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Estimation of the Contribution of the Biosector to Ireland’s Net Foreign Earnings: Methodology and Results

Riordan, Brendan (2012): Estimation of the Contribution of the Biosector to Ireland’s Net Foreign Earnings: Methodology and Results. Published in: http://www.aesi.ie/aesi2012/aesi2012riordan.pdf (2012): pp. 1-20.

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An estimate of the contribution of the biosector to Ireland’s net foreign earnings in 2008 was recently published by The Department of Agriculture, Food and the Marine (2012). This paper examines these results and their derivation from a wide range of data provided by the Central Statistics Office (CSO), particularly the Census of Industrial Production and the Supply and Use and Input-Output Tables for Ireland.

The 'biosector' comprises the agriculture, forestry and fishing industries, along with the industries processing their products - the food and beverage industries. The main finding was that in 2008 the biosector accounted for 40 percent of net foreign earnings from merchandise exports. This was more than double the sector's percentage share of exports. The main reasons for the sector’s disproportionately large contribution to net foreign earnings were: lower import requirements per euro of exports, and higher receipts of EU payments. These results are analysed in terms of Balance of International Payments flows per €100 of merchandise exports. Put this way, in 2008 every €100 of exports from the biosector generated €52 in net foreign earnings. In contrast, exports from the non-biosector, contributed only €19 in net foreign earnings for every €100 of exports.

The result is shown to be quite dependable in the light of its consistency with other statistics for the economy and with results for earlier years. For example, when previous results for 2005 were updated with revised data and reclassifications, the results were very similar to those for 2008.

More generally, these results illustrate an approach to assessment of the value to the economy of exports from specific sectors. In particular, the contribution of one sector or industry relative to another, in terms of net inflows per €100 of exports, could be a valuable way to assess the case for the expansion of one export sector, or industry, relative to another. In this case the biosector’s contribution per €100 of exports in 2008 was provisionally estimated to be at least 2.7 times that of the non-biosector, and very likely to be far higher for Irish owner enterprises in the biosector sector.

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