Positive Economist FaceBook Live – A Spotlight on Exports

There is a lot of talk these days about exports. For example, you might hear people say that “Ireland is a very open economy” or “the UK is Ireland’s biggest trading partner and that gives rise to a lot of concern regarding Brexit” or “Enterprise Ireland and the Local Enterprise Offices help small and medium companies to export”

All of these statements are true, but as an economist, it’s important to have specific questions to address so that you can find the information that you’re looking for and draw the conclusions that you need from them. If you’re studying Leaving Cert economics, then you will be aware that you will have a Research Project to complete as well as a report to write on it afterwards, so during this month’s video, I took a research approach to exports.

Here are my three key questions:

Are our exports rising or falling?

Before we start to answer these questions, we also need to define what we’re specifically talking about. Exports consist of both goods and services, so our analysis will need to consider both of them separately.

The first question is quite easy to find as these figures are available on the CSO web site both for goods and for services.

Source: CSO Goods Exports and Imports December 2019

Source: 2019 CSO International Trade in Services

Answer to Q1: Have Irish exports gone up, down or not changed at all?

According to these tables, our goods exports grew from €140 billion in 2018 to €152 billion in 2019. This represents an 8.5% increase.

It’s also interesting to note that our imports fell last year by 3% and as a result, our goods surplus (i.e. the amount by which exports are higher than imports) increased by a very significant 30%.

In the case of our international services, our exports grew by €18.24 billion (which equates to 11.2%). Further, it’s noteworthy that our services deficit (which means that our imports are greater than our exports) reduced from €43 billion down to €5.5 billion.

Who are we exporting to around the world?

There are two key questions that we may consider here.

You might often hear the phrase that the UK is our largest trading partner. While that’s true, that doesn’t mean it’s our largest export destination. Our largest trading partner refers to both imports and exports. Check out this interactive guide

Source: Central Statistics Office

Our largest export destination is actually the United States. In 2019, Ireland exported €46 billion to the US and this represented 31% of our entire exports. The European Union, as a currency bloc (and remember that this includes the UK data as it was within 2019), the EU represented the destination of 48% of our total exports and this amount grew last year by 3%.

However, our exports to countries outside of the EU grew by almost €10 billion, accounting for a 14% growth over the year before.

In order to find out the fastest-growing destination, we need to process the data from the table as the information wasn’t on the press release.

Here is what we need to do:

This was the result:

Therefore, the fastest-growing export destination in the EU is Cyprus and the non-EU country is China.

There is a range of bodies who help Irish companies export including Enterprise Ireland , the Local Enterprise Offices , Enterprise Europe Network , Bord Bia , Intertrade Ireland , Tourism Ireland and others.

Answer to Q2: Who are we exporting to and in particular:

The US with €46 billion of goods exports representing 31% of total Irish goods exports.

Our exports to Cyprus grew by 78% albeit off a low base of €23 million and this was the fastest-growing export destination in the EU. Outside, our exports to China grew by 63.19% from €5.4 billion to €8.9 billion.

If we apply the same analysis to International Trade in Services, here is what we find:

Source: Central Statistics Office

Also, our fastest-growing export country, in terms of services, is the Dominican Republic (a country in the Caribbean) with 200% growth. However, as an economist, one would have to recognise that this figure is just €1 million and hence, it’s worthwhile to consider a country that has a more meaningful amount. Therefore, of the countries at the top of the list in 2018, there is one that stands out significantly here. Ireland grew its services exports from €3.8 billion to €5.3 billion.

What are we exporting and how is it changing?

Referring to our Goods press release mentioned above, the answer to this question is clear.

“The largest category of exports was  Medical and pharmaceutical products. Exports of these goods accounted for a third (33%) of all exports, or €49,655 million in 2019.”

This makes sense given that every single one of the top ten pharmaceutical companies in the world has a base in Ireland.

However, when we want to find our fastest growing destination, we need to go through the same process with the data.

The fastest-growing segment of our goods exports is “Electrical machinery, apparatus and appliances and parts” at 56.77% in 2019. In contrast to the geographical data earlier, this commodity is a of a substantial amount and grew from €5.3 billion to €8.4 billion.

In the case of services, the press release noted that “Computer services exports at €86.2bn remains the largest export category and accounted for 47.9% of total service exports in 2018.”

As we delved into the data, we then found that it was in fact Royalties and Licenses that grew the fastest in 2018, when it came to services exports.

Answer to Q3:   What are we exporting and how is that changing?

In the case of goods, the largest segment that we export is pharmaceutical goods. However, the fastest part of the growth is coming from “Electrical machinery, apparatus and appliances and parts”.

In the case of experts, the largest segment that we export is computer services.However, the fastest part of the growth is coming from “Royalties and Licenses”.

This process of identifying a question, finding some information related to the topic, cleaning the data and extrapolating conclusions is a highly useful skill and enables us to shed light on some very interesting economic questions.

For updates on the next upcoming interactive FaceBook Live Q&A videos, book reviews, interesting headlines and a variety of other resources, you can  like our FaceBook page  and we will catch up with you regularly! Our next Positive Economics session will focus on the Gender Pay Gap and we would be delighted if you could join us!

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