In 2017, Northern Ireland made up nearly 6% of the UK’s landmass but had less than 3% of its population (1.87 million people; Eurostat, 2018). It has the smallest economy of all regions within the UK, with a Gross Domestic Product (GDP) of €51.1b, which corresponds to 2.1% of the 2016 UK total.
Its GDP per capita (PPS) in 2016 was €23,600 compared to the UK average of €31,400 (Eurostat, 2018) and the labour productivity in 2016 was 16.5%. Although its R&D indicators are significantly below UK's average, Northern Ireland presents other strengths, such as a highly educated English-speaking workforce, one of the youngest populations in the European Union, a competitive cost structure and a pro-business environment.
Northern Ireland has a relatively large public sector (education, health and public administration), which accounts for 27% of total employment. Agriculture, construction, retail and manufacturing are also relatively significant employers. In terms of employment, the Northern Ireland economy has proportionately the smallest private sector of any UK region. In 2017, the unemployment rate was 4.6% and had its last peak in 2013 with 7.5% (Eurostat, 2018).
Northern Ireland is significantly strong in areas relevant to electronics, health technology, semiconductors and aerospace. Manufacturing within Northern Ireland has grown almost three times faster than the rest of the UK and employment in manufacturing accounts for 11% of employment in Northern Ireland (Government of NI, 2018). Machinery and equipment manufacturing, food processing, textile and electronics manufacturing are the leading industries. Other industries such as papermaking, furniture manufacturing, aerospace and shipbuilding are also important, concentrated mostly in the eastern parts of Northern Ireland. In terms of GVA, the most important manufacturing sector in the North West is food products, beverages and tobacco industry. In particular, Whiskey represents a significant proportion of the total volume of export from Northern Ireland.
R&D investment in NI caught up with the UK average (1.67%) with a Gross Expenditure on Research and Development (GERD) of 1.68% of GDP in 2015 (Eurostat, 2018).In 2016, £739.3m (€825.7m) was spent on R&D by Businesses, Higher Education and Government in Northern Ireland - a decrease of 1.3% compared to the previous year (NI Statistics and Research Agency, 2017).Of the £739.3m spent on total R&D, 70.9% was spent by Businesses, 26.2% by the Higher Education sector and the remainder 2.9% was Government expenditure.
There was a 4.7% increase in the number of local and externally owned companies engaged in R&D over the year. Externally owned companies accounted for more than 59% of R&D expenditure compared to 40.2% of locally owned companies in 2016.
NI is home to two universities and a number of higher education colleges. Queens University Belfast is a research-intensive university; in the UK-wide 2014 research excellence framework (REF), Queen’s had 14 subject areas ranked within the top 20 in the UK, six in the top 10 and two in the top five.
In 2016, there were 23,100 people employed in the High Tech sector; in 2017, this number decreased remarkably and resulted in a total of only 20,700 people employed (Eurostat, 2018).
The 2014 Framework for Smart Specialisation identifies five priority technologies: information and communication technologies, life and health sciences, advanced manufacturing and agri-food technologies. The programme of Competence Centres was launched in 2012, and has established four of these initiatives by October 2015 in the following sectors: agri-food; connected health; sustainable energy; and advanced materials (according to NI's Economic Strategy).
According to the Regional Innovation Scoreboard 2017, Northern Ireland is ranked as a Strong - Innovator, and innovation performance has increased significantly over time. The 2017 Regional Innovation Index is below UK average (10.1% lower) but it still remains above EU average (by 9.5%). Within the period 2011-2017 the index has experienced a steady growth, increasing by more than 15%.
The Northern Ireland Assembly is responsible for: agriculture and rural development; culture, arts and leisure; education; employment and learning; enterprise, trade and investment; environment; finance and personnel; health, social services and public safety; justice; regional development (including transport); social development (including housing).
Responsibility for innovation falls within the Department for the Economy. The Department plays a crucial role in formulating and delivering economic development policy in many key areas in Northern Ireland, including Enterprise, Innovation, Social Economy, Energy, Telecoms, and Tourism. As of 2015, the Strategic Policy Framework for Smart Specialisation for Northern Ireland is publically available.
The strategic objective of the 2016 created Department for the Economy are:
• Accelerate innovation and research;
• Enhance education, skills and employability;
• Drive inclusive, sustainable growth;
• Succeed in global markets;
• Build the best economic infrastructure;
• Deliver a regulatory environment that optimises economic opportunities for business and commerce, while also protecting consumers and workers;
• Ensure the Department has effective governance and manages its resources, both financial and staff.
This framework complements the Northern Ireland's Innovation Strategy, that has the objective to make Northern Ireland recognised as an innovation hub and will be one of the UK's leading high-growth, knowledge-based regions which embraces creativity and innovation at all levels of society by 2025.
The following five areas of the Northern Ireland Framework for Smart Specialisation were identified:
• ICT & Telecommunications;
• Life & Health Sciences;
• Advanced Manufacturing & Materials; and
• Sustainable Energy.
In addition to the Department for the Economy, Northern Ireland also has a regional economic development agency (Invest Northern Ireland), whose mission is to grow the economy by stimulating entrepreneurial activity; increasing exports and trade; promoting research, development and innovation and by attracting new investment to and within Northern Ireland.
MATRIX, the Northern Ireland Science Industry has published 16 reports to date in the following areas: Life & Health Sciences, ICT, Agri-Food, Sustainable energy, Advanced Materials, Advanced Engineering (Transport), Telecoms, Technical Capability, Intellectual Capital, Social Innovation and Public Procurement of Innovative Science and Technology Solutions.