Queen's University Belfast NISRA BDR Programme

The Northern Irish economy has low productivity, present even prior to the troubles encountered from the late 1960s (Hitchens and Birnie, 1989). To solve this historical underperformance, numerous policies have been implemented with limited success. The current foundation of DfE's 10x vision, to enable productivity growth through specific technologies and clusters, may seem to be guided by similar ideas as capital subsidies present during the third industrial revolution. However, the environment has changed drastically, and we now live in a new phase of the industrial process focusing on real-time data, interconnectivity, machine learning and automation, often referred to as Industry 4.0 (Lasi et al., 2014). Although COVID-19 has accelerated this phase by forcing companies and the Government to prioritise digitalisation (gov.uk, 2020), understanding of this trend is still limited. Adopting advanced technology in this phase was shown to result in productivity gains (Brynjolfsson and McAfee, 2011 and 2014; Gal et al., 2019) and lack of adoption was attributed to the slowing down in productivity growth across Europe (van Ark, 2016), yet it is still unclear how it affects the NI economy. Initial findings suggest a limited impact of digitalisation on productivity at least in the shorter term (Lound et al., 2021). It could also increase unemployment, social inequality, mistrust (Acemoglu et al., 2020) and even populism (Levy, 2018). This project will develop an evidence base on how digitalisation affects the NI economy, including productivity and employment dynamics, that could be key to tackling the long term NI productivity puzzle and technological anxiety amongst the population.

In addition to this, the project will produce a bespoke analysis targeted at supporting the 10x vision. DfE's 10x vision focuses on enabling specific clusters, namely (1) digital, ICT and creative industries, (2) fintech/ financial services, (3) life and health sciences, (4) agri-tech and (5) advanced manufacturing and engineering, to drive innovation that facilitates productivity gains and distributes the resulting benefits to the whole population. It also offers the three main pillars of how success will be assessed: innovation-led economic growth, inclusive growth and green growth. This project will compare companies in those clusters to other organisations in their investment in technological advancements between 2014 and 2020 and measure the extent of resulting benefits, including economic growth, inclusive growth and green growth. The project will utilise the Northern Ireland Annual Business Inquiry, which is uniquely placed to investigate subsidies, investment in computers and machinery and how they affect tax collections, productivity, employment dynamics and green growth.