This year marks the centenary of Northern Ireland\u2019s creation. During that time, its economy has persistently underperformed and it has remained one of the UK\u2019s poorest regions.<\/p>\n\n\n\n
Central to this poor economic performance is low productivity. Northern Ireland produces less output per hour worked than most other regions in the UK. In turn, the UK underperforms relative to its international peers: UK productivity is lower than in the United States, France and Germany, and has grown more slowly over the past decade<\/a>. This makes Northern Ireland\u2019s low levels of productivity even more concerning.<\/p>\n\n\n\n Several potential causes have been suggested for why firms in Northern Ireland are less productive than those in the rest of the UK. Yet attempts to address this \u2018productivity gap\u2019 have, so far, been unsuccessful, reflecting its interdependent and deep-seated causes.<\/p>\n\n\n\n Productivity measures the amount of goods and services \u00ad\u2013 or output \u2013 produced in an economy. Productive firms are key to increasing economic growth and raising living standards over the long run (Office for National Statistics, ONS, 2020<\/a>). Productivity can be measured at a regional level by the amount of value created (or \u2018gross value added\u2019) per hour worked.<\/p>\n\n\n\n Figure 1 compares levels of productivity across the UK\u2019s regions. Northern Ireland is one of the worst performing UK regions, at around 14% below the overall UK level, with only Wales and Yorkshire and the Humber performing worse.<\/p>\n\n\n\nDoes Northern Ireland have a productivity problem?<\/h3>\n\n\n\n
Figure 1: Regional productivity (GVA) per hour worked in 2018 (UK=100)<\/h4>\n\n\n