Business Creation and Political Turmoil: Ireland versus Scotland before 1900

What effect does political instability in the form of a potential secession from a political union have on business formation? Using newly collected data on business creation, we show that entrepreneurial activity in Ireland in the late nineteenth century was much lower than Scotland, and this divergence fluctuated over time. Several factors may have contributed to this, but we argue that political uncertainty about the prospect of a devolved government in Ireland played a role. The effects were most acute in the North of Ireland, the region that was most concerned by potential changes.

Automated summary

Political instability, particularly concerning the prospect of devolved government, had a detrimental effect on business formation in Ireland compared to Scotland, with the Northern region being the most affected.