WE HAVE benefited significantly from EU structural funds, the availability of which has reduced pressure on our own resources for infrastructural development and enabled us to make faster progress than would otherwise have been possible in catching up with our backlog of public investment.
But because our economy has been growing so rapidly in recent years, the Irish State - which we have chosen to have treated as a single region for EU purposes - no longer meets the eligibility criterion for Objective One Funds, which are an important component of the total sum we receive. Thus, for what might be described as the best of reasons, viz growing prosperity, there is now a real possibility that from the year 2000 an important part of the transfers we receive from the Community may be phased out - albeit gradually, if recent indications from the European Commission prove well founded.
This has raised the question of whether it might now be timely to base our claim for such funds on the needs of some of our poorer regions rather than, as has been the case hitherto, on those of the State as a whole. This could be worthwhile if the level of some of these regions' per capita GDP were to remain below 75 per cent of the average EU level. Last weekend's publication of the first regional accounts provided by the Central Statistics Office offers the first solid basis for an assessment of this possibility.
The CSO analysis not only provides estimates of GDP per head for our planning regions but also records that between 1991 and 1995 the purchasing power of per capita GDP in Ireland rose from 76 per cent of the EU average to 95 per cent of that figure. This reflects the fact that in those four years our GDP per head rose by around 30 per cent as against less than 5 per cent in the rest of the EU.
Now the negotiations on the next round structural funds are expected to start in about a year's time, and past precedent suggests that the basis of our entitlement is likely to be the most recent three year period for which figures will then be available, viz 1994-6.
In that three year period the ratio of Irish GDP to that of the EU is likely to have been just below the figure for 1995. And this means that if our regional distribution has not changed significantly since 1991, only the midlands would qualify for Objective One Funds in that year; GDP in the Border counties and the west would be likely to be 77-78 per cent of the EU average.
Of course even a small shift in the regional distribution of our GDP since 1991 could affect these figures, and it cannot be excluded that a quite significant part of our State, involving as many as 13 counties, might then scrape in under the wire, registering figures fractionally below 75 per cent. But we certainly can't count on that.
It should, however, be said that GDP is a bad measure of economic performance in the Irish case because, uniquely, a significant part of this figure is accounted for by the excess of the profits of multinational industries here over the now quite substantial, profits earned by Irish in vestments abroad.
WHEN THIS factor is excluded, the resources actually available to us, described as Gross National Product or GNP, are about 13 per cent lower than the figure indicated by the GDP data. In other words our GNP per head still falls short of that of the EU by 13 per cent, a gap we are likely to bridge within the next five years.
If, as we have a right to argue, GNP rather than GDP were to be used as the criterion for Objective One eligibility, then this would not only make the Border counties, the west and Munster eligible for Objective One Funds but would also bring in the south east, i.e. Wexford, Waterford, Carlow, Kilkenny and South Tipperary.
However, quite apart from this issue of the structural funds it is obviously of interest to know how different regions of our State now compare with each other in terms of output and incomes.
In the past, estimates of regional incomes have been produced by the Economic and Social Research Institute for various years between 1960 and 1983, but these differ of course, from the new CSO figures which give estimates of regional output. The levels of regional GDP and of regional income may differ from each other for any one of three principal reasons; profits of multinationals, taxation and social transfers, and commuting.
First, because the regional origins of multinational profits are at present unavailable, we do not know the true level of the resources actually available to us from production in each region after these profits are deducted.
Second, the tax and social transfer system redistributes from better off to less well off regions through the tax and social welfare systems: richer regions with a greater proportion of high incomes yield more in taxation, and poorer regions with more unemployed, pensioners or small farmers receive more in social welfare payments.
On the social transfer side, it has been estimated that in 1983 such transfers represented 23-25 per cent of incomes in the west and north west, but only 15 per cent in the case of Dublin. For its part, the Dublin region must have contributed a disproportionate share of tax revenue, although no data are available on this. Taking these two factors together, the net transfers from this region to the rest of the country must be very substantial indeed.
THE EFFECT of commuting on the balance between regional output and incomes can also be important, where many of those at work in a major centre live and commute from a different region, as is the case with Dublin.
Almost one third of the population of the "mid east" region (which includes Kildare, Wicklow and Meath) live in parts of those counties immediately contiguous to Dublin, and between them these "mid east" residents account for about one tenth of the population of the Greater Dublin region. Most of the residents of these particular areas who are working are probably employed in and contribute to the output of Dublin city and county rather than to that of the "mid east" region.
Thus the figures recently produced by the CSO, although relevant to EU structural funds, do not provide us with a reliable picture of the relative income levels and living standards in different parts of the country. And for the same reason these figures are not directly comparable with earlier data on regional incomes which the Economic and Social Research Institute has in the past produced for the years 1960, 1965, 1969 (and 1983 unpublished).
Nevertheless, there may be some significance in the fact that, as will be seen from the table below, the GDP output ratios for two regions in 1991 differ significantly from the regional income ratios for 1983 that were calculated by the ESRI nine years ago.
The first of these is the south west (Cork and Kerry) in respect of which the 1991 GDP ratio is considerably higher than the 1983 incomes ratio. This reflects the exceptional volume of external high tech investment in this area since 1983, but this figure will have been exaggerated to an unknown degree by the inclusion of the profits of the multinationals in question.
By contrast, the 1991 output ratio for the midlands is a good deal lower than the 1983 incomes ratio, which suggests that during this period this particular region may have been falling behind the rest of the country.