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Is Ireland the most Intangible Intensive Economy in Europe? A Growth Accounting Perspective

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  • Kostarakos, Ilias
  • McQuinn, Kieran
  • Varthalitis, Petros

Abstract

Assessing the contribution of intangible investment to growth is a challenging and complex task for any country. However, it has become increasingly difficult to determine both the exact magnitude of economic performance and its composition in the case of the Irish economy. This is mainly due to the impact of certain distortionary transactions by a select number of multinationals operating in the Irish jurisdiction. In this paper, we address this issue by assessing, in a detailed manner, the contribution of intangible and tangible assets to the Irish growth story. We control for distortions in the official investment data series while also incorporating intangible assets that are not currently included in the National Accounts. Our results show that the observed unprecedented increase in the official intangible investment has a relatively minor contribution to the actual Irish labor productivity growth. Once the distortions are filtered out, Irish labor productivity growth is driven by tangible capital. More interestingly, non‐national accounts intangible capital has a sizeable pro‐cyclical impact on labor productivity growth.
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  • Kostarakos, Ilias & McQuinn, Kieran & Varthalitis, Petros, 2022. "Is Ireland the most Intangible Intensive Economy in Europe? A Growth Accounting Perspective," Papers WP719, Economic and Social Research Institute (ESRI).
    • Handle: RePEc:esr:wpaper:wp719
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