PRODUCTIVITY AND INCOME PER-CAPITA CONVERGENCE IN A PERIPHERAL EUROPEAN ECONOMY - THE IRISH EXPERIENCE

GDP per capita in Ireland increased from 60% to 90% of the UK average during 1986-95. This extremely rapid convergence begs the question whe ther increases in comparative productivity were of a similar magnitude . Industry of origin comparisons were used to benchmark Ireland/UK lab our productivity in 1935, 1968 and 1985. Dramatic improvement in manuf acturing comparative productivity was the immediate explanation of muc h of the convergence in GDP per capital levels. Unadjusted manufacturi ng productivity in the mid 1990s was as high as that in the US. This w as prima facie evidence of transfer pricing. The likely scale of disto rtion created by transfer pricing is discussed and hence the extent of exaggeration of GDP. An agenda for further research was suggested.