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Home Publications Blogs Beat the Press Was the Irish Recovery Driven by Drugs?

Was the Irish Recovery Driven by Drugs?

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Friday, 14 March 2014 07:22

Apparently it was in large part, according to this WSJ article. The piece tells readers that Ireland's economy shrank by 2.3 percent from the third to the fourth quarter, meaning that it dropped at a 9.2 percent annual rate, to use the normal terminology of people in the United States when talking about growth data. However the article later tells us that the story is not as bad as it first appears, since much of this decline is due to a major drug going off patent, which has reduced the income flows recorded in Ireland.

Due to its low corporate tax rate, many multinational companies book income in Ireland even though it was actually generated elsewhere. These phantom income flows have little to do with the state of the Irish economy. To avoid this problem it is more useful to look at gross national income. If we look at the OECD data on Irish national income we find that the number for 2012 (the most recent year available) was still 8.6 percent below the 2008 level. In fact, it was 2.3 percent below the 2005 level. Obviously Ireland is yet another one of those great success stories from the economic whizzes at the European Commission.  

Comments (3)Add Comment
..., Low-rated comment [Show]
comparing today to bubble levels is just wrong., Low-rated comment [Show]
That's right, pete
written by A Jones, March 14, 2014 5:14
Use only the data that fits your theory and exclude the rest. Good luck with that!

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.

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