Ireland’s position in a global ranking of economic competitiveness would have improved last year if a different economic growth metric had been used to benchmark the economy’s performance, the National Competitiveness and Productivity Council (NCPC) has said.
The Republic slipped two places to fourth in the Institute of Management Development (IMD) world Competitiveness Yearbook 2024, published last June.
At the time, the NCPC said the drop, which still saw the Republic placed in the top five for the second consecutive year, was largely down to a slowing down of economic growth as measured by gross domestic product (GDP).
However, issues with using GDP – the total value of goods and services produced within the economy – to measure performance have been well documented, due to the distorting impact of the multinational sector here.
Some economists instead use modified gross national income, otherwise known as GNI*, a measure of economic growth that seeks to strip out the impact of intellectual property values related to large multinationals anchored in the Republic.
In a statement on Thursday, the NCPC said if GNI* is substituted into the IMD’s world Competitiveness framework, the economy would have placed third in the global rankings rather than fourth.
The Republic’s economic performance score would also have improved as well as its infrastructure score.
The research highlights the need to interpret international rankings “critically”, said the NCPC.
“While international rankings are valuable tools, they must be used with care,” said Frances Ruane, economist and had NCPC chair.
“For Ireland, where GDP can significantly overstate economic capacity, GNI* offers a more appropriate lens for understanding our true performance.”
She said: “This research by the NCPC Secretariat helps support more informed, evidence-based policymaking, and will be used when evaluating all future releases of the IMD indicators.”
