Is Ireland Really the Wealthiest Country in the World?

this video is brought to you by brilliant if you look at a list of countries by GDP per capita Ireland ranks as one of the richest nations in the world according to the IMF for example in 2023 Ireland's GDP per capita is 145 000 the highest in the world and nearly triple that of the UK the World Bank puts it slightly lower at one hundred and six thousand dollars but that still puts Island in third place after just Luxembourg and Singapore and implies the Ireland is in per capita terms twice as wealthy as the UK If this wasn't impressive enough Ireland is also the fastest growing economy in the EU by quite some distance according to the World Bank Ireland's GDP grew by an astonishing 12.2 percent last year and Ireland's 3.5 growth in the final quarter of 2022 equivalent to an annual growth rate of about 15 single-handedly kept the Eurozone out of recession unsurprisingly these figures have provoked a bit of skepticism obviously Island's a lovely place but it doesn't exude wealth in the same way as say Luxembourg or Hong Kong and it's hard to believe it's the wealthiest country in the world so in this video we're going to have a look into Ireland's impressive Duty EP figures how Ireland has achieved such rapid economic growth and whether we can really trust the data [Music] before we start if you haven't already please consider subscribing and ringing the bell to stay in the loop and be notified when we release new videos to understand quite how impressive Ireland's GDP figures are we need to start with a bit of history for most of recent history Ireland's economic prospects were limited by population Decline and de-industrialization under British rule prior to the Great Famine of the 1840s there were roughly 8.2 million people living in Ireland but a combination of economic misery and mass emigration means its population has never returned to this level since from its independence in 1922 up until the 1960s Ireland went through a further period of economic stagnation marked by heavy emigration on average over 40 000 people left the country every year from 1946 to 1957 resulting in population decline to a record low of 2.8 million during that time the economy was highly protectionist with elevated tariff barriers and Ireland soon became one of the poorest countries in Western Europe there was a brief period of respite in the 1960s when the country began to shift away from a rural agrarian economy to a more service-based economy thanks to effective interventionist policies by the Irish government especially in infrastructure and higher education and a more open economy which allowed for trading relations with other European countries as well as the UK unfortunately Ireland like much of Europe was badly affected by the oil crisis of the 70s growth slowed and Ireland became beset by industrial strikes and political crises governments were constantly collapsing with power alternating between Fina fall and finagale and neither government was very good at managing the economy in the early 80s growth slowed to about 2 percent and Ireland became known as the sick man of Europe for example in 1985 Ireland's GDP per capita was about six thousand dollars in current USD compared to about nine thousand dollars in France Germany and the UK it was really in the 90s that Ireland became the economic miracle that we see today Island's GDP per capita began converging towards its European neighbors and accelerated in the late 90s from 1995 to 2000 Island's growth averaged 9.4 percent and in 2001 it had the highest GDP per capita in Western Europe earning it the nickname the Celtic tiger while there have been some occasional hiccups Ireland's rapid growth has basically continued and as we mentioned in the intro island is now Apparently one of the wealthiest countries in the world Island's economy was helped by its membership of the EU which has invested billions of dollars in Irish infrastructure and the Eurozone which prompted a credit boom in the 2000s however the main reason for Ireland's rapid GDP growth is its pro-business policies Islands open economy functioning legal system and super low cooperation tax rates have made it the tax Haven of choice for Western multinationals Ireland is the main base in Europe for U.S companies in particular from the I.T and pharmaceutical sectors in recent years Google meta Yahoo eBay and Amazon have all set up shop in Ireland to serve Europe unfortunately the presence of these multinationals distort Ireland's real wealth the main reason for this is how GDP is measured essentially GDP is meant to measure a country's productive capacity by summing four things government spending household consumption investment and the difference between exports and imports in practice more exports means higher GDP however GDP doesn't really distinguish between different types of exports to take advantage of Ireland's low corporation tax rate many multinational companies claim that most of their business takes the form of exports from the Irish subsidiaries the precise mechanism is a bit complex educated but the basic idea is that when say apple sells an iPhone it claims that most of the value comes from research and development operations in Ireland in other words despite the fact that an iPhone is designed in California and built in China when you buy one most of the money goes to Apple's Irish subsidiary this is why in 2018 the IMF calculated that a quarter of Ireland's growth was actually down to iPhone sales multinationals also inflate Island's investment rate because when they move money about between their various subsidiaries it counts as foreign direct investment even though it's actually just an accounting gimmick in 2019 the IMF estimated that 60 of Irish foreign direct investment was quote Phantom anyway this is why Ireland's former Central Banker Patrick Hanahan argues that we should ignore these two components of GDP when measuring Ireland's wealth and just focus on household consumption and spending by the government on public services by this measure Island ranks just slightly below the EU average below countries like Luxembourg or Denmark but above EU Nations like Spain Poland and Portugal obviously this is still impressive it means the island is a prosperous European country with stable institutions but it's definitely not the wealthiest country in the world all in all while its GDP might be overstated and Ireland is probably closer to New Zealand or Italy than to Switzerland or Norway it's still a prosperous European country which is really impressive given its economic history what do the world's best politicians have in common they're willing to learn some something new every day and if you think that sounds too hard or too time consuming or even just too overwhelming for you to do then you haven't tried brilliant.org brilliant.org is the best way to learn maths and computer science in a fun and interactive way that's because brilliant has 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Channel: TLDR News EU

Views: 233,292

Keywords:

Id: QDAa6ZQeEJ4

Length: 8min 17sec (497 seconds)

Published: Sat May 13 2023

Reddit Comments

[u/daenaethra]

"no"

[u/bayman81]

Gdp is a bullshit number. GNI* is the correct number.

Most organisations use whatever number suits their narrative though. When calculating wealth ngo’s use GNI*, when calculating welfare spending/GDP they use gdp. “Oh look we spend so little on welfare…”

[u/Sergiomach5]

Ah GDP. The leprechaun economics of measuring wealth here.

[u/WickerMan111]

Yup. Try it sometime.

[u/Theelfsmother]

Yeah just bought 8 Smithwicks for 17 euro.

[u/svmk1987]

No. Next question.