Economics: Why is Ireland so extraordinarily wealthy? GDP PPP per capita Watch

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Melancholic Mill
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According to the data from IMF and World Bank 2015/2016, Ireland is considerably more wealthy (the living standards are much better) than in the UK, France or even Germany. It seems it is more comparable to countries like Norway or Switzerland.

https://en.wikipedia.org/wiki/List_o...PP)_per_capita

Just take a look at the data for GDP PPP per capita; in my opinion the best 'proxy' for the standard of living

I already know about the i) low population of Ireland ii) high US investment - transaction cost economics of US corporations like Yahoo or Twitter iii) the highly educated population.

But - giving the fact that it's around 60,000 USD GDP PPP per capita while the UK has only 38-42k USD GDP PPP per capita, is there anything else that I should know about the Irish economy?
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Melancholic Mill
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So why is Ireland so rich huh does anyone know
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Sternumator
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That is interesting and I don't know. I would have assumed it was lower than the UK.

I guess they never really had much heavy industry so they don't have urban areas where there is poverty decades after the industry left. Even Dublin is a small city by UK standards. May be they have been able to adapt better to the new economy because they didn't have those concentrated areas of unemployment that are found in UK towns and cities.
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markova21
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The Government doesn't have to spend billions on a health service. Everyone has private health insurance. You have to pay to have your weekly rubbish emptied. The cost of living is just scary. Social Welfare payments for unemployed people are about 200 Euros a week. Which sounds great, but the price of food and utilities is very high. They haven't experienced mass immigration like some countries have over the last 50 years or so. Ireland's population, compared to the UK , is tiny. There are huge swathes of areas where you will see 5 and 6 bedroom houses, standing on their own land. People build houses for themselves like this in Ireland. Also, the population is quite young. There are more young people than elderly. My son's 90 year old gran has been in a nursing home for the past 12 months. It is paid for by her private medical insurance that she paid her entire working life. Up here in Northern Ireland we call it Rip Off Republic. The cost of houses is eye watering, although I think they have come down in recent years. My dream if I won the Lottery would be to move to West Cork, which is spectacularly beautiful.
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username2965904
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Guinness
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TeeEff
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(Original post by Melancholic Mill)
According to the data from IMF and World Bank 2015/2016, Ireland is considerably more wealthy (the living standards are much better) than in the UK, France or even Germany. It seems it is more comparable to countries like Norway or Switzerland.

https://en.wikipedia.org/wiki/List_o...PP)_per_capita

Just take a look at the data for GDP PPP per capita; in my opinion the best 'proxy' for the standard of living

I already know about the i) low population of Ireland ii) high US investment - transaction cost economics of US corporations like Yahoo or Twitter iii) the highly educated population.

But - giving the fact that it's around 60,000 USD GDP PPP per capita while the UK has only 38-42k USD GDP PPP per capita, is there anything else that I should know about the Irish economy?
Before we look at this, it's important to note that in your post you have defined what you view as the best metric for measuring living standards. In doing so, you should be aware of the inherent debate regarding the most approapriate metric to measure living standards. The lack of a single definitive and internationally accepted proposal should imply that only looking at one metric isn't the best idea. Notably, GDP does not include distributional weighting so countries with high GDP PPP per capita like Qatar rank highly but is unlikely to be fully representative in reality, for the average person in that country (do you really think the huge amount of laborers there have living standards anywhere near $130k worth?).

Things like this will always be subjective but imo, it's best to take a look at a broader range of accepted metrics (HDI etc.) and use a composite-esque rating when looking at ranking countries for living standards. That way, a country which consistently ranks highly is far more likely to genuinely have high living standards.

Anyway, in the case of Ireland, the measurement of GDP is significantly distorted by the composition of the Irish economy, whose measurement is particularly volatile due to the corporate tax policy of the country, and how GDP is measured. If you took the numbers at face value, it's GDP grew by 26.3% in 2015 (FT, 2016) which is hilarious. If you actually dig into why the statistic is that way, you'll notice that it stems from multinationals domiciling their assets in Ireland (be it IP, planes to be leased to airlines and corporate tax inversions). As these capital assets are now "Irish", the numerator in the GDP PPP per Capita calculation balloons, even after how you adjust for cost of living, and when you combine it with Ireland's low population you have a high GDP PPP per Capita.

Does this actually reflect living standards in Ireland? Probably not. Those planes, corporations etc. don't really have anything to do with Ireland (little to no local employment for these assets, proportionally low level of tax paid so doesn't generate a lot of tax revenue for the government to spend on services etc.), Ireland is just where they're registered. Hence their GDP measurements are particularly quirky to the point of uselessness.
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ECON1228
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It turned out that the GDP figures were completely misleading and they now use Modified GNI as a metric.They are not as rich as they were and debt is 104% of *GNI.
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Good bloke
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(Original post by Melancholic Mill)
According to the data from IMF and World Bank 2015/2016, Ireland is considerably more wealthy (the living standards are much better) than in the UK, France or even Germany. It seems it is more comparable to countries like Norway or Switzerland.

https://en.wikipedia.org/wiki/List_o...PP)_per_capita

Just take a look at the data for GDP PPP per capita; in my opinion the best 'proxy' for the standard of living

I already know about the i) low population of Ireland ii) high US investment - transaction cost economics of US corporations like Yahoo or Twitter iii) the highly educated population.

But - giving the fact that it's around 60,000 USD GDP PPP per capita while the UK has only 38-42k USD GDP PPP per capita, is there anything else that I should know about the Irish economy?
No. This is Google's money, Amazon's money. It is in Ireland for a millisecond purely for tax purposes. It contributes just the (low level) of tax to the Irish economy, nothing more.
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Palz
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It is true that Ireland is extraordinarily wealthy. But it is not evenly distributed. The Eastern seaboard is the rich corridor for the most part.
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Palz
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It is not true that Dublin is small by UK standards.

It's greater metropolitan area population is approaching 2 million which would
comfortably sit within any top 10 list of UK biggest cities. If it was in the UK of
course.

Ireland's wealth stems from it's agriculture, pharma, textile and food industries
supplanted by a young highly educated workforce. It's favourable corporation tax
rate, time zone, English language and quality of life have collectively attracted
huge external investment from multinationals who choose Ireland for their world
headquarters. The list is long and very impressive.
From Apple to World Rugby just off the top of my head.
Google it.

This inward investment adds considerably to GDP PPP.

Ireland is probably going to get a lot richer post Brexit and will continue to be
much richer than the UK for a long time.

(Except Central London which is far and away richer than Ireland.)

The Irish financial services industry is well poised to take full advantage of
companies exiting the UK.
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itsanyday
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I think that it just is and they make there money by work
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adamfoley
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One of the factors some of the above comments are missing about Ireland is the ability of its people to move elsewhere when disaster strikes. Take 2008 for example - people who were unemployed or had little prospects in Ireland at the time moved abroad giving the country the massive benefit of not having to pay out costly benefits. The huge amount of Irish people living abroad that are skilled in multiple fields tend to drift back when the demand for those skills rises.

Irelands Macroeconomic policy seems to be to let the free market run away with itself. When it all goes t-up the employees of those heavy concentrated industries move elsewhere leading to sharper recoveries that other countries could manage. Other reasons are productivity. And specialisms such as the Pharma and tech industry.
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Eireannach
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Less than half the population of Ireland pay private health Insurance and that is optional ,there is a public health service which is rather good once one gets into the system ,there is a same day access to GP's unlike elsewhere ..Their social welfare system is superior and the people live pretty well.Pensions are 245 Euros a week plus benefits and unemployment benefit is 200Euros per week both are well supported by many extras..Yes they pay for bin collection and have property tax on private dwellings but they do not have a penal council tax to worry about..The ROI with a population of 4.7 million has left its neighbour Northern Ireland in its wake and its economy is 10 times that of NI with a population of 1.8 million .From your comment i deduce a large element of begrudgery.
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Jack F
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Please ignore this post. Northern Irish folk are a bit upset that they now rely on handouts from the UK for their income. The majority of workers are employed by the UK government and ther is very little wealth produced or value added. A sad situation where even the Republic of Ireland is not interested in unification
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Jack F
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(Original post by markova21) Please ignore this post. Northern Irish folk are a bit upset that they now rely on handouts from the UK for their income. The majority of workers are employed by the UK government and there is very little wealth produced or value added. A sad situation where even the Republic of Ireland is not interested in unification. The poster markova is sucking on sour grapes. Check out his/her leader Arlene Foster on Google images to see a face sucking sour grapes. Not pleasant as you will see.
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Eireannach
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What a sad comment ..No doubt you come from the begrudger side of N.Ireland and find it difficult to digest Ireland's.continued success.Your fact finding mission must have been extracted from the DUP,s Newsletter
Last edited by Eireannach; 10 months ago
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luke.houghton
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It's a tax haven. Ireland offers businesses some of the lowest tax rates in Europe if they choose to base themselves there. This brings in loads of revenue to the country, hence the very high GDP per capita.
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Eireannach
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According to the UK press Ireland is a legal tax haven ,so what?Did not the UK plunder booty and don't they launder Russian money .?
post by luke.houghton)
It's a tax haven. Ireland offers businesses some of the lowest tax rates in Europe if they choose to base themselves there. This brings in loads of revenue to the country, hence the very high GDP per capita.
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farmer2
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#19
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They should be wealthy.They still have the money from when they sold the north out.
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