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Productivity and Income Per Capita Convergence in a Peripheral European Economy: The Irish Experience

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Author Info
J. E. Birnie, D. M. W. N. Hitchens
Abstract

BIRNIE J. E. and HITCHENS D. M. W. N. (1998) Productivity and income per capita convergence in a peripheral European economy: the Irish experience, Reg. Studies 32, 223-234. GDP per capita in Ireland increased from 60% to 90% of the UK average during 1986-95. This extremely rapid convergence begs the question whether increases in comparative productivity were of a similar magnitude. Industry of origin comparisons were used to benchmark Ireland/UK labour productivity in 1935, 1968 and 1985. Dramatic improvement in manufacturing comparative productivity was the immediate explanation of much of the convergence in GDP per capital levels. Unadjusted manufacturing productivity in the mid 1990s was as high as that in the US. This was prima facie evidence of transfer pricing. The likely scale of distortion created by transfer pricing is discussed and hence the extent of exaggeration of GDP.An agenda for further research was suggested. BIRNIE J. E. et HITCHENS D. M. W. N. (1998) La convergence de la productivité et du revenu par tête dans une région européenne périphérique: le cas d'étude de l'Irlande, Reg. Studies 32, 223-234. Le PIB par tête en Irlande a augmenté de 60% jusqu'à 90% de la moyenne au Royaume-Uni entre 1986 et 1995. Cette convergence vertigineuse remet en question la comparabilité des taux de productivité. On s'est servi des comparaisons des industries d'origine afin de tester la productivité de la main-d'oeuvre en Irlande par rapport à celle au Royaume-Uni en 1935, 1968 et 1985. Il s'est avéré qu'une amélioration marquée de la productivité industrielle comparative a expliquédans une large mesure la convergence des niveaux du PIB par tête. Au milieu des années 1990, la productivité industrielle nonajustée était aussi élevée qu'elle ne l'était aux E-U, ce qui indiquait à première vue des preuves des prix de transfert. L'importance de la distorsion éventuelle à cause des prix de transfert se voit discuter et, par la suite, le gonflement du PIB se voient discuter. Des sujets à rechercher sont proposés. BIRNIE J. E. und HITCHENS D. M. W.N. (1998) Konvergenz von Produktivität und Pro-Kopf-Einkommen in einer Randgebietswirtschaft Europas: das Beispiel Irlands, Reg. Studies 32, 223-234. Im Zeitraum 1986-95 stieg in Irland das Bruttoinlandsprodukt von 60% auf 90% des Durchschnitts im Vereinigten Königreich. Diese außerordentlich schnelle Annäherung weicht der Frage aus, ob Anstiege vergleichbarer Produktivität ähnlicher Größenordnung waren. Vergleiche der Herkunftsindustrien wurden dazu benutzt, die Höhe der Arbeitsleistung Irlands und des Vereinigten Königreichs in den Jahren 1935, 1968 und 1985 festzustellen. Die Konvergenz der Höhen des Bruttoinlandsprodukts wurde zunächst größtenteils durch die dramatische Verbesserung der vergleichbaren Herstellungsleistung erklärt. Unbereinigte Herstellungsleistung in der Mitte der neunziger Jahre war ebenso hoch wie in den USA. Sie war Anscheinsbeweis der Festlegung der Verrechnungspreise. Es wird der Umfang der durch Festlegung der Verrechnungspreise geschaffenen Verzerrung besprochen, und damit das Ausmaß der Übertreibung des Bruttoinlandsprodukts. Es wurden eine Reihe Vorschläge für weitere Forschungsaufgaben vogelegt.

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Article provided by Taylor and Francis Journals in its journal Regional Studies.

Volume (Year): 32 (1998)
Issue (Month): 3 (May)
Pages: 223-234
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Handle: RePEc:taf:regstd:v:32:y:1998:i:3:p:223-234

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Keywords: Productivity Income Per Capita Manufacturing Transfer Pricing Ireland Uk;

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. van Ark, Bart, 1990. "Comparative Levels of Manufacturing Productivity in Postwar Europe: Measurement and Comparisons," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 52(4), pages 343-74, Special I.
  2. Muellbauer, John, 1991. "Productivity and Competitiveness," Oxford Review of Economic Policy, Oxford University Press, vol. 7(3), pages 99-117, Autumn.
  3. D. M. W. Hitchens & J. Birnie, 1989. "Productivity Levels in Northern Ireland Manufacturing Industry: A Comparison with Great Britain," Regional Studies, Taylor and Francis Journals, vol. 23(5), pages 447-454, October. [Downloadable!] (restricted)
  4. Mankiw, N Gregory & Romer, David & Weil, David N, 1992. "A Contribution to the Empirics of Economic Growth," The Quarterly Journal of Economics, MIT Press, vol. 107(2), pages 407-37, May. [Downloadable!] (restricted)
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  5. Broadberry, Stephen N, 1992. "Manufacturing and the Convergence Hypothesis: What the Long Run Data Show," CEPR Discussion Papers 708, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Pedro Lains, 2006. "Growth in the ‘Cohesion Countries’: the Irish tortoise and the Portuguese hare, 1979-2002," Working Papers de Economia (Economics Working Papers) 37, Departamento de Economia, Gestão e Engenharia Industrial, Universidade de Aveiro. [Downloadable!]
  2. James H. Love & Stephen Roper & Jun Du, 2007. "Innovation, Ownership and Profitability," DRUID Working Papers 07-10, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies. [Downloadable!]
    Other versions:
  3. Pedro Lains, 2008. "The Portuguese Economy in the Irish Mirror, 1960–2004," Open Economies Review, Springer, vol. 19(5), pages 667-683, November. [Downloadable!] (restricted)
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