Sheila Killian: In the Central Bank’s most recent Quarterly Bulletin, released today, Mary Everett does a good analysis of the impact of multinational investment in Ireland. It includes a really useful discussion of the difficulties in extricating the real underlying economic activity from the tax-based money-moving of multinational firms. There’s a particular focus on the Shire effect – the way some multinational firms moved their headquarters here in order to avoid adverse taxes elsewhere.
Everett notes that:
“While these types of companies have large balance sheets, their contribution to the local economy in terms of employment tends to be limited.”
While it’s well worth reading in full, one highlight to ponder is the depressing statistic that 15% of inward direct investment and 21% of outward direct investment moves between Ireland and Bermuda. Hardly a traditional trading partner, this is a strong indication of the sort of aggressive tax planning outlined here, and indicates that for all serious purposes, our GDP is a far less realistic measure of real economic activity than GNP.