Vol. 530 No. 6
46 Mr. Callely asked the Minister for Finance the variance between GDP and GNP for 2000; the percentage increase in the difference between GNP and GDP in the past five years; and if he will make a statement on the matter. [4419/01]
GDP and GNP figures for 2000 are not yet available from the Central Statistics Office. According to the most recent national accounts data published by the Central Statistics Office, which relate to 1999, Gross Domestic Product is estimated to be £69,052 million compared with Gross National Product of £59,068 million, a difference of £9,984 million or 14.4 % of GDP. This compares with a gap of £4,684 million in 1995 which amounted to 11.3 % of GDP.
The figures for 1995-99 inclusive are set out in the following table.
Table 1: The difference between GDP and GNP 1995-1999.
|
Year |
GDP |
GNP |
Difference between GDP & GNP |
Difference between GDP & GNP |
|
£m |
£m |
£m |
(as % GDP) |
|
|
1999 |
£69,052 |
£59,068 |
£9,984 |
14.4% |
|
1998 |
£60,582 |
£53,193 |
£7,389 |
12.2% |
|
1997 |
£52,760 |
£46,428 |
£6,332 |
12.0% |
|
1996 |
£45,634 |
£40,487 |
£5,147 |
11.3% |
|
1995 |
£41,409 |
£36,725 |
£4,685 |
11.3% |
For 1999 most of this difference relates to the repatriated profits of multinational companies operating in Ireland. The foreign owned sector has made a significant contribution to the economy's transformation over the last 30 years and to the exceptional performance of recent years. According to the IDA's Annual Report for 2000, there were 1,200 overseas companies in Ireland directly employing more than 123,000 people.Adding to this total the indirect employment generated by these companies, it is clear that the foreign owned sector is a crucial sector of the economy. In addition, many of these companies are operating in high growth sectors where the potential exists for continued strong growth in output and employment.
Accordingly, the increase in the gap between GDP and GNP shows the success of Ireland's industrial policy in attracting foreign direct investment. Maintaining this successful policy is a key challenge over the medium term. As a small open economy, sustaining output and employment growth is dependent, inter alia, on our ability to attract FDI and remain competitive on international markets.
Is the Minister seriously saying that most of £10 billion, the difference between GNP and GDP, is one year's repatriated profits?
The bulk of the difference is repatriation of profits from multi-national companies.
What does the Minister mean by "bulk"– 70%?
I do not have the exact percentage but it is in excess of 50%. It depends on the definition of repatriated profits. It also includes royalty agreements and similar matters. They are all classified as repatriated profits, although there may be statistical differences between the headings. I can get the details for the Deputy.
Would the Minister agree that the increasing gap between GNP and GDP is of concern, particularly in the context of a slow down in the US economy? Will he consider measures beyond what has been done to encourage multinational corporations, particularly those based in the United States, not to repatriate profits to the extent that they do, by, for example, doing more research and development work here?
I would like to see a greater proportion of research and development work of all firms conducted here, especially multi-nationals. I would be more worried if the amount of repatriated profits was not substantial. The level of repatriated profits is a function of the level of foreign direct investment. Hence the higher the investment level, the higher the country's output and consequently an increase of repatriated profits.
I agree with the Minister. Anything to discourage investment by curtailing repatriation would be counterproductive. Has he checked how these figures impact on the balance of payments?
I do not have the information at hand but I am sure the CSO and other relevant institutions have done analysis on this. Some years ago a professor made a name for himself studying this phenomenon.
