Challenges in Economic

Statistics

-- How they evolved in Japan --Shigeru Kawasaki

Statistical Research and Training Institute

Ministry of Internal Affairs and Communications, Japan

Presentation at the International Forum on Monitoring National Development: Issues and Challenges

Beijing, People’s Republic of China, 27-29 September 2011

Views expressed in this presentation are personal, and do not necessarily represent the official position of the Government.

Introduction Needs for economic statistics are varied among countries,

and affected by various factors, such as the level of economic development, political conditions, cultural background, etc.

Challenges of economic statistics are also varied among countries, and they shift over time.

To provide a broad perspective, this presentation discusses the evolution of issues and challenges of economic statistics in Japan over the last half century.

In this presentation, the challenges in statistics are discussed for three stages of economic development:Stage of Rapid Growth (1945-1970)Stage of Economic Slowdown (1970-1990)Stage after the Economic Bubble (1990-Present)

Status of the World Economy in early 1950s – Japan ranked in the lowest group after WW II

- $249 $250-499 $500-749 $750-1000 $1000+Greece 220Portugal 200Turkey 210Japan 190Philippines 150Egypt 120 Ceylon 110Rhodesia 100Thailand 80Congo 70Korea 70Pakistan 70Kenya 60India 60Uganda 50Burma 50

Israel 470Argentina 460Puerto Rico 430Ireland 410Chile 360Austria 370Cuba 310Malaya 310Italy 310S Africa 300Colombia 250Panama 250Lebanon 260

France 740Norway 740Finland 670Venezuela 540Germany 510Netherlands 500

New Zealand 1000Australia 950Sweden 950Luxembourg 890Belgium 800UK 780Iceland 780Denmark 750

USA 1870Canada 1310Switzerland 1010

Per Capita Net National Product (US$) Annual Average 1952-54

Source: “Per Capita national Product of Fifty-five Countries: 1952-1954” UN Statistical Office (1957)Note: Country names are based on the source, but some were shortened due to limited space.

Economic Development of Japan – Growing fast, and shifting down

Source: Computed from the data of “Annual Report on National Accounts” (In Japanese) Cabinet Office, Government of Japan

Real GDP Growth Rate p.a. (1955-2009)

1 Stage of Rapid Growth (1) – Groundwork for statistical development

1946 Statistics Act was enacted (1947). -1950 Population Census, Establishment Census, Manufactures

Census, Agriculture Census were resumed (1947).

Monthly Industrial Production Survey was initiated (1948).

Housing Survey, Construction Start Statistics, Census of Commerce, Energy Supply and Demand Statistics, Monthly Labor Force Survey were initiated (1950).

1951 Monthly Family Income and Expenditure Survey, Unincor- -1955 porated Enterprise Survey, R&D Survey and many other

surveys were initiated.

Regular compilation of National Income and Input-Output Tables was initiated (reference year 1951).

Cabinet decided “Plan for Self-Sustained Economy” based on economic modeling (1955).

1956- Cabinet decided “Plan to Double National Income” (1960). -1960 (Target: Real-term NI(1960)X2--- > NI(1970) Achieved)

Official statistics developed rapidly thanks to the solid legal and administrative framework. (Statistics Act, 1947)

The censuses (Population, Establishment, etc.) were given highest priority, and they played key roles for consistent development of statistics.

Censuses and sample surveys were to complement each other systematically. Censuses have been taken every five years, and sample surveys (monthly or annual) have been taken to fill the gaps between the census years.

National accounts statistics and the input-output tables promoted the economic policy formulation based on econometric models.

----> Reliable statistics are needed for good governance.

1 Stage of Rapid Growth (2) – Key factors in statistical development

Declining fertility and population aging became a high priority issue in social and economic policies.

----> Statisticians and researchers began to collaborate more actively in social and demographic researches. Public policies focused on improvement of “quality of life”. ----> Researches on social indicators and welfare measures were conducted. Industrial policies aimed at transformation of industrial

structure from traditional industries to electronics, energy-saving, knowledge-oriented, and service industries.

----> Business surveys were expanded for improved coverage. People became more conscious about protection of privacy. Pressure to government spending reduction became strong. ----> Statistical coordination across government was strengthened in controlling census and survey taking.

2 Stage of Economic Slowdown – Building on the foundations

3 Stage after the Economic Bubble (1) – In search of “Solutions”

<Environment surrounding statistics>The economic environment is changing drastically, and many unknown issues are emerging from one to the next. e.g. Globalization, Knowledge Economy, Financial Deregulation, ICT, Income Gap and Poverty, Sustainable Growth, Natural Disaster, Sovereign Debt Crisis, etc.

The economy is becoming more difficult to predict, and consensus on policies is becoming more difficult to reach.

The growth rates have lowered to the equivalent level of statistical errors, and distinguishing “signal” from “noise” is becoming more difficult.

Resources for statistics are diminishing (or not increasing). It is necessary to concentrate on high priority issues.

3 Stage after the Economic Bubble (2) – In search of “Solutions”

<Approach for statistical development>The coverage of statistical data collection has to be efficiently expanded to include emerging issues and to improve data quality. (e.g. Service statistics, Economic Census 2012, asset prices, financial statistics, productivity)Quality of statistics has to be assessed regularly, and efforts to improve the quality have to be made. At present, improvement of national accounts statistics, including implementation of 2008 SNA, is of high priority.Development of a more reliable central business register is in progress. For this purpose, administrative data sources are found to be useful.To enhance relevance of statistics, new findings from statistics have to be effectively communicated whenever and wherever possible.

4 Conclusion

In an early stage of economic development, compilation of the basic set of statistics (e.g. censuses, national accounts) is of high priority. Establishing a solid framework for statistical development is necessary.

In a more developed stage, more emphasis has to be placed on improving quality of statistics, and it requires good communication with users and data providers.

In Japan, the Economic Census will be taken in early 2012, and the new business register is being developed for continuous update by administrative data. National accounts statistics will be improved with new data sources. These efforts are expected to help improve the quality and the value of statistics.

The EndThank you!