Funferal

Ireland’s growing wealth

This snippet gives an interesting overview of Ireland’s economic growth:

Ireland is set to become the world’s third-wealthiest nation. The Bank of Ireland has announced that its wealth per head of population overtook that of the US for the first time in 2004. In 1988 Ireland was one of the poorest countries in Europe. In that year America’s GDP per head was almost three times that of Ireland. Ireland’s economy boomed in the 1990s after a huge rise in foreign investment. (via Interworld Radio)

Without arguing with the overall point I’d like to raise some questions (which an initial search online didn’t answer). I wonder if the comparison takes account of PPPs – the falling value of the dollar would increase Ireland’s figure in dollars, which a PPP comparison would cancel out somewhat. Also, Ireland’s GDP is significantly higher than GNP (about 30% bigger), since such a high proportion of our industry is foreign owned, so we do much better in GDP comparisons than we do in GNP comparisons. Though it isn’t fully clear, it appears the new calculation may be based on GDP.
Finally, to use a GNP or GDP comparison to make conclusions about ‘wealth’ is to ignore the historical pattern of incomes, and to mix up income and wealth. This is not to deny that Ireland is much better off – and has benefited tremendously from inward investment, particularly from the EU’s various funds – but the historical lack of income meant that Ireland suffered from chronic under-investment. It is only recently, therefore, that we have been able to accumulate wealth in public facilities (most visibly in areas such as roads). While this area has been improviing, a GDP/GNP comparison cannot – and does not pretend to – compare underlying wealth.