Second city's role in wealth of our nation

Analysis: CSO figures reveal that while Cork's disposable income is behind that of the capital, its gross value added is way ahead, writes Marc Coleman, Economics Editor

For many years, Dubliners have harboured prejudices about Corkonians grabbing the wealth of the nation. According to the latest Central Statistics Office (CSO) figures, not a word of this is true.

In fact Dubliners continue to enjoy the highest average incomes anywhere in the country. And far from the Corkonians taking their money, it's the "buffalows" who are really doing best: big underestimated fellows from Laois, Longford, Offaly and Westmeath.

Compared to the national average, these counties lag behind in terms of the value of their national output and in terms of average incomes enjoyed by the average person. But relative to what their regional economies actually produce, these counties are doing very well.

This assessment is based on a study of regional Gross Value Added (GVA) per person and regional disposable household income. The first of these measures the value of output produced in the region or county. The second is an indicator of how much people are benefiting from the economy after profits have been deducted or repatriated.

Modern economists accept that so-called "core" areas are richer than so-called "peripheral" areas. What does the evidence say?

In 2003 - the year for which data was examined - GVA per person was €31,395. The average disposable income per person was €18,610 across the nation as a whole. In the core region of Dublin, it was highest at €21,082. In isolated Donegal, it was the lowest at €15,594.

And according to another recent CSO survey on price variations, the advantage Dubliners have is only partly eroded by higher prices in the capital.

In a survey of grocery prices last May, the CSO found that prices were on average just 3.5 per cent higher in the capital, implying that most of the Dubliner's 13 per cent income advantage is real (it did not look at property prices, which may put a different gloss on things).

As is consistent with the findings of the last census, the survey shows that incomes in counties Kildare, Louth, Wicklow, Meath and Westmeath have risen as refugees from Dublin's property market flood in.

GVA and disposable incomes in Galway, North Tipperary and Limerick benefit from a mix of indigenous urban and multinational economic activity.

But Dubliners don't produce the most wealth in the economy. Due to multinational activity in Cork, GVA per person is €41,129, some 31 per cent higher than the national average level. But average disposable incomes in the region are just over 3 per cent lower than the national average. While Cork incomes are €18,583, average incomes in Kerry are just €16,087.

So does the image of Corkmen stealing our jobs and or Kerrymen taking the eyeballs out of our skulls need revising?

In theory, the figures mean the reverse: the southwest is producing wealth and giving it to the rest of the country.

Well not quite. Putting a huge and highly profitable multinational like Pfizer in a region greatly pushes up that area's GVA score.

But, apart from its highly paid employees, it doesn't guarantee higher incomes for the county's other inhabitants.

Hosting as it does some of the world's largest and most-profitable pharmaceutical companies, the Cork economy is literally high on drugs.

And that kind of high is not real. It's Americans who are creating the wealth in that part of the country and repatriating their profits back home - and that explains the gap.

Back to the buffalows. Taking the national average as equal to 100 and measuring per person GVA as an index against this benchmark, the midlands region - comprising Laois, Longford, Offaly and Westmeath - produces just 64.8 per cent of the national average.

This region is situated in the middle of a relatively poor diagonal belt of counties that runs from the northwest part of Ireland to the county of Wexford.

But while those four counties lag behind the national average, per person disposable incomes in this region are 91.9 per cent of the national average.

And this is the largest positive gap between average output and average income.