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Income Flows

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Income Flows to and from the US

Income Balance
2012-3.323963284
2013-0.631112744
2014-0.114008611
20151.010648051
20161.967503749
2017-6.834555677
2018-6.585910454

Source publication: Foreign Direct Investment 2018

Figure 4.1 shows a sharp decrease in the income balance between Ireland and the US after 2016, which has taken Ireland into a negative income balance with the US. An income surplus in years 2015 and 2016 was followed by an income deficit in years 2017 and 2018. Ireland's income balance with the US increased from a deficit of €3.3bn in 2012 and peaked with a surplus of €2.0bn in 2016. From 2016 the income balance declined significantly to a deficit of €6.8bn in 2017 and increased by €0.2bn to a deficit of €6.6bn in 2018.

Table 4.1 Ireland's Total Income Inflows, Income Outflows and Income Balance with the US, 2012-2018€ billion
 Income InflowsIncome OutflowsIncome Balance
201213.216.5-3.3
201312.713.3-0.6
201413.914.0-0.1
201516.015.01.0
201617.215.32.0
201719.125.9-6.8
201819.626.2-6.6
Direct Investment IncomePortfolio Investment IncomeOther Investment Income
2012-2.290264589-1.2594329570.125455749
2013-1.7144754640.4920819960.485481219
2014-1.8104365331.980718777-0.391550223
20151.305769840.317732526-0.729340794
2016-0.1674285341.5298241230.487697395
2017-8.4788009941.1266240910.340053679
2018-11.2657694492.6080233591.887776143

Source publication: Foreign Direct Investment 2018

This large decrease in the income balance with the US was mainly driven by large increases in the outflows of direct investment income to the US as seen in Figure 4.2 above. In the years examined in this information note, 2015 was the only year which showed a positive direct investment income balance with the US. From 2016 to 2018 the balance followed a negative trend which was mainly due to an increase in multinational corporations sending income back to the US. Large direct investment income outflows in both 2017 (€9.6bn) and 2018 (€9.9bn) produced negative direct investment income balances with the US of -€8.5bn and -€11.3bn respectively.

Direct Investment Income

Direct Investment Income Outflowsof which: Reinvested Earnings
20125.7737447343.8627436
20134.8251005292.066827483
20145.160599254.000050862
20152.5681982761.499166392
20162.4820287051.09427486
20179.6009223058.165185668
20189.9149742855.377253445

Source publication: Foreign Direct Investment 2018

Get the data: StatBank (BPA37)

Figure 4.3 shows the main components of outflows of direct investment income into the US. Outflows of direct investment income were at their lowest value in 2016 at €2.5bn which is followed by a sharp increase in outflows of income in 2017 and 2018. This sharp increase in outflows was mainly driven by increases in outflows of reinvested earnings (from multinational corporations affiliated with pharmaceutical production) back to the US. Outflows of reinvested earnings were €8.2bn in 2017, up €7.1bn from 2016, and stood at €5.4bn in 2018.

Source publication: Foreign Direct Investment 2018

Get the data: StatBank (BPA37)

Figure 4.4 above breaks down outflows of direct investment on a global scale. In 2018, only 13% of income outflows from direct investment in Ireland were returned to the US by multinational corporations, while most income outflows were returned to European countries. Income outflows to Luxembourg, the Netherlands and UK were 16.2%, 10.3% and 5.2% respectively while outflows to Switzerland were 15%. By convention, profits are distributed to the location of the immediate direct investor, however much of Ireland’s ultimate investment from the US comes through intermediary countries such as Luxembourg and the Netherlands. This may explain the small share of profits going directly to the US.

A more detailed account of the impact of foreign direct investment in Ireland can be found in the Foreign Direct Investment in Ireland 2017 publication.

Inflows of Portfolio Investment Income

2018
Switzerland14.9560993349958
US12.8779613466334
UK5.17846009975062
Luxembourg16.1692123857024
Netherlands10.3127597672485
Rest of
World
40.5055070656692
InflowsOutflowsNet Portfolio Investment Income
20127.0915560938.35098905-1.259432957
20137.2755754786.7834934820.492081996
20148.427910756.4471919731.980718777
20159.7192647019.4015321750.317732526
201611.57878503110.0489609081.529824123
201714.26146162213.1348375311.126624091
201816.31394931913.705925962.608023359

While income from direct investment recorded a large negative balance in 2017 and 2018, the net portfolio investment income balance between Ireland and the US recorded a peak value in 2018 at €2.6bn as income inflows from portfolio investment in the US have grown constantly since 2012, as seen in Figure 4.5. Income inflows from portfolio investment were the largest component of primary income inflows in 2018 at a value of €16.3bn. Portfolio investment income inflows made up 85% of total primary income inflows from the US in 2018. Portfolio investment income inflows consisted of income earned from Irish funds investing in US short-term money market instruments and long-term US bonds, with returns from these instruments increasing by €2.1bn after 2017 as Irish entities earn higher returns from well performing US money markets. 


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