-his paper is preparad for staff use and is not for publication. The views expressed are those of the author and not necessarily those of the Bank. Public Disclosure Authorized INTERNATIOAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION .velopment Economics Staff Working Paper No. 189 September 1974 STATISTICAL INDICATORS OF INDUSTRIAL DEVELOPENT A CRITIQUE OF THE BASIC DATA Public Disclosure Authorized A critical evaluation and compilation of some basic data needed for constructing statistical indicators of industrial development are presented in this paper. The data on manufacturing output, value added, employment, wages, industrial labor force, and manufactured and semi- manufactured exports at the aggregated sector level; on GNP, population, geographical area, and total merchandise trade; and on human resources: skills, education, and nutrition are compiled for about 100 countries. The data on value added at sub-sector level, on manufactured and semi- manufactured imports, on various measures of import substitution and on demand-sources of industrial growth are presented only for selected countries. Some ratios for 1971 and growth rates for 1960-1972 are calculated. Public Disclosure Authorized The data on manufacturing value added, manufactured exports and imports, and merchandise exports, assembled from various sources are evaluated. Several points emerge: four definitions of manufactured exports, frequently used interchangeably, lead to very different results with regard to absolute levels, growth rates, or ratios of manufactured. exports to merchandise exports. The differences are so large that very often no meaningful conclusions can be drawn. The absolute levels and growth rates of manufacturing production also differ consiaerably. A careful evaluxation of the basic data and standardization of the defini- tions are thus essential. Prepared by Vinod Prakash Assisted by: Samuel Akinsete, Naimeh Hadjitarkhani, and A.P.N. Poduval Public Disclosure Authorized Economics of Industury Division Developnent Economics Department Development Policy Staff TALEE OF CONTENTS ?age Li st of Tables List of Statements i Summ.ary and Conclusions 1 I. Introduction 1 II. Development Indicators 3 III. Indicators of Industrial Development 3 A. Industrial Production: Value Added, Employment, Wages, Gross Output, Product-mix 6 B, Trade in Industrial Produc ts: Manufactures, Semi-manufactures, Direction of Trade, Concentrat.ion or Diversification of Exports 8 C. General: Per Capita Income and Population, Area and Population Density, Human Capital and Technology Compiled 9 IV. Coverage and Scope of the Data Structure General Industrial Data, Industrial D1Xta, Trade Data, Data on Import Substitution, Growth Data on Demand-Sources of Industrial 13 V. Limitations of Data 13 A. General Industrial Statistics List of Developing Countries, Industrial Coverage, Size of Employment, Strategic Considerations, Value Added, Industrial Classification, Reference Period, Non- response, Revision of Data 15 on Trade Manufactures B. Data Trade Trade Classifications, Definition of and Trade in Manufactures, Valuation of Output Sources or Measures 19 VI. Comparability in Data: Alternative of Industrial Data, Comparability Comparability in Manufactured Exports Data, Comparability in in the Merchandise Exports Data, Comparability of Manufactured Exports to Merchandise Ratio Import Sub- Exports, Comparability in Measures of stitutioni, Import Elasticity, and Demand-Sources of Industria:L Growth 119 Selected Bibliography List of Tables Page 1. General Characteristics of Industrial Development: Absolute and Per Capita Levels, 1971 29 2. General Characteristics of Industrial Development: Ratios, 1971 and Growth Rates, 1960-1971 32 3. General Characteristics of Human Resources: Skilla, Education and Nutrition 34 4. Availability of Industrial Data from Manufacturers' Censuses/Surveys, 1953-1970 37 5. Gross Value Added in Manufacturing in Selected Countries, 1953, 1958, 1960 and 1963-1971 39 6. Industrial Production Index for 1960-1971 and Gross Value Added in Manufacturing in Base Year (1963 - 100) 40 7. Conversion Factors and Exchange Rates, 1960, 19965, 1970 and 1971 42 8. Manufactured Exports as Percent of Merchandise Exports, 1960 and 1965-1972 44 9. Semi-manufactured Exports as Percent of Merchandise Exports, 1960 and 1965-1972 46 10. Manufacture.d and Semi-manufactured Exports as Percent of brchandise Zxports, 1.960 and 1965-1972 48 11. Vallue and Growth Rates of Manufactured Exports, 1960, 1965 and 1970-1972 50 12. Manufactured Inports in Selected Countries According to Various Definitions, 1960 and 1971 52 13. Manufactured Iinports in Selected Countries According to Various Definitions: as Percent of Merchandise Imports, 1960 and 1971 53 14. Manufactured Imports in Selected Countries According to Various Definitions as Percent of those under Definition "Total A", 1960 and 1971 54 15. Average Annual Growth Rates (%) of Manufactured Imports in Selected,LCountries According to Various Definitions, 55 1 960-1 971. 16 A. Indicators of Lmport Substitution in Selected Countries, 1963-1971 56 16B. Demand-Sources of Induszrial Growth in Selected Countries, 1963-19 71, . 57 17. Nature of Industrial Classification used by Se).ected Countries, 1953, 1958, 1960, and 1963-1971 58 18. Comparison of Manufacturing Gross 'Value Added and- Industrial Production Index in Selected Countries, 1971- 59 19. Value of Manufactured Exports According to Variou.s Definitions, 1965 and 1971 60 20. Manufactured Exports According to Various Definitions: As Percent of those under Definition "Total All and Growith Rates, 1965 and 1971 62 21. Manufactured Eiports According to Various Definitions as Percen,t of Merchandise Exports, 1965 and 1971 64 22. Comparison of ilerchandise Exports as Reported in Various Documents (Illustration from Latin America and the Caribbean, 1965 axLd 1969) 66 23. Industrial Structure of Manufacturing Sectors, 1953, 1958, 1960,. and 1963-1971 for Selected Countries by YMajor Groups of ISIC (Rev. 1 and Rev. 2). 67 Tables 23.1 to 23.26: ;l Argentina, .2 Brazil, .3 Chile, .4iChina, Republic of, .5 Colombia, .6 Costa Rica, .7 Ireece3 .8 India, .9 Iran, .10 Israel, .11 Ivory Coast, .12 Japan, .13 Kenya, .14 Korea, Republic.ofs .15 Malaysia, Wast, .16 Mexico, .17 Pakistan, .18 Peru, .19 Philippines, .20 Singapore, .21 Spains .22 Thailand, .23 Tunisia, .24 Turkey, .25 Venezuela, .26 Yugoslavia. List of Statements I. Definitions of Manufactured, Semi-manufactured, and Primary Products. 93 II. List of SITC (Rev.) Codes representing Manufactured, Semi- manufactured, and Primary Products. 98 III. Comparison of Major Groups of ISIC (Rev. 2) with ISIC (Rev.1). 99 IV. Classification of Countries by Employment Coverage in General Industrial Statistics. 101 V. Grouping of Countries by Type of Industrial Classification used in General Industrial Statistics. 102 VI. Country Notes for iManufactured and Semi-manufactured Export Data. 103 VII. Illustrative List of Manufactuired Products not covered in t the Definition "Total B '. 118 Summaar and Conclusions 1. Chenery's pioneering study cn the patterns of industr-ial growth formed a basis for many studies using multiple regression methods. Recently Balassa and Hughes presented several statistical indicators of industrial development. A critical evaluation and compilation of basic data needed for constructing such indicators are presented in tkis paper. A fo-mal analysis to construct the inrdicators will follow in a later paper. 2. Most indicators represernt sore aspects of manufacturing production or trade in Imanufactures, but some relate to the general economy. Some indicators may be in terms of absolute level, growth rate, or a ratio; others may be relative shares for measuring the joint inter-temporal and cross-sectional changes or elasticities. The basic data assembled on these indicators include the data on manufacturing output, value added, employment, wages, industrial labor force, and manufactured and semi- manufactured exports for about 100 countries. The general macroeconomic data relating to GNP, population, labor force, geographical area, and total merchandise trade are also compiled, together with the data On human resources such as per capita calorie consumption, school enrollment, occupational distribution of labor force, and stock of scientists, engineers and technicians. The data on value added at sub-sector level, on manufactured and semi-manufactured imports, on various measures of import substitution and on demand-sources of industrial growth are also processed for selected countries. The period covered, however, is not uniform. Usually the 1960-1972 period is covered, but many indicators relate to 1971 or some other year. 3. This paper discusses the quality and limitations of the relevant data at some length as a basis for future econometric analysis. The limitations of industrial data arise from a variety of reasons including differences in the concepts and definitions used in the coverage by industry, employment size, geographical area or ownership, in the reference unit, in the financial period, and so on. The errors in data may be sampling or observational arnd sometimes both, and may arise fram admiinistrative procedures, time-lags, or the valuation system. The data may also be biased because of inadvertent misclassification, deliberate misspecification, or under/over-reporting due to financial or political considerations. Other limitations discussed in this paper relate to the