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Sources of Economic Growth

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The following section is an overview of the underlying trends in economic growth in Ireland over the period of 2000 to 2017. An analysis of the contributions to growth by principal economic sector, by Foreign sector and Domestic and Other sector, and by inputs, i.e. labour, capital and MFP is provided.

ManufacturingProfessional, Admin and Support ServicesInformation and Communication ConstructionRemaining sectorsDomestic and OtherForeignLabourCapital servicesMFP
Contributions by Sector2.261124238761030.7816105429586350.6632264958904430.05056428894329691.4669585347243900000
Contributions by Foreign and Domestic and Other000002.496330354392792.727153746885000
Contributions by Inputs00000000.4124059724436484.71858658835654-0.0490326059191074

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

Get the data: Statbank PIA04

Over the period to 2017, gross value added grew annually at an average of about 5.2%. A breakdown by sector indicates that 2.3% of GVA growth is accounted for by Manufacturing, which includes NACE sectors B-E. The second largest contributor to growth has been the Professional, Administrative and Support Services sector (M and N) contributing 0.8% to the GVA growth. Information and Communication (J) was third with a contribution of 0.7% to GVA growth and Construction was fourth making a 0.1% contribution to growth.  The Foreign sector which accounted for a large proportion of GVA growth increased by an average of 2.7%, while the Domestic and Other sector increased by an average of 2.5% in the period to 2017.  This publication also breaks down economic growth by inputs; capital input (measured as capital services) was responsible for almost all GVA growth during the period standing at 4.7%. This was followed by a small increase in labour input of 0.4%, while multi-factor productivity made practically no contribution to growth.

ManufacturingProfessional, Admin and Support ServicesInformation and Communication ConstructionRemaining SectorsDomestic and OtherForeignLabourCapital servicesMFP
Contributions by Sector0.7241801643404970.615982247187880.575867048586304-0.04587711870842921.598733601888200000
Contributions by Foreign and Domestic and Other000002.226574299354751.2423116439397000
Contributions by Inputs00000000.2509076557482922.969536651532220.26072854607254

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

Get the data: Statbank PIA04

Excluding the period with large globalisation events, the overall annual average growth in the economy for 2000 to 2014, falls to 3.5% from 5.2% for the entire period. The contribution of Manufacturing is also reduced standing at 0.7%. GVA growth in the Foreign sector fell to an annual average of 1.2%, while GVA growth in the Domestic and Other sector recorded a more modest fall in the period to 2014 of 2.2%. On the inputs side, there is a positive contribution of 0.3% to productivity growth by MFP and a reduced impact of 3% from capital services.

ManufacturingProfessional, Admin and Support ServicesInformation and Communication ConstructionRemaining sectorsDomestic and OtherForeignLabourCapital servicesMFPTotal
Sectors 2000-20081.020.560.50.252.08000004.46
Foreign and Domestic & Other 2000-2008000002.961.440004.46
Contribution by Inputs 2000-200800000001.23.86-0.584.46
.00000000000
Sectors 2009-20110.260.450.51-0.750.94000001.41
Foreign and Domestic & Other 2009-2011000000.560.850001.41
Contributions by Inputs 2009-20110000000-3.40.963.851.41
.00000000000
Sectors 2012-20140.40.950.780.120.45000002.7
Foreign and Domestic & Other 2012-2014000001.770.940002.7
Contributions by Inputs 2012-201400000000.962.32-0.572.7
.00000000000
Sectors 2015-201712.161.681.090.311.240000016.47
Foreign and Domestic & Other 2015-2017000003.7312.7400016.47
Contributions by Inputs 2015-201700000001.3516.66-1.616.47

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

Get the data: StatBank PIA04

To better understand the developments in productivity in the economy, the charts above present the seventeen-year period broken out by stages in the economic cycle. The first section covers the period of the ‘Celtic Tiger’ and includes the onset of the recession in 2008. The second part covers the downturn years of 2009-2011, and this is followed in 2012 - 2014 by the return to growth in the economy. The period of 2015 to 2017 is presented separately because of the extreme changes that occurred in 2015.

The period 2000 to 2008, prior to the recession, was characterised by sustained annual average economic growth of about 4.4%. This growth was concentrated in the Domestic and Other sectors, reflecting the importance of Construction, over the period. Capital services explain most of the improvements in productivity over the period growing at 3.8%, with labour playing only a small part.

Economic growth stood at 1.4% for the period 2009 to 2011. From a sectoral perspective, Manufacturing, Professional, Administrative and Support Services and the Construction sector contracted, while growth in the Remaining sectors was positive. Growth in the Domestic and Other sector grew at an annual average rate of 0.6%, while growth in the Foreign sector grew at an annual average rate of 0.8%. Capital services increased by an average of 0.9% over the period, with the fall in labour input offset by a fall in MFP.

The period from 2012 to 2014 saw positive annual average growth of 2.7%, driven by increased capital services. There was significant growth in both the Foreign sector and the Domestic and Other sector, while growth in the five sectors in the economy ranged from 0% to 1% in the two-year period.

The period 2015 to 2017 was dominated by a major increase in the industrial sector due to the relocation of large multinational companies to Ireland. From a productivity perspective, this was associated with a dramatic increase in capital services and a corresponding fall in multi-factor productivity. Growth of 12.1% was recorded in the Manufacturing sector, while growth of 1.6% was recorded in the Professional admin and support services sector over the three-year period.


1The Remaining sector includes all sectors not mentioned above.

Go to the next chapter: Labour Productivity - Sectoral Contributions