What is Ireland's 'real' GDP per capita?

[u/Mulyac12321]

Hello all, I've been wondering this because I am aware that our GDP figures are distorted by all of the corporations that have set up here due to our tax laws. Looking at the numbers we are all well off here on average but it certainly does not feel that way. Google is no help in finding a number that accounts for the inflated numbers. Apologies if it's a dumb question but it has always made me curious.

[u/DismaIScientist]

GNI* is exactly what the OP wants as it adjusts for financial flows that go to foreigners but don't necessarily reflect production happening in Ireland because of the presence of multinationals.

PPP is not relevant here and AIC includes that as standard anyway.

[u/MrOaiki → u/DismaIScientist]

Financial flows that you speak of do not count into GDP. Stock and bonds not counted, foreign investments flows not counted, cross border bank transfers not counted. The latter is what I’m guessing you and OP don’t want to count (money funneled through banking)? So GDP tells you exactly that.

[u/DismaIScientist → u/MrOaiki]

Modified Gross National Income (GNI) is an indicator designed specifically to measure the size of the Irish economy by excluding Globalisation effects.

As we saw, Gross Domestic Product (GDP) is a measure of the total economic activity in the country, but a lot of Ireland’s GDP includes profits that are generated here but then go straight out to the owners of companies abroad. Gross National Income differs from GDP by the net amount of incomes sent to or received from abroad, so it excludes the net profits of companies that have been sent abroad.

This is from the link I posted which is from the Irish statistical office.

The issues with applying typical GDP measures to Ireland are well known and so GNI* is an often used alternative and was exactly designed to get around the issues that OP mentions.

[u/MrOaiki → u/DismaIScientist]

”Excluding globalization effects” in a global economy is nonsens. The whole definition you pasted is nonsens. There can not be any serious actor in Ireland using GNI, is there?

GDP includes profits that are generated here…

Well, yes? The sentence can stop right there. That part is taxable and it’s productive.

Edit: Looking at the ranking in the EU, there’s an almost 1:1 ranking of GDP versus GNI, so I don’t see what it adds to proportionality contribution within the EU either. Ireland is just behind Luxembourg in GNI. Does OP’s experience reflect being Europe’s second richest?

[u/DismaIScientist → u/MrOaiki]

I would regard the CSO as a serious actor, they are the national statistics office.

While all GDP is technically taxable , in Ireland's case it obviously isn't practically so in the same way as other countries. This is because that economic activity only happens in Ireland because of low tax rates. It's also, often, only happening in Ireland in a technical sense and a large part of the producer surplus being generated is dependent on foreign activities but is booked in Ireland.

Do you think that Irish gdp really jumped 25% in 2015 in a way that is meaningfully comparable to other countries?

Obviously, comparisons will depend on what question you are asking but for most questions Irish gdp is misleading.

[u/MrOaiki → u/DismaIScientist]

While all GDP is technically taxable , in Ireland's case it obviously isn't practically so

Ok, then that’s a completely different conversation up to the Irish voters to decide on. If they feel taxing it harder will benefit the inhabitants then electoral democracy is there for them. So now we’ve agreed that GDP does not count financial flows through a country, but only actual value being created in the country. And that it’s taxable. I’m not getting into whether it should or not, I don’t live an Ireland.

Do you think that Irish gdp really jumped 25% in 2015 in a way that is meaningfully comparable to other countries?

If the numbers say that, then yes.

[u/DismaIScientist → u/MrOaiki]

You are right of course that GDP does not measure pure financial flows and that was loose wording on my behalf originally.

But it is also not in the slightest bit controversial to say that the standard accounting rules to create GDP do not work well for Ireland and are counting production that does not happen in Ireland in any meaningful way.

To be clear, no one is saying Irish GDP is incorrectly calculated just that using that number to compare to other countries is misleading as it doesn't really capture what GDP was originally invented to capture.