Net Exports Create Growth and Jobs, Not Exports

The NYT had a good piece on Ireland's effort to get back on a solid growth path. At one point it refers to a 5.4 percent rise in exports as an encouraging sign:

"driven by gains from Pfizer, Intel, SAP and other multinational companies that were drawn to Ireland in the 1990s and 2000s by its low taxes, well-educated English-speaking work force and access to the European market."

Actually, this picture is less clear. Many of the exports associated with these companies are likely to be associated with increased imports as well. For example, if Intel is exporting more microprocessors assembled in Ireland it is also importing more components. The net gain to Ireland's economy might be very small since most of the value added may take place elsewhere.

GNP vs GDP
written by Mark in CA, December 06, 2011 9:35 AM

Krugman makes another point about GDP versus GNP, which is what most Irish people feel: http://goo.gl/trCC6. "Ireland, you see, is a country with an extraordinary amount of foreign-owned capital; this means that gross national product, the income of Irish residents, is substantially smaller than gross domestic product, the income generated in the country. We normally focus on GDP, because it’s easier to measure accurately, but in Ireland’s case this can be misleading — because the gap between GDP and GNP has been widening."

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written by Rob, December 06, 2011 7:03 PM

The figure on its deficit reduction from over 30% to 10% is very misleading. The latter figure is accounted for by bank bailouts. The primary deficit has not moved much in the last couple few years. http://www.irishleftreview.org...cil-story/

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written by Rob, December 06, 2011 7:06 PM

Sorry, meant to say former figure. That is, the 30%+ deficit referred to in the NYT was due to bank recaps.

Net Exports Create Growth and Jobs, Not Exports

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