Ireland Pays Out More Income Abroad Than It Receives, a Net 28.6% of GDP

The difference between producing and receiving

Gross domestic product measures what is produced inside a country. Gross national income measures what its residents actually receive. The primary income balance is the bridge between them: profits, dividends, interest and wages flowing in, minus the same flowing out.

A negative balance means output produced in a country accrues to owners somewhere else.

Ireland

Ireland records -28.6% of GDP. On the net balance, close to three tenths of everything produced in Ireland accrues to owners abroad; the series publishes the difference between what flows out and what flows in, not the outflow alone. Only Luxembourg, at -29.3%, is higher, and the two have swapped places on this measure with the latest revision.

This is the mechanism behind an observation that recurs across this site. Irish real GDP per capita is the second-highest in the Union at 94,930 euro, measured at 2020 prices. Irish manufacturing is 30.8% of value added, the highest in the Union. Irish regions held first and third place in the European regional GDP ranking in 2023.

Every one of those figures is inflated by the output of foreign-owned firms, and this indicator measures the size of the inflation directly. Irish national income is very substantially lower than Irish domestic product, and the difference is 28.6 percentage points of GDP.

Where other studies on this site flag the Irish distortion as a caveat, this one quantifies it.

Luxembourg, Cyprus and Malta

Luxembourg records -29.3%, Cyprus -15.0% and Malta -11.7%.

All three host financial and corporate structures large relative to their domestic economies, and the income generated by those structures is paid out to non-residents. It does not follow that the three look alike on every measure: Luxembourg has the Union's highest GDP per capita, while Cyprus and Malta both sit close to the middle of the Union on it.

The recipients

Sweden records +4.8%, Germany +3.5%, Denmark +2.5% and France +1.7%.

The first three are net creditor economies: Denmark's net international investment position is 97.8% of GDP, Germany's 80.8% and Sweden's 59.7%, as the net investment position study records, and those assets pay a return that flows home. France is not one of them — its position is -29.6% of GDP — so its surplus on this measure is not the return on an accumulated creditor position, and this study does not establish what it is.

For those three, a positive primary income balance is what an accumulated creditor position looks like as an annual flow: income received for past saving rather than for current production. France shows that the reverse does not follow, and that a positive balance is not proof of such a position.

Why eighteen Member States are negative

Most EU economies are net debtors to the rest of the world, and a net debtor usually pays out more income than it receives. That is the ordinary case, and the amounts are mostly small: of the eighteen, seven are no worse than minus two per cent of GDP and fourteen stay above minus seven. Eight Member States are on the receiving side, and Italy sits on the line: its balance rounds to exactly zero, so it is counted on neither side.

What makes the extremes remarkable is scale rather than sign. A balance of -29% is not a more negative version of the ordinary case; it is a different phenomenon, produced by foreign-owned production booked in a small economy rather than by accumulated borrowing.

The two look identical in this statistic and mean entirely different things, which is why the indicator should be read alongside the net investment position rather than on its own.