Before independence, Derry was Ireland's fourth city in terms of population after Belfast, Dublin and Cork. However, for much of the last 100 years, the city has suffered from significant economic and social disabilities. Derry's failure to develop as a hub for the northwest region of the island has had serious consequences for its hinterland on both sides of the Border.
Incomes in Derry are below the average for Northern Ireland, and it has a higher proportion of its population in poverty. Across the Border in Donegal, disposable income per head is lower than in any other region of the Republic, except the midlands.
Evidence from population movements show that some of Derry’s ties with the Donegal region have weakened over the last century. In 1911 more than 7 per cent of Co Derry’s population was Donegal-born. By 2011 only 4 per cent of residents had been born in the Republic. These were largely concentrated in the over-65s, mainly Donegal women who had husbands from Derry.
However, the economic performance of Derry and Donegal remain intertwined. While fewer Donegal people move today to live in Derry city, it remains an employment hub for them, with about 4,000 Donegal people commuting to work there.*
Derry’s growth over much of the last century has lagged behind other Northern Ireland regions. This failure to reach its potential has affected not only those who live there, but the whole northwestern region, including Donegal.
Another area of historic neglect of Derry has been poor transport connections, especially with Belfast
While there are a number of factors behind Derry’s economic underperformance, its neglect by policymakers in Northern Ireland over a long period is one.
The proportion of people with a third-level qualification is lower in Northern Ireland as a whole than in any other region in these islands. And Derry is at the bottom of the Northern Ireland ranking.
The decision in the 1960s to locate Northern Ireland's second university in Coleraine, rather than Derry, has contributed to a lower proportion of graduates in Derry than elsewhere in Northern Ireland. This, in turn, has consequences for the number of high-skilled, well-paid jobs in Derry, and for the city's overall economic performance.
While Magee College, part of Ulster University, has grown in recent years, it offers a limited number of course options. So Derry needs a strong third-level institution to raise the city's educational profile, with spillover benefits for Donegal.
Another area of historic neglect of Derry has been poor transport connections, especially with Belfast. While there is a scenic rail connection, it’s quicker to take the bus, despite the inadequate road infrastructure.
When Northern Ireland built its first motorway in the 1960s it went to Dungannon rather than to Northern Ireland's second city, Derry. While road links have since improved, the job is not yet done and the quality of road infrastructure between Derry and Belfast remains a significant obstacle to doing business in Derry until the road is completed.
The Republic would also like to achieve a good road connection between Dublin and Derry – which would facilitate access between Dublin and Donegal – and the Government is willing to partly fund the Northern Ireland section. Despite that offer, progress on the matter is slow.
Donegal's and Derry's interdependence underlines the importance of maintaining a seamless border for the economy of the northwest region
Regional policy in the North has historically favoured moving development out of Belfast along the M1 corridor, rather than developing its two major urban centres, Belfast and Derry. But more recently, there has been greater investment in strengthening the infrastructure of the two cities.
While Belfast suffered significantly during the Troubles, it has undergone major regeneration in the last 20 years, captured in the opening sequence of Kenneth Branagh’s recent film on his native city.
The late John Hume played a part in securing European and other investment to support Derry's renaissance over recent decades. Its urban renewal has enabled Derry to capitalise on its unique position as the only remaining walled city on the island of Ireland. With the shirt factories of yore replaced by today's knowledge-based industries, strengthening education opportunities will be crucial for the city's future prosperity.
Donegal’s and Derry’s interdependence underlines the importance of maintaining a seamless border for the economy of the northwest region, and how Derry was especially disadvantaged by the introduction of the original Border in 1922. The rise in cross-Border trade illustrates the potential gains for Northern Ireland of fully exploiting its dual status as being in the UK and also in the EU single market.
And Donegal, which is virtually land-locked from the rest of the Republic, has most to gain from open borders with a thriving Derry.
