Productivity in Ireland 2016

Source publication: Estimates of the Capital Stock of Fixed Assets

Get the data: StatBank CSA02, StatBank PIA01

There have been substantial increases in the quantity of capital in use in the economy since 2000. One way of understanding these increases is in terms of capital stocks per employee. Ireland’s capital stock per employee has increased from 150 thousand euro per employee to 378 thousand per employee between 2000 and 2016, an increase of 152 percent.

Source publication: Estimates of the Capital Stock of Fixed Assets

Get the data: StatBank CSA02, StatBank PIA01, Eurostat (capital stocks), Eurostat (employment)

Ireland had a level of capital stocks per employee below many of its EU peers in 2000. However by 2016 as a result of significant capital deepening, capital intensity of labour had grown at a much faster rate than many other European countries and the value of capital stocks per employee is now one of the highest in Europe.

Source publication: Estimates of the Capital Stock of Fixed Assets

Get the data: StatBank CSA02, Eurostat

The charts above and below compares Ireland’s cumulative growth in capital stocks to other EU countries. From 2000 to 2014, the rate of increase in capital stocks in Ireland for both the Foreign sector and the Domestic and Other sector was higher than for any other country in the EU for which data are available.

Get the data: StatBank CSA02, Eurostat

The dramatic growth in Ireland’s capital stock in 2015, associated with the level shift in GVA in the same year, puts overall capital stock growth significantly ahead of all other EU countries over the period 2000 to 2016, for which data are available.

Get the data: StatBank CSA02, StatBank PIA01

Capital services measure the productive use of capital. The volume index of capital services estimates the flow of capital services derived from all the capital assets in the economy. The main difference between the flow of capital services and the growth of capital stocks is the way in which different types and ages of assets are aggregated together. Capital services tend to grow at a faster rate than capital stocks. This can be understood from the intuition that a capital asset’s value will decline more quickly than its overall usefulness. Capital services are composed of the value of capital stocks weighted by the user cost for each asset. The user cost for each asset is based on the allocation of capital compensation in each asset’s sector. More information on calculating capital services can be found in the appendix.

Source publication: Estimates of the Capital Stock of Fixed Assets

Get the data: StatBank CSA02, StatBank PIA01

The above chart includes growth in capital stocks in 2015 and 2016. The flow of capital services in 2015 was much greater than the growth in capital stocks.

Get the data: StatBank PIA01

Here we see that capital services grew at six percent or more during the years 2000 to 2007. These large increases were mainly driven by increases in the capital stock of dwellings and other buildings, during the boom period. Capital services growth was positive but lower from 2008 to 2013. Capital services growth returned to a similar growth rate in 2014 as during the 2000 to 2007 period. Nevertheless, there have been significant increases across almost all assets categories over the entire period, for example, there are additions to transport equipment in every year reflecting the increased aircraft leasing activities in Ireland.

Source publication: Estimates of the Capital Stock of Fixed Assets

Get the data: StatBank PIA01

Capital services growth since 2000 is dominated by the extraordinary increase in capital in 2015 associated with international corporate relocations and greatly increased contract manufacturing activities.