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National Accounts: a Practical Introduction

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National Accounts: a Practical Introduction ST/ESA/STAT/SER.F/85 Department of Economic and Social Affairs Statistics Division Studies in Methods Series F, No.85 Handbook of National Accounting NATIONAL ACCOUNTS: A PRACTICAL INTRODUCTION United Nations New York, 2003 NOTE Symbols of United Nations documents are composed of capital letters combined with figures. The designations employed and the presentation of material in this publication do not imply the expression of any opinion whatsoever on the part of the Secretariat of the United Nations concerning the legal status of any country, territory, city or area or of its authorities, or concerning the delimitation of its frontiers or boundaries. Where the designation “country or area” appears, it covers countries, territories or areas. LIST OF ABBREVIATIONS C.i.f. Cost, insurance and freight CPC Central Product Classification (United Nations) CPI Consumer price index FISIM Financial intermediation services indirectly measured F.o.b. Free on board GCF Gross capital formation GDP Gross domestic products GFCF Gross fixed capital formation GNDI Gross national disposable income GNI Gross national income IC Intermediate consumption ISIC International Standard Industrial Classification of All Economic Activities NCS Net capital stock NFC Non-financial corporation NPISHs Non-profit institutions serving households PIM Perpetual inventory method PPI Producer price index ST/ESA/STAT/SER.F/85 United Nations publication Sales No. ISBN Copyright ©United Nations 2004 All rights reserved Printed in United Nations, New York ii Preface National Accounts: A Practical Introduction has been prepared as part of a series being developed by the member organizations of the Intersecretariat Working Group on National Accounts (ISWGNA) to assist countries in the implementation of the System of National Accounts, 1993 (United Nations publication, Sales No.E.94.XVII.4). Its general objective is to provide an introduction to some basic concepts and structures of the System of National Accounts (SNA) to economists and policy makers who are not familiar with national accounts, as well as other newcomers to the field of national accounting. The text may serve as a guide to reading the SNA itself. In that sense, the text is written in as simple a style as possible, and therefore the detailed elaboration of concepts in both theory and practice is avoided. Simple exercises are included, whenever possible, to make concepts and structures clearer to readers. The handbook also provides an example of the complete system in Excel so that readers can trace the linkages in the system by looking at the formulas there. A compilation spreadsheet that can be used for compiling national accounts is also developed as part of the development of the handbook. It has been tested and used in many developing countries. Those supplements are posted on the web page of the United Nations Statistics Division as part of the series Handbook of National Accounting. The text is not intended to replace either SNA or other handbooks. Compilers are expected to read the details in SNA as well as practical applications and methods presented in the handbooks prepared either by the United Nations Statistics Division, the Organisation for Economic Cooperation and Development (OECD), The International Monetary Fund (IMF) or the Food and Agriculture Organization of the United Nations (FAO). Many of those handbooks are posted on the web pages of the organizations that published them and can be obtained free of charge. The following handbooks have already been prepared or published: Handbook on Non-profit Institutions in the System of National Accounts (United Nations publication, Sales No. E. 03.XVII.9) Use of the System of National Accounts in Economies in Transition (United Nations publication, Sales No. E. 96.XVII.121) Handbook of Input-Output Table Compilation and Analysis (United Nations publication, Sales No. E.99.XVII.9) Household Accounting: Experience in Concepts and Compilation (United Nations publication, Sales No. E.00.XVII.16, vols.1 and 2) Links between Business Accounting and National Accounting (United Nations publication, Sales No.E.00.XVII.13) A System Approach to National Accounts Compilation (United Nations publication, Sales No.E.99.XVII.10) Use of Macro Accounts in Policy Analysis (United Nations publication, Sales, No. E.02.XVII.5) Tourism Satellite Account: Recommended Methodological Framework (United Nations publication, Sales No. E.01.XVII.9) Balance of Payments Manual (IMF, 1993) Balance of Payments Compilation Guide (IMF, 1994) Government Finance Statistics Manual (IMF, 2001) A System of Economic Accounts for Food and Agriculture (FAO, 1996) Integrated Environmental and Economic Accounting (United Nations publication, Sales No. E.93.XVII.12) Handbook on Quarterly National Accounts, (Statistical Office of the European Communities (Eurostat) 1999) iii Quarterly National Accounts Statistics: Concepts, Data Sources and Compilation (IMF, 2001) Handbook on Measurement of the Non-Observed Economy (OECD, 2002) Measuring Capital: A Manual on the Measurement of Capital Stocks, Consumption of Fixed Capital and Capital Services (OECD, 2001) Handbook on Price and Volume Measures in National Accounts (Eurostat, 2001) The present handbook was prepared by Vu Quang Viet of the United Nations Statistics Division. Throughout the drafting of the handbook, valuable comments were provided by many experts in the field, particularly Cristina Hannig, Ivo Havinga, Karoly Kovacs, Mathias Reister and Mary Chamie of the United Nations Statistics Division, Brian Newson of Eurostat, Heidi Arboleda of the Economic and Social Commission for Asia and the Pacific, Estrella V. Dommingo of the National Statistical Coordinating Board of the Philippines and Yatimah bt. Sarjiman of the Department of Statistics of Malaysia. Ms. Arboleda provided a number of exercises for incorporation in the handbook. Mathias Reister reviewed the draft carefully, providing important inputs to the rewriting of many chapters. The compilation worksheets were the result of the work over many years of Jan van Tongeren, Stefan Schweinfest and Vu Quang Viet, all of the United Nations Statistics Division. The following are the web page addresses of various relevant international organizations and bodies: United Nations Statistics Division: http://unstats.un.org/unsd/ International Monetary Fund: http://www.imf.org Organization for Economic Cooperation and Development: http://www.oecd.org/std World Bank: http://www.worldbank.org Food and Agriculture Organization of the United Nations: http://www.fao.org Statistical Office of the European Communities: http://europa.int/comm/eurostat/ iv CONTENTS Introduction ...................................................................................................................................................................1 Part I: Accounts of the nation Chapter 1: Overview......................................................................................................................................................4 Chapter 2: Production account and goods and services account..................................................................................16 A. Objectives.................................................................................................................................................16 B. Basic concepts and relations of goofs and services in national accounts..................................................16 1. Gross domestic product (GDP) and value added ............................................................................16 2. Supply and uses of goods and services ...........................................................................................17 3. Basic relationships in national accounts..........................................................................................18 4. Overall approaches of calculating GDP..........................................................................................19 5. Components of value added............................................................................................................19 C. Production boundary and principles of valuation .....................................................................................20 1. Production boundary.......................................................................................................................20 2. Valuation of goods and services in the SNA...................................................................................21 3. Valuation of national accounts aggregates......................................................................................23 D. Basic definitions of other aggregates of goods and services in national accounts....................................23 1. Definition of output ........................................................................................................................23 2. Definition of intermediate consumption .........................................................................................25 3. Definition of final consumption......................................................................................................25 4. Definition of exports and imports of goods and services................................................................26 5. Definition of gross capital formation ..............................................................................................27 E. Measurement issues ..................................................................................................................................30
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