Source publication:  National Income and Expenditure 2017 Tables 1-22 and Annex 1 for 1995-2017 (XLS 393KB)

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The above figure decomposes annual GVA growth into capital services, labour input and multi-factor productivity. GVA growth from 2000 to 2007 was mainly driven by capital services. In 2008, the first year of the recession, there were falls in multi-factor productivity, a common initial occurrence in recessions. The second year of recession, 2009, was associated with labour input falling more than GVA, linked to large falls in hours worked in that year. In the same year, capital services and multi-factor productivity increased slightly. The economy returned to growth in 2010 and 2011 but labour input continued to decline, resulting in increases in multi-factor productivity during these years. GVA growth remained stable in the year 2012 and 2013, before increasing significantly in 2015. This large increase was due to a level shift in activity driven by multinational activity, as previously discussed. A more stable level of growth was observed in 2016.

Source publication:  National Income and Expenditure 2017 Tables 1-22 and Annex 1 for 1995-2017 (XLS 393KB) , Gross Value Added for Foreign-owned Multinational Enterprises and Other Sectors Annual Results

The chart above shows real GVA growth split into sectors dominated by Foreign-owned and Domestic and Other sectors. Irish economic growth from 2000 to 2007 occurred predominantly in the Domestic and Other sector. Negative growth of -2% and -7% was reported in the Domestic and Other sector in both 2008 and 2009. Growth of 1% was recorded in both sectors in 2010, while no growth occurred in Foreign dominated sector in 2011. The latter years, particularly since 2014, have seen GVA growth in the Foreign Sector rising to 3% in 2014 and jumping to 22% in 2015. GVA growth in 2017 has returned to more modest levels with growth of 3% reported in the Domestic and Other sector and growth of 4% in the Foreign dominated sector.

*See Glossary of Terms or the Appendix for more information on the Foreign-owned Multinational Enterprise dominated sectors.

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In the figure above, the Domestic and Other sector of the economy is decomposed by factor inputs. The high rates of growth in the Domestic and Other sector from 2000 to 2007 have been driven mainly by capital services. Increases in labour inputs of between 0.5% and 3% are also observed. Labour contributed negatively to GVA growth from 2009 to 2012 with overall compensation of employees declining due to falling labour hours and job losses. The growth in the Domestic and Other sector from 2013 to 2015 has seen positive contributions from capital services, and labour input. GVA growth has moderated in the Domestic and Other sector from 2015 onwards, reaching 4.3% growth in 2017. The reduced levels can be attributed to the falling contribution from capital services. 

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Growth in the Foreign dominated sector of the Irish economy up to 2014 has come almost entirely from capital services and multi-factor productivity. Gross value added in the Irish economy has grown at a much greater rate in the Foreign dominated sector than the Domestic and Other sector and has followed a different cyclical pattern. The Foreign dominated sector of the Irish economy experienced a recession in 2003 due to the dot-com bubble. This was associated with falling multi-factor productivity and, to a much lesser extent, falling labour input. The Foreign dominated sector also experienced negative growth in 2008 because of the global financial crisis and a third instance of negative growth in 2013, which was preceded by low growth in 2012. 

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The chart above shows the sources of GVA growth in the Foreign dominated sector with the years 2015, 2016 and 2017 included. The 2015 growth rate is mostly due to significant corporate relocations of entire balance sheets dominated by intellectual property products by Foreign owned multinationals. Significant exports involving contract manufacturing abroad drove the very strong GVA results for 2015. This surge in growth is presented in the chart above in the form of a significant increase in capital services and a related fall in multi-factor productivity. In 2017, GVA growth of 10% is explained by the increase in MFP. 

Source publication: National Income and Expenditure 2017 Tables 1-22 and Annex 1 for 1995-2017 (XLS 393KB)

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The above figure highlights Ireland’s position in real GVA growth terms relative to its European counterparts. Looking at the Foreign dominated sector in the Irish economy, average growth in real GVA stood at 9.7% over the period 2000-2017. This large growth in real GVA places Ireland at the top of the distribution. This is due to the large influx of activities relating to contract manufacturing and aircraft leasing. Real GVA growth for Ireland as a whole is also at a relatively high position in the distribution falling just behind the Foreign sector, with at an annual average growth rate of 5.1%. The Domestic and other sector in the Irish economy also performs relatively well recording an annual average growth rate of 3.5%. This result places the Domestic and Other sector 10^th in the distribution just behind countries such as Bulgaria, Poland, Latvia and Estonia, among others. 

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The above chart shows Ireland’s MFP position relative to its European partners over the period 2000 to 2014. The Irish economy had a relatively strong performance when compared to its European counterparts, showing cumulative growth of 1.91% over the entire period behind the Czech Republic, Finland, Germany, the UK and Austria, among others. The Foreign sector in the Irish economy shows a strong performance relative to the other EU countries shown. The Foreign sector posted cumulative growth of 5.22% in the period up to 2014, resulting in a position at the top of the distribution. The Domestic and Other sector of the economy recorded a cumulative growth rate of 0.84% in the period to 2014, resulting in a position of 8^th in the distribution. Denmark, Italy and France recorded negative MFP cumulative growth rates in the period to 2014.

*It is important to note the negative MFP result associated with globalisation related events amounts to -12% in 2015 for the Irish economy as a whole and to -65% for the Foreign sector in the Irish economy in 2015.

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Looking at the average annual growth over the period 2000 to 2014, Professional, Admin and Support services experienced the largest average annual growth within the period, followed by Information and Communication. Most of the growth was again attributable to capital services. Public Admin and Defence also experienced the largest growth in labour input at 2% over the period, while sectors related to Manufacturing and the Construction sector suffered large falls in labour input over the period up to 2014. Growth of 1% was recorded in the Agriculture, Forestry and Fishing sector. The Construction sector was the only sector to record negative average annual growth of -1%, mainly driven by the negative contribution from labour.

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There has been considerable variation in average GVA growth by sector over the period 2000 to 2017. Manufacturing, Professional and Technical activities experienced the largest average annual growth in GVA over the period and much of this growth was driven by capital services. In the case of Manufacturing, labour input contributed negatively to GVA growth overall. Public Admin and Defence saw the largest increase in growth from labour input, while the Construction sector saw the largest fall in labour input. The latest productivity growth results indicate that GVA growth returned to pre-2015 levels in 2016 and 2017 for industries such as Manufacturing, Information and Communication and Professional Administration and Defence. In 2017, the Manufacturing sector had growth in GVA of 8%, Information and Communication growth of 15% and Professional services growing by 11%.

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The above chart shows the breakdown of GVA in the Information and Communications sector by factor inputs. The steady increase in growth during the period 2000 to 2002 was mainly driven by capital services. In 2003, with the onset of the dot-com bust, a significant fall was evident in MFP and labour input for the sector. Growth in GVA recovered until 2007, mainly driven by MFP and capital, with labour input only making a small contribution over the period. The onset of the international recession in 2008 led to a decline in growth until 2011.The slightly negative growth in 2012 was mainly driven by the fall in MFP. The recovery in GVA growth from 2012 up to 2015 is explained primarily by large increases in capital services. The fall in GVA growth in 2016 was mainly because of the fall in MFP, while in 2017, GVA growth recovered driven by the positive contribution from MFP.

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The figure above shows GVA in the Wholesale and Retail sector broken down by factor inputs over the period 2000 to 2017. GVA growth fell in 2001 and a fall in MFP is observed. Labour input was negligible in 2002 and 2003, before increasing in 2004 and 2005 with GVA growth. In line with the increased spending in the economy, higher levels of growth in 2006 and 2007 occurred. In this sector the impact of the crisis was most keenly felt with GVA growth falling by 5% in 2008 and by 13% in 2009. These large declines in GVA were due to falling demand for retail services but also back up the supply chain to falling Wholesale demand. Consequently, as labour was laid off we observe falling labour input and MFP. The sector returned to growth in 2013 and there have been consistent positive levels of growth from 2013 to 2015, explained by increased levels of MFP and capital services. By 2017 GVA growth had fallen, falling to -0.4% in 2017 associated with increased capital services and negative MFP.

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The figure above shows GVA in the Market sector broken down by factor inputs over the period 2000 to 2014. The Market sector is an aggregate sector which encompasses all market activity in the economy. The sector includes all NACE sectors excluding Real Estate, Public Administration, Education and Human Health (see glossary for more details). In general, GVA growth followed a downward trajectory from 2000 to 2003, driven by the decline in labour input. From 2003 until 2006, GVA growth recovered in line with increased capital services. With the onset of the recession in 2007, GVA growth fell to -8% in 2009 driven mainly by falling labour input. Between 2011 and 2012 another decline occurred in GVA growth, associated primarily with falling MFP. The market sector recovered thereafter, driven by increased levels of capital services up until 2014.