Trade in Northern Ireland: Characteristics of businesses and workers
Lead Research Organisation:
University of Strathclyde
Department Name: Economics
Abstract
The vision for a 10x Economy sets out clear ambitions for Northern Ireland to focus on areas where Northern Ireland can be a global leader, in order to "Position Northern Ireland to be amongst the most competitive small advanced economies in the world".
In a supporting strategy document focussed on Trade, Trade and Investment for a 10x Economy, the Executive set out the ambition to use trade and investment as a key driver to increase wealth, prosperity and living standards in Northern Ireland. In particular, there are a number of measurable specific targets set in the strategy to increase and diversify the firms and sectors exporting (both within the UK and to the rest of the world).
In line with many other countries, including the other devolved nations within the UK, Northern Ireland's exporting base is narrow, selling a limited range of goods and services, from a small base of companies, to a relatively small number of companies. As is pointed out in the strategy document, "The top 5 sectors account for almost all (around 90%) of our external sales value.".
To support the delivery of the 10x strategy, and in particular the ambitions on trade, this project will seek to use the linked data that has been made available to add to the knowledge about the nature of trading firms and the impact they have on workers. In particular, the research would seek to answer the following two questions:
What is the nature of trading firms vs non-trading firms in NI, at a detailed sectoral level? What is the scale of employment supported by exporting in NI, and what is the nature of this employment?
In a supporting strategy document focussed on Trade, Trade and Investment for a 10x Economy, the Executive set out the ambition to use trade and investment as a key driver to increase wealth, prosperity and living standards in Northern Ireland. In particular, there are a number of measurable specific targets set in the strategy to increase and diversify the firms and sectors exporting (both within the UK and to the rest of the world).
In line with many other countries, including the other devolved nations within the UK, Northern Ireland's exporting base is narrow, selling a limited range of goods and services, from a small base of companies, to a relatively small number of companies. As is pointed out in the strategy document, "The top 5 sectors account for almost all (around 90%) of our external sales value.".
To support the delivery of the 10x strategy, and in particular the ambitions on trade, this project will seek to use the linked data that has been made available to add to the knowledge about the nature of trading firms and the impact they have on workers. In particular, the research would seek to answer the following two questions:
What is the nature of trading firms vs non-trading firms in NI, at a detailed sectoral level? What is the scale of employment supported by exporting in NI, and what is the nature of this employment?
Organisations
People |
ORCID iD |
| Mairi Spowage (Principal Investigator) | |
| Gioele Figus (Co-Investigator) |
| Description | International trade is vitally important for regional growth. Understanding how international trade interacts with local supply chains is necessary for developing business and trade policy. Given Northern Ireland's new trading arrangements, it is increasingly important to understand how trade impacts Northern Ireland's economy, as well as the differences between exporting and non-exporting firms. Understanding how employment differs between exporting and non-exporting firms is especially valuable, but past research into exporting and the labour market in the UK is sparse. Gaining insight into this interaction allows researchers, businesses, and policymakers to identify which groups in society are potentially benefitting the most from trade and which groups may be getting "left behind." in Northern Ireland. Previous research has not use detailed microdata and so assumed that exporters have the same characteristics as industry averages. We expand on this research by using detailed microdata on the Northern Ireland economy, the Northern Ireland economic accounts, and industry averages to estimate the impact of exporting on the Northern Ireland labour market and explore how exporter firm characteristics differ from non-exporters. Utilising local data, rather than regionalising national data, can help improve the robustness of these results, and perhaps shed greater insight into Northern Ireland's exporting sectors. In 2018, Northern Ireland sold £17.7 billion in goods and services to Great Britain and internationally. Producing these exports requires the use of products from supply chains across Northern Ireland. Including these supply chain impacts, we estimate that Northern Ireland's exports supported £27.5 billion in output, £11.8 billion in Gross Value Added (GVA), and nearly 170,000 full-time equivalent (FTE) jobs. This means that one out of every four jobs in Northern Ireland is either directly related to or supported by exporting. Examining gender effects, we find that only 29% of the jobs that are either directly or indirectly supported by exports are held by women. By comparison, 47% of jobs are held by women across Northern Ireland's economy. The estimates above rely on industry averages and do not explore the impact of differences in the characteristics of exporting and non-exporting firms. For this reason, we have used microdata to explore these differences. Examining the nature of exporting and non-exporting firms in Northern Ireland, we found that exporting firms account for 54% of all business turnover in Northern Ireland while employing only 35% of workers. Exporting firms furthermore account for 55% of all purchases and 50% of GVA. Employee costs per employee are nearly double for exporters compared to non-exporters, indicating significantly higher wages. 78% of all imports go to exporting firms. In total, productivity - here measured by GVA per employee - is around £58,000 in exporting firms, compared to £32,000 in non-exporting firms. Higher labour productivity means our estimates of the jobs supported by exports are likely biased upwards. In order to demonstrate how Northern Ireland-specific data can improve results, we compared our results to that from a Northern Ireland economic model and to a model that uses a UK economy regionalised to Northern Ireland. We find that regional survey data directly attributed over 200,000 full time-equivalent jobs to exporting firms. This is nearly double the number of FTE jobs that our Northern Ireland IO model estimated. Our regionalised UK IO model underestimated the volume of employment even further, attributing only 70,000 FTE jobs to exporting. This demonstrates the importance of using Northern Ireland-specific data when attempting to understand the impact of trade on Northern Ireland. |
| Exploitation Route | This funding was one of a number of projects which "road-tested" this novel dataset, and we gave extensive feedback as part of this to NISRA and ADR UK about how to make the data more useable and useful in the future. This also supports our research through the Centre for Inclusive Trade Policy, which is an ongoing ESRC centre, which will ultimately lead to the production of a Jobs in Trade dataset. |
| Sectors | Other |
| URL | https://www.adruk.org/news-publications/publications-reports/data-insight-characteristics-of-exporting-firms-in-northern-ireland/ |
| Description | These findings have contributed to discussions with NISRA and the Department for Economy Northern Ireland about the range of data they could make available for researchers in the future. |
| First Year Of Impact | 2023 |
| Sector | Other |
| Impact Types | Economic Policy & public services |
| Description | Presentation at "Business Data for Research" Conference |
| Form Of Engagement Activity | A talk or presentation |
| Part Of Official Scheme? | No |
| Geographic Reach | National |
| Primary Audience | Policymakers/politicians |
| Results and Impact | Presented the results of the research at the Business Data for Research Conference, to policymakers, analysts and academics in Belfast. |
| Year(s) Of Engagement Activity | 2023 |