Tommy Broughan (Dublin North East, Independent)
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369. To ask the Minister for Finance in relation to the recent publication of the quarterly national accounts, if he will provide an estimate of the amount of Irish exports are contractual production, especially in the pharma sector, carried out abroad by foreign workforce; and if he will make a statement on the matter. [31637/15]

Michael Noonan (Limerick City, Fine Gael)
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I am aware of the phenomenon of 'contracted manufacturing'. This issue has been under observation for some time by my Department. Indeed, the economic review and outlook that accompanied Budget 2015 contained a detailed explanation of the issue.

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Exports grew by 13.6 per cent year-on-year in the second quarter of this year, with goods exports up over 16 per cent. Part of the strong performance in goods exports can be attributed to what is known as 'contracted manufacturing'.

This contracted production occurs when an Irish-resident (though not necessarily Irish-owned) enterprise contracts a plant abroad to produce a good for supply to a third country. The sale of the good is recorded as an Irish export as the economic ownership of the good prior to sale is regarded as belonging to the Irish-resident enterprise. Imports (for example patents and royalty fees) used in the production process are also recorded as Irish imports.

It is important to stress that the contribution of contracted production to overall exports cannot be calculated with precision with the publicly available data. It is also important to note that this phenomenon involves very little employment effect or second-round impact on the wider economy. In fact, the CSO confirmed that last year contract manufacturing had a negligible impact on GDP growth; this is because the phenomenon involves an increase in the level of both exports and imports, with little net impact.

Notwithstanding these developments relating to contracted production, there is no doubt that the recovery has gained momentum this year and that it has broadened to include a recovery in domestic demand. This is very important given the jobs and tax rich nature of domestic demand.