Intellectual property (IP) helped increase Ireland’s GDP by 26.3% in 2014, as the Organization for Economic Co-operation and Development (OECD) detailed in a 2016 article, citing a report of the same year by the Irish Central Statistics Office.
More multinational companies moved to Ireland
As the OECD explained, high GDP growth rates occurred in Ireland due to low corporate tax rates, which in turn led to the relocation to Ireland – of the economic activities (more specifically, the IP) — of a large number of multinational corporations. As a result, sales (production) generated by that IP created a substantial corresponding boost to the country’s GDP.
These figures gained much attention at the time in international media. They also raised the question of whether the conceptual accounting framework used to define GDP is reflective of reality, when that IP can be located anywhere.
GDP measurement a combination of multiple factors
The OECD argues that while the relocation of production and value added to countries within multinational enterprises may have significant upward impact on local GDP growth – these figures do not reflect a complete picture of material well-being above and beyond economic growth alone. Notably, however, in the case of Ireland in 2015, had the IP assets been purchased by an already existing Irish entity for use in subsequent production, the same increase in Irish GDP would also have occurred.