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Rebalancing and Regional Economic Performance: Northern Ireland in A Nordic Mirror
Author(s) -
Brownlow Graham,
Birnie Esmond
Publication year - 2018
Publication title -
economic affairs
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.24
H-Index - 18
eISSN - 1468-0270
pISSN - 0265-0665
DOI - 10.1111/ecaf.12267
Subject(s) - devolution (biology) , public sector , argument (complex analysis) , copying , dividend , economics , corporation , private sector , northern ireland , economic sector , economic policy , political science , economy , economic growth , geography , law , sociology , biochemistry , chemistry , ethnology , archaeology , finance , human evolution
Abstract Northern Ireland has been characterised as having an excessively large public sector. This characterisation has led some to explain poor regional economic performance in terms of ‘crowding out’. This diagnosis has been used to justify a policy of ‘rebalancing’ and the region copying its southern neighbour's lower rate of corporation tax. The experience of large public sectors in the Nordic economies seems however to suggest that higher public spending is not necessarily damaging. This argument is examined critically. Rodrik's comparative institutional analysis indicates that in the Nordics a large public sector was the result of building a successful tradable private sector rather than its cause. In terms of the possible ‘economic dividend’ from devolution we suggest that a Hayekian insight is better: no ‘silver bullets’ exist.

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