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Increase north-south trade to enhance FDI potential – ESRI
Tanaiste Leo Varadkar Pic: RollingNews.ie

07 Dec 2021 / business Print

Increase north-south trade to enhance FDI – ESRI

Tánaiste Leo Varadkar has said that there is scope for greater all-island thinking in services economy, taking the best of both jurisdictions.

This would accrue economic and societal benefits both north and south, he said, speaking as the ESRI launched its Shared Island research on growing services trade and enhancing attractiveness to high-value foreign direct investment (FDI) across the island of Ireland.


Cross-border services trade is considerably lower than cross-border trade in goods, the report shows.

Services make up 26% of the total trade going from the North to the South and 16% of the trade going from the Republic to the North.

This suggests considerable scope for greater development of all-island services links, the researchers believe.

The main services traded include transportation and storage, business services, and computer consultancy.

The low share of services in trade flows is in contrast with the high overall services content of Ireland’s exports to other markets.

Ireland is one of the main markets for services trade from the North.

Sales to Ireland account for 17% of services outflows from the North and for 11% of services inflows to the North.

For trade from Ireland, the North accounts for slightly less than 1% of total services exports from Ireland.


This reflects the relatively small size of the North’s economy and the highly export-orientated and FDI-dominated structure of the Republic’s services sector. 

The report finds that exporting firms in services are systemically larger and more productive than non-exporters.

Author Professor Martina Lawless commented: “The patterns identified in this report suggest that there is considerable scope for expansion of cross-border trade in services.

“The monitoring of the effectiveness of trade support policies would be greatly improved by expanding and coordinating the information collected on cross-border services flows.”

Single Market

The North’s continued access to the EU Single Market for goods secured through the Protocol is a key comparative advantage for attracting high-value FDI relative to the other regions in Britain.

Author Professor Iulia Siedschlag said: “Taken together, the results of this research suggest that attractiveness to high-value FDI across the island could be enhanced by considering complementarities between Ireland and Northern Ireland, in particular with respect to EU market potential, availability of workforce skills, and investment in R&D in the Government and higher education sectors. 

“To the extent that an all-island view on attracting high-value FDI is possible, policy coordination and cooperation in these areas could contribute to maximising benefits north and south on the island.”

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