The causes and consequences of rent‐seeking in Northern Ireland, 1945–72¹

Abstract

SUMMARY Northern Ireland’s economic performance during the ‘golden age’ was weak. Crafts suggested that rent‐seeking was an important determinant of this poor record. This article offers support for such a conclusion. It is suggested that the growth record was shaped by British regulations preventing conflicts of ministerial interest not being made operational until 1963. This institutional divergence tended to promote rent‐seeking behaviour, which impeded the pursuit of an industrial policy that could promote economic efficiency. In 1963 the institutional structure and the industrial policy framework changed. These changes stimulated the pursuit of efficiency and contributed to an improved regional economic performance.

Practice running ahead of theory? Political economy and the economic lessons of UK devolution

“…This emphasis on contingency within the institutional geography approach finds corroboration in the 'laboratory' of the 'Stormont' regime (c1921-1972 as well as more contemporary 'laboratory' of asymmetric devolution in the UK. The argument of Rodríguez-Pose and Gill finds application in explaining the causes and consequences of rent-seeking in Northern Ireland (NI) (Crafts, 1995;Brownlow, 2007).8 These empirical studies suggest that between 1945 and 1963 the institutional geography of the DA was associated with cronyism, rent-seeking, devolution and this resulted in slow regional economic growth.9 A number of economists, writing from a variety of perspectives, have considered the specific financial and economic failings of the Stormont settlement (Rowthorn, 1981;Gibson, 1996). As a result the institutional-economic nexus has been explained as contributing to the region's economic failings (Gibson, 1996;Heald, 2003).…”

“…Rodríguez-Pose and Gill argue that the impact can be damaging to national efficiency as competitive bidding for FDI flows leads to a deadweight loss at the aggregate level (Rodríguez-Pose and Gill, 2005). 8 Brownlow found that the absence of conflict of interest regulations that existed under the devolved settlement -when combined with the strong overlap between business and political elites -tended to promote rent-seeking (Brownlow, 2007). 9 Lawrence viewed the potential accessibility of political actors within NI as a strength of the Stormont settlement.…”

“…In particular, he praised the way that 'businessmen and interest groups of all kinds can press their cases on the spot' (Lawrence, 1965 p.167). For a more pessimistic interpretation see (Brownlow, 2007;Ollerenshaw, 2013, p.224).…”

Review of periodical literature published in 2007

“…Elsewhere, Jamison argues that Westminster, determined to replace the Polaris nuclear deterrent, consistently advertised and exaggerated the programme's employment opportunities in Scotland. Brownlow suggests that links between those awarding government grants in N. Ireland and those receiving them, coupled with the lack of an industrial policy seeking to move resources from declining to new industries, were significant contributors to the province's poor economic performance in the golden age. Finally, Foster considers the forces and events behind dramatic and unforeseen recent change since the 1970s in the Republic of Ireland's politics, economics, cultural influences, religious profession, and gender roles.…”

Soft budget constraints and regional industrial policy: reinterpreting the rise and fall of DeLorean

“…The observations of both Kornai and more recent authors have particular resonance in the DMCL case. A number of authors have demonstrated that rent-seeking, as induced by poor institutional design related to socio-political inequalities, contributed to weakening the supply-side of region's economy prior to the outbreak of the Troubles (Crafts, 1995;Brownlow, 2007). As we will see in the next section, violence would further compound underlying economic weaknesses.…”