Sunday 25 September 2016

All-island economy 'would grow by €32.5bn'

Published 22/03/2016 | 02:30

The simulation identified many benefits for the North from the removal of currency differences based on an assumption that it would join the Eurozone along with the Republic.
The simulation identified many benefits for the North from the removal of currency differences based on an assumption that it would join the Eurozone along with the Republic.

A united all-island Irish economy would grow in GDP by €32.5bn in the first eight years after re-unification, a new international economic report argues.

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The economic report led by academics at the University of British Columbia in Canada, deploys economic models which were used to examine German Reunification in 1990 and potential scenarios to reunify North and South Korea. It is billed as the first comprehensive simulation of political and economic integration and finds significant benefits and savings for people on both sides of the border.

But economic development and workers' incomes would grow more dramatically in the North. The Republic would also benefit from better market access and better economies of scale for investments.

The report is entitled 'Modelling Irish Unification' and it stresses that, politics aside, the merits of partition may again come into focus if British voters decide to leave the EU in the vote on June 23 next. The study pointedly avoids political choices and makes an assumption of a smooth political transition to an all-Ireland political and economic entity.

The simulation identified many benefits for the North from the removal of currency differences based on an assumption that it would join the Eurozone along with the Republic. It would also benefit from trade and tax barriers which currently impede economic growth while the Republic would get barrier-free access to markets in the North.

The economic models used employ economic theory and statistical analysis to model the economic relationships driving production, consumption, wages, price, exports and imports, and economic output.

Project director Dr Kurt Hubner said a successful currency devaluation for the North and successful industrial development generally should deliver a successful unification. He cautioned that political friction in Ireland on the issue or global economic shocks could change that optimistic outlook.

"But our study underlines the potential of political and economic unification when it is supported by smart economic policy," Prof Hubner said.

The study will be formally launched in the Westbury Hotel in Dublin this morning.

Prof Hubner is Professor of Political Science at the University of British Columbia. His firm, KLC Consulting for Tomorrow, performed the study.

Irish Independent

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