Ireland ‘not technically a wealthy nation’

IRELAND cannot technically be called a wealthy nation, despite still rating highly in terms of average income levels, a new report has claimed.

A wide-reaching national economic report by Davy Stockbrokers said high national income levels were “wasted“, mainly by the corporate sector, and investment in the country was “misallocated” during the boom years of 2000 to 2008, resulting in a national infrastructure which should be “far better than it is today”.

“Ireland still fares reasonably well on income per capita tables. At the end of 2009, it was probably ranked eighth in the euro area.” said Davy economist Rossa White.

“One of the great misconceptions about Ireland is that it is a wealthy country. Ireland relentlessly climbed the income per capita table year after year from 1994, but it has slipped back below mid-division in the euro area following a savage recession. Yet, it was never wealthy; those years of high income were largely wasted,” he added.

The report suggests Ireland’s capital stock was mis-invested away from such areas as transport, roads, schools and hospitals and towards property.

“Too much of it went into that unproductive asset: housing,” said Mr White:

“Housing, alone, accounted for 63% of the net investment in our capital stock... No Irish resident who has visited Belgium or Finland would have the audacity to claim that this country is wealthier. Transport infrastructure is vastly superior in those countries, as is the telecommunications network, and public services are delivered from higher-spec schools and hospitals,” he added.

Mr White’s report noted that under-investment in the country’s communications/ software infrastructure network remains a concern, but that “human capital investment” must remain a priority. “Ireland still has the second highest number of graduates in the 25-34 cohort in the EU. Furthermore, the quality of human capital probably hasn’t been diluted too much by emigration of low-skilled workers,” he added.