Infrastructure for Growth Dr. Edgar Morgenroth Infrastructure for Growth and BREXIT OUR REGION

Prospects for Regional Development: Infrastructure, Human Capital and Brexit Edgar Morgenroth Economic & Social Research Institute (ESRI) Adjunct Professor, Trinity College Dublin edgar.morgenroth@esri.ie

Introduction Infrastructure is often seen as an important policy tool for regional development. Policy makers and residents of more peripheral regions tend to lobby strongly for more centrally financed investment in infrastructure to overcome the perceived disadvantage due to peripherality. What factors are important?? Brexit poses an additional challenge for development particularly for the Border region.

Motorways and By-passes by Period of Completion (1983 to 2010)

Motorway Length by Region Source: National Roads Authority/ Transport Infrastructure Ireland Route Lengths, CSO Annual Abstract of Statistics.

Drive Time to the Nearest Motorway Junction Source: Own calculations using Microsoft MapPoint

Drive Time to Nearest Railway Station Source: Own calculations using Microsoft MapPoint

Drive Time to the Nearest Commercial Port (1,000,000 tonnes in 2011) Source: Own calculations using Microsoft MapPoint

Drive Time to the Nearest Airport Source: Own calculations using Microsoft MapPoint

Percentage of the Population with a Third Level Qualifications

Drivers of New Firm Formation Rank Foreign High-Tech Indigenous High-Tech 1 3rd level Qual. (+) 2 Relative Wages (+) Total Employment (scale) (+) 3 Metropolitan Area Network (+) Eircom DSL (+) 4 MAN backhaul (+) MAN increased backhaul (+) 5 Unemployment (+) Specialisation (-) 6 7 Airport (DT) (+) 8 DSL (+) 9 3rd Level Institute (DT) (+) 10 11 Motorway Junction (DT) (+) Source: McCoy, Lyons, Morgenroth, Palcic and Allen (2016) “The impact of broadband and other infrastructure on the location of new business establishments”, MPRA Paper No. 69074

Broadband and Human Capital Interaction

Regional Implications of Brexit The impact of Brexit depends on the final agreement – this is difficult to anticipate, but it is very unlikely to be the EEA (Norway) solution. At this point it seems more likely that the UK will leave the Customs Union than reach an EEA style agreement => that would make a hard border certain! The introduction of tariffs would hit agri-food worst. But it would also hit other traditional manufacturing and services. It is important to remember that the EU excluding the UK is a more important trade partner than the UK – leaving the EU would be worse than Brexit!!!

Industrial Exports from the BMW Region (% of total output, 2012)

WTO Tariffs by Product Group Source: Lawless and Morgenroth (2016)

Importance of the Agri-Food Sector Share of Jobs (2011)

Importance of the Non-metallic Minerals, Basic and Fabricated Metals Sectors. Share of Jobs (2011)

Discussion Infrastructure is not the most important factor!! There is an important interaction between human capital and the impact of broadband (and probably other infrastructure). A hard border would change the infrastructure accessibility maps for both the North and the South at least in terms of economic activity (trade, commuting)! What can the regions do to utilise all of their potential? What can the regions to maximise their potential? What can the regions do to minimise the impact of Brexit?