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A NEW REPORT by the International Monetary Fund (IMF) suggests that iPhone exports accounted for a quarter of Ireland’s economic growth in 2017.
Last year, Ireland’s gross domestic product (GDP) rose by 7.8%. According to the IMF’s latest ‘World Economic Outlook’, exports of Apple’s smartphone accounted for about a quarter of that increase.
However, the IMF noted that the income generated from smartphone sales “does not fully contribute to the Irish economy”.
Apple iPhones aren’t exported from Ireland, but the company’s intellectual property (IP) is based here.
Bringing foreign companies’ IP to these shores “leaves domestic employment mostly unchanged,” the Washington DC-based fund said.
In 2015, the Central Statistics Office reported that Ireland’s GDP rose by more than 26%. Nobel laureate economist Paul Krugman famously branded the official statistic as ‘leprechaun economics’.
The data was skewed by a number of factors, many of which were likely due to the large presence of multinational companies in Ireland and the so-called ‘onshoring’ of firms’ IP in the Republic.
‘Tech cycle’
The IMF reported that smartphones are driving a new ‘tech cycle’ and contributed to about one-sixth of the estimated growth rate of global trade.
“This growth was driven mainly by an increase in value added per unit, rather than units sold, which declined for the first time on record,” the authors of the report said.
Ireland, Korea and Taiwan have been the main beneficiaries of this new tech cycle “in value-added terms”, the IMF said, referring to the process where companies make products appear more valuable through marketing and special features.
Last year, the average sale price of an iPhone increased from $618 to $798.
Some 1.5 billion smartphones were sold as of 2017, meaning one in five people on the planet owns one.
The IMF said that mobile technology and services were estimated to have contributed $3.6 trillion to global GDP last year – that’s equal to 4.5% of the world’s economic growth in 2017.
Written by Conor McMahon and posted on Fora.ie
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This another example of Leprechaun economics. A couple of years ago our GDP grew by 30% due to account adjustments when leased planes and aviation companies centered in Ireland.
GDP is fast becoming a laughing stock as an economic metric, and if it is not adjusted to track reality all people will continue to do is ignore it.
@ktsiwot: very true. 1/4 of GDP growth to a thing that isn’t even manufactured here. Something wrong here
@ktsiwot: As I recall, our EU contribution went up by a considerable margin on that occasion and there’s no reason for that not to be repeated. Since taxes on these transactions are minimal, the Irish people are directly subsidizing the operations of these multinationals and paying a hefty sum for the privilege.
@ktsiwot: I believe they were looking into alternatives for years, but when this anomaly appeared a couple of yrs ago there is now a definite push to come up with an alternative that would work globally.
@ktsiwot: It’s far more cynical than just Leprechaun economics, it’s three card trick tax avoidance/dodging Leprechaun economics.
@Charles Williams: They are paying a lot more tax in recent years. I think it was 400 million odd euro they paid in corporate tax to the state last year…way more any other company. I’d say the income tax paid by the 5000 staff is fairly significant too and all the spin off jobs created that service a big facility like that. Massively important for us, all things considered I would say.
That’s amazing given they’re not made here in any way, shape or form. Over reliance on prostituting ourselves to mncs instead of helping develop Irish industry is going to bite us in a jog way when they inevitably pull out.
@Seán C:Not really considering that all of the value is held here. The most valuable asset Apple have is knowledge in the form of IP, this is owned by Apple Ireland. It costs very little to manufacture an Iphone, but it costs a lot to hire the knowledge required for R&D of new products. Apple doesn’t sell hardware it sells knowledge.
@joe: not really Joe , holding the ‘value’ here is an accounting exercise for taxa management and has no impact on the economic growth for Ireland – the measure of economic growth is suppose to be just that ‘economic growth’ – it is leprechaun economics doing it this way , not to mention the double whammy that we agreed very low tax rates for apple – it is ridiculous to think of book value being ‘held here’ as influencing economic growth – that ‘value’ you talk about does not add to the growth – it is primarily to enable to the corporation to channel revenues earned in other jurisdictions to be counted for lower corporation taxes – the IMF should have done a better job on forcing changes to our outdated economic measurements by our bloated and outdated pen pushing economist civil servants .
@Dave Hammond: I agree its distorting things and that it’s having an impact on economic measures. However what i was saying is that it’s not amazing as the other poster said. All of Apple’s IP is held here.
It’s a simple reality today that in a modern economy there is little money in manufacturing, the real money is in The technology behind what’s being manufactured.
Apple employ 5,000+ highly skilled people in Ireland as a result. This is much bette than 5000 minimum wage manufacturing jobs and is the advantage for Ireland. Any profits should be taxed at 12.5%
@joe: that’s still distorting the facts , it’s not mutually exclusive that there are 5000 jobs here from apple thats great , but completely unrelated to economic growth data , that’s not what is making the economic output look 25% more than it should , the point is how the economic growth is measured and reported , it’s busy fool stuff trying to count iPhones as Irish export growth , the tax arrangement was not 12.5 % they paid less than 2% and that’s the subject of a legal case as I am sure you aware , I am not trying to slag off apple I am merely pointing out that Irish civil service are well paid large enough body who should be able to modernize and correctly report our economic performance instead of leprechaun economics that this stuff is.
@Seán C: They are not manufactured here but they all get shipped, boxed and sold through Apple’s Cork logistic HQ.
Our biggest seller is something we don’t make or sell. Some people still think Ireland is not a proxy tax haven for american companies to fleece Europe. Maybe trump could talk about those secret deals the Irish government has with only american companies.
The company is from the USA, they’re made in China, and we’re exporting them even though they never come to Europe never mind our Little Rock,
@Philip McLoughlin: is the software written here?
So the biggest growing economy in Europe is due to a company who we are using tax payers money to ensure they pay us no tax! Brilliant. And the suits in the FG/FF government will still trot out the same load of boll0x that they still know what’s best for us little people, and this will be swallowed by the forelock tugging morons who continuously vote for them.
With apologies to Descartes
“iPhone; therefore Ireland is”
Ireland is Apple’s best accessory.
@Michael Lang: We change our tax policies to placate them faster than their devices update.
@Fifty Shades of Sé: indeed and far more effectively so.
Our country is being run by a bunch of incompetent cowboys with their leprechaun economics and when the next crash comes, we’ll be the worst affected, and straight after again, we’ll have incompetent idiot FF and FG gombeen politicians like Pascal telling us anybody else would break the economy, and unfortunately, our gombeen voters are going to believe him!
@Adrian: and you’re solution to this is what? How exactly is this GDP anomaly going to play out in the next crash. What should we be doing better? Who should the Irish public vote for and how would that person resolve the global measurement tool?
@SPQH: well, if Ireland goes bankrupt and requires an IMF bailout and the vast majority of other countries don’t, I would have though the solution is obvious! All of Irelands problems are down to poor national governance by successive FF and FG led govs.
Paddy economics to placate the dumb paddies…
Anyone else picturing a leprechaun dancing to some diddle-de-aye music?
Are we on the hook for bigger donations to the EU again or is this classed as an exceptional item in the calculation?
Now we know what the i stands for in iPhone, iPad, iPad … Irish!
The govt really needs to make sure the underlying economy is diverse. 1/4 of our exports (real or virtual) should never be one product.
Statistics – leprechaun economics style……
it’s funny, not one single iPhone was manufactured here. But the government claims we’re not a tax haven? This is funny given this as well as the 13+ billion ruling against Apple for illegal state aid here.
That being said “don’t hate the player hate the game”, it’s EU laws and regulations that enable this legal tax evasion in the first place.
Most big multinationals would jump ship on Ireland in the morning if they could get cheaper corporate tax rates elsewhere in the EU. The IDA and government need to do more to encourage sustainable and indigenous industries and employment here. Things are changing rapidly on tax in the EU and we can no longer afford to rely solely on foreign direct investment.
Scary to think we are so dependent on the company who could leave in a whisper, any news on that little tax owed to the state, I wonder?
have your say