Kieran Donoghue, head of global strategy at the IDA, has been announced as the new chief executive of Invest Northern Ireland, the IDA’s northern equivalent.
This is more than a symbolic change from the northern to the southern way of business. Delivering such a change was effectively the job description when Donoghue applied. For many years, the popular caricature of Invest NI has been of an agency that subsidises fly-by-night call centres, in a desperate attempt to attract any jobs and overseas investment. A damning report was published in January, following an independent review commissioned by a DUP minister. It found the caricature is still too close to the truth.
Invest NI has been following an outdated “client company model”, awarding grants to a small number of favoured recipients. Job creation remains its vague goal, although Northern Ireland has been a full-employment economy for a generation. There is little evidence this is having any economic impact and no evidence it is tackling low productivity, the North’s real economic problem. Divisions within management and confusion over Stormont’s economic development policy have added to the agency’s dysfunction. “Profound change is needed,” the report concluded.
Stormont’s Department for the Economy, which sponsors Invest NI, has spent most of this year developing a plan to implement the report’s 17 recommendations. Donoghue has been hired to implement the plan.
Industrial strategies are back in vogue, having lost the stigma and much of the context of the 1970s
Invest NI’s mission will be changed to improving productivity – to better jobs, rather than more jobs. Sectors will be identified with growth potential and given targeted support. Achieving this will require a complete change of mindset: Invest NI has not even been assessing how its efforts are affecting productivity. It has to stop thinking of all inward investment is good, and realise some is pointless or actively bad. The report found that investment from companies in Britain may not raise productivity, while the client companies model may have obstructed local start-ups.
The report’s authors met with development agencies in the Republic and referred repeatedly to the decision Northern Ireland has to make on its cross-Border economic relationship. The department’s plan is coy about this, as the decision is loaded with political contention. If Invest NI adopts the same approach as the IDA and Enterprise Ireland on supporting high-quality investment, do north and south compete or co-operate? Unionists might say compete, nationalists co-operate, but it is not that simple.
The best way to co-operate could be emphasising differences that complement each other, or at least do not clash, while specialising in different sectors. All-Ireland promotion of the advantage of two Irelands would challenge everyone’s political convictions.
Republicans will obviously want an all-Ireland strategy, but Sinn Féin will be wary of perceptions of helping one part of Ireland ‘steal’ investment from the other, especially if it ends up governing both
Change is also expected at the top of the Department for the Economy. It has never had a nationalist minister and has been under DUP control since 2007, interrupted only by collapses of devolution.
Arlene Foster was at the helm for seven years, before becoming DUP leader. Most of the department’s remit and two-thirds of its budget were delegated to Invest NI during her tenure – perhaps one reason why lack of vision went unnoticed. Everyone coasted along on parallel tracks, with the DUP acquiring a business-friendly reputation by default, until Brexit and RHI exposed the reality.
Sinn Féin is making no secret of its hope to take the economy portfolio, if and when Stormont returns. The party has been calling since 2018 for a new industrial strategy that targets support at high-growth sectors. Many of its statements anticipated this year’s report almost verbatim, although no crystal ball was required. Industrial strategies are back in vogue, having lost the stigma and much of the context of the 1970s, when governments proved poor at what they termed ‘picking winners’.
Invest NI has to stop thinking of all inward investment is good and realise some is pointless or actively bad
The prominence Sinn Féin has given this policy will have left many voters cold, which tends to suggest it is genuine. As Stormont’s largest party, it gets first choice of departments, so control is there for the taking.
Republicans will obviously want an all-Ireland strategy but Sinn Féin will be wary of perceptions of helping one part of Ireland “steal” investment from the other, especially if it ends up governing both. It will want a careful message of north and south complementing each other, without emphasising their differences.
The Belfast Agreement allows Stormont and the Oireachtas to set up a cross-Border body to promote the whole of Ireland for investment, as already happens for tourism. No new cross-Border bodies have been established since the agreement, mainly because unionism would block them, but partly because nationalism has never forced the issue.
Sinn Féin may change this, while a “two Irelands” message might reduce unionist opposition. But with or without such an innovation, Stormont will first need to co-ordinate its own policy across the multiple departments with a role in improving productivity: education, infrastructure, housing, finance and more. That would be achievement enough.