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Measuring the Economy

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The CSO's recent review of economic and social progress for 2008 incorporates EU-wide comparisons based on GDP (Gross Domestic Product) and GNI (Gross National Income). For Ireland, these measures differ by about 14 percent. In many situations, the lower GNI is the most appropriate measure of Ireland's output as it excludes the huge profits generated by multinationals. However, comparative studies by the EU, OECD, IMF etc. are based on GDPs which for many countries are very close to their GNI values. Consequently, their findings over- or understate Ireland's true performance as illustrated by the following examples derived from the CSO's review and covering the 27 EU states:

  • Ireland ranked second place in terms of purchasing power per person based on GDP but fell to fifth place based on GNI.
  • For capital investment, Ireland jumped from 16th place based on GDP to a much more favourable 8th position based on GNI.
  • Social protection expenditure based on GDP placed Ireland in 20th place. This improved to 15th based on GNI.
  • For public expenditure on education, Ireland ranked 15th based on GDP but rose to a commendable 7th place for GNI.
  • Ireland's ranking for public health expenditure jumped from 17th place when related to GDP to an above-average 11th place for GNI.

Surely, domestic and international studies should assess Ireland's performance based on GNI as well as GDP, even if only in footnotes. For example, the projected exchequer deficit for 2009 is 10.8 percent of GDP and extraordinarily high by international standards. If based on GNI, it rises to 12.7 percent and points to an even more serious position.

Letter published in the Sunday Business Post on 13th September 2009. The five examples were edited out for space reasons. 

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This page contains a single entry by Brian published on August 20, 2009 12:52 PM.

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