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Overview of System of National Accounts
(SNA)
I. Introduction to SNA
UN Statistical Institute for Asia and the Pacific
System of National Accounts System of National Accounts
The national accounts are the source of information about the state and performance of the economy
The national accounts are the source of information about the state and performance of the economy
It conveys information about the performance of the economy in a similar way as that of the operating and financial accounts of an individual firm
It conveys information about the performance of the economy in a similar way as that of the operating and financial accounts of an individual firm
The broad objective of national accounts
To integrate and reconcile data for economic analyses and monitoring.
It is central to all economic statistics developments
By linking micro and macro data it provides an integration across a wide range of statistics
It adds value to diverse data sets through integration
The framework is not only for GDP estimates, but is also useful for other groups of statistics related to BOP, GFS (Govt. Fin Stat), financial activities and environmental accounts
Structure of the SNA
A set of national accounts provides:
A comprehensive and detailed A comprehensive and detailed recording recording
of the flows and stocks of an economyof the flows and stocks of an economy
in a systematic and integrated manner.in a systematic and integrated manner.
Flows and stocks
Stocks are holdings of assets and liabilities at a given timeStocks are holdings of assets and liabilities at a given time
Fixed capital, inventories, money and wealthFixed capital, inventories, money and wealth
Flows reflect the creation, transformation, exchange, transfer or loss of economic valueFlows reflect the creation, transformation, exchange, transfer or loss of economic value
Flows provide a “moving picture” of the economyFlows provide a “moving picture” of the economyProduction aggregates, consumption expenditure, investment and saving are all flow variables
Production aggregates, consumption expenditure, investment and saving are all flow variables
Flows and stocks
The way flows and stocks are recorded The way flows and stocks are recorded is governed by a number of specific is governed by a number of specific rules and conventions aiming at rules and conventions aiming at quantifying the economic entries as quantifying the economic entries as precise and consistent as possibleprecise and consistent as possible..
The way flows and stocks are recorded The way flows and stocks are recorded is governed by a number of specific is governed by a number of specific rules and conventions aiming at rules and conventions aiming at quantifying the economic entries as quantifying the economic entries as precise and consistent as possibleprecise and consistent as possible..
These have to do with timing, valuation, These have to do with timing, valuation, and the boundaries that distinguish and the boundaries that distinguish economic flows and stocks from non-economic flows and stocks from non-economic variableseconomic variables..
These have to do with timing, valuation, These have to do with timing, valuation, and the boundaries that distinguish and the boundaries that distinguish economic flows and stocks from non-economic flows and stocks from non-economic variableseconomic variables..
Compilation Compilation
Compilers of the NA have to content with all sorts of conceptual and data problems
Compilers of the NA have to content with all sorts of conceptual and data problems
The NA are compiled in accordance with the System of National Accounts (SNA)
The NA are compiled in accordance with the System of National Accounts (SNA)
To cope with these problems a variety of conventions are used to classify, measure and exclude various items
To cope with these problems a variety of conventions are used to classify, measure and exclude various items
What is System of National Accounts (SNA) ?A comprehensive, consistent and integrated
set of macroeconomic accounts, balance sheet and tables based on a set of internationally agreed concepts, definitions, classifications and accounting rules comprehensive: all activities, all agents covered consistent: identical values are used to establish
the consequence of a single action on all actors integrated: all consequence of a singe action by
one agent are reflected in the accounts, including wealth and balance sheets.
What is System of National Accounts (SNA) ?
A coherent, consistent and integrated set of macroeconomic accounts, balance sheet and tables based on a set of internationally agreed concepts, definitions, classifications and accounting rules
Provides a comprehensive and detailed record of the complex economic activities taking place within an economy and the interaction between different economic agents and groups of agents that takes place in markets or elsewhere
What is SNA ? (contd.)
framework that measures stock of resources and flows of goods, services, income emanates from using these resources
Meets needs of Government, Analysts, Policy makers, Decision makers
What is SNA ? (contd.)
Helps economists to measure the level of economic development and the rate of growth, change in consumption, saving, investment, debts and wealth.
Economists can forecast future growth or study impacts on the economy and its sectors of alternative government policies.
What is SNA ? (contd.)
Integrated FrameworkPromotes integration of economic and
related statistics in a system that is based on consistent economic and statistical concepts and methods allowing comparative analysis.
Resources of the Country
Human Human resourcesresources
Natural Natural resourcesresources
ProducedProduced resourcesresources
Financial Financial resourcesresources
Is SNA Country specific?
You learn the framework of SNA and the structure which is/has to be universal, with examples, here
You share the experiences, if you have any. You should try to find solutions to your country
specific issues such as data and records We need to be familiar with SNA resources,
concepts and standards Frequently, expert groups meet to discuss
issues and resolve those.
Human ResourcesPopulation ( Children, Adult, Elderly)
Source of labour for the economy (means of production)
Capable of managing other resources
Can reproduce itself Consumes/Uses resourcesObject of development
Natural Resources(Air, Land, Water, Atmosphere, Biota, Forest, Etc.)
Provide means and material inputs for production
Absorb waste and residualsReproduce itself, MostlyProvide environment for living
and consumption services
Produced Resources.. Fixed assets (Buildings, Infrastructure, Transports, Goods in Inventory, Livestock, etc.)
Result of production processUsed as means or material input to
productionHelp Economic Growth and its
Acceleration
Financial Resources(Currency, Deposits, Bonds, Equities, etc.)
Created to facilitate economic transactions
Most resources have liability counterpart
Used as medium of transactionProvide means for flows and use
of resources
OPENING STOCK OF RESOURCES
HumanHuman ProducedProduced NaturalNatural FinancialFinancial
PRODUCTIONPRODUCTION
IncomeIncome Goods & ServicesGoods & Services ResidualsResiduals
Intermediate consumption
Final Consumption
Accumulation Exports
DISTRIBUTION & USEDISTRIBUTION & USE
CHANGE: human
CHANGE:produced, natural, financial+
Other changes(volume, price)
CLOSING STOCK OF RESOURCES
HumanHuman ProducedProduced NaturalNatural FinancialFinancial
Format of the Integrated Framework - Presenting Stock and Flows
Stock of resources (opening)ProductionConsumptionCapital formation, Net ExportsOther Changes in Volume/PriceStock of resources (closing)
Format of the Integrated Framework - Meaning of Stock and Flows
Stock –refers to Level of Resources taken at a Point in Time
Flows –refer to Production, Income, distribution and Use of Products
taken as sum of what took place during a Period of Time
Resources
Stock of Resources
- Key factor to attain Society’s goal
Optimization of Use of Resources
- Key principle to Development Planning
Go to Stocks and Flows..
Resources (Contd.)
Information on Resources required for development planning
WHO (own them) ?
HOW (much of these available and how used) ?
WHAT (is the quality of these) ?
WHERE (ownership is concentrated…Institution) ?
Economic FlowsActors, Actions, Activities
WHO does WHAT ? By WHAT means ?For WHAT purpose ?With WHOM in exchange of WHAT ?With WHAT Changes in Stocks ?
Triple A’s: Actors, Actions, Activities
SNA records actions of economic actors in terms of flows and stocks
Within each account, flows and stocks (actions) are grouped according to economic activity
It includes a full sequence of accounts (activities) for each of the five institutional sectors (actors)
Institutional sectors of the economy
Non-financial corporationsFinancial corporationsGovernment units, including social security
fundsNPIs serving households (NPISHs)Households
Production
Economic activity that produce goods and services using directly/ indirectly the available Resources
Classified into three broad types -Primary Production- extracting goods/ services from natural assets with or without cultivation
(agriculture, fishery, forestry, mining)
Production (Contd.)
-Secondary Production- Economic activities transforming goods into other goods- (manufacturing, construction, utilities)
-Tertiary Production- Services- remaining economic activities-(Transport, Trade, Business/ Financial services, Real estate & Housing, Community services, Public administration and defense, and Other services
Basic concepts and variables
Total supply of Gs & Ss must equal to Total uses Total Supply = Output + Imports Total Use = Intermediate consumption + Final
consumption + Gross capital formation + Exports Thus : Output + Imports = Intermediate consumption +
Final consumption + Gross capital formation + Exports (If the valuation is similar in both sides)
Gross value added
We define,Gross value added =
Output – Intermediate consumption = Final consumption + Gross CF + X-I
Since Output is measured at producer prices and the rest at purchaser prices, we need to change the output to purchase prices.. (tax – subsides)
Simple example
Value added is GDP (Production approach)
Thus, define ‘Value Added’ = GDP = Output + Taxes - Subsidies – Intermediate
consumption = Final consumption + Gross CF + X-I
Value added = GDP = Output +Taxes - Subsidies – Intermediate consumption (This is the GDP by Production approach!)
GDP = Gross value added + Taxes-Subsidies
GDP by Expenditure approach
Same equation can be viewed as:GDP = Final consumption + Gross CF +
Exports – Imports (Expenditure approach!)
GDP by Income approach
Production process creates incomes for owners of inputs: labour, capital, government
GDP = Compensation of employees + taxes – Subsidies + Consumption of fixed capital + Gross operating surplus (Income approach!)
Gross o/s includes interest payable to lenders of financial assets, or rent payable to renters of non-produced assets, such as land, sub-soil assets or patents
Gross domestic product (GDP) Gross domestic product (GDP)
The GDP is the total value of goods and services produced within the boundaries of a country in a particular period
The GDP is the total value of goods and services produced within the boundaries of a country in a particular period
GDP methods GDP methods
There are three ways to calculate the
gross domestic product of a country
There are three ways to calculate the
gross domestic product of a country
Total value of production
= Output - intermediate consumption
Total value of production
= Output - intermediate consumption
Total value of final sales
= Final consumption + Capital formation + Exports - Imports
Total value of final sales
= Final consumption + Capital formation + Exports - Imports
Total income earned
= Compensation + Operating surplus
Total income earned
= Compensation + Operating surplus
Gross national income (GNI) Gross national income (GNI)
In a particular period (say one year) residents (citizens of the country) earns income in other countries and foreigners earn income in your country
In a particular period (say one year) residents (citizens of the country) earns income in other countries and foreigners earn income in your country
GNI is calculated by: – adding the income earned by residents in other
countries to the GDP; and– subtracting the income earned by foreigners in your
country
GNI is calculated by: – adding the income earned by residents in other
countries to the GDP; and– subtracting the income earned by foreigners in your
country The GNI is the amount a country has available for
consumption and saving.
The GNI is the amount a country has available for consumption and saving.
Simple example
A+B. Agriculture, forestry and fishingC. Mining and quarryingD. ManufacturingE. Electricity, gas and waterF. ConstructionG+H. Wholesale and retail trade, hotels and restaurantsI. Transport, storage and communication J+K. Financial intermediation, insurance, real
estate and business servicesL+M +N. Public Admin, education, health, social work O. Other community, social and personal services
A+B. Agriculture, forestry and fishingC. Mining and quarryingD. ManufacturingE. Electricity, gas and waterF. ConstructionG+H. Wholesale and retail trade, hotels and restaurantsI. Transport, storage and communication J+K. Financial intermediation, insurance, real
estate and business servicesL+M +N. Public Admin, education, health, social work O. Other community, social and personal services
Standard Industrial Classification of all Economic Activities (ISIC Rev3)
Standard Industrial Classification of all Economic Activities (ISIC Rev3)
A. Agriculture, forestry and fishingB,C,D+E. Mining and quarrying, manufacturing, electricity, gas and
water of which C. ManufacturingF. ConstructionG,H+I. Wholesale and retail trade, transport accomm. and food services
J. Information and communication J+K. Financial intermediation, insurance,L. Real estateM+N Business servicesO,P,Q. Public Admin, education, health, social work R,S,T+U. Other services
A. Agriculture, forestry and fishingB,C,D+E. Mining and quarrying, manufacturing, electricity, gas and
water of which C. ManufacturingF. ConstructionG,H+I. Wholesale and retail trade, transport accomm. and food services
J. Information and communication J+K. Financial intermediation, insurance,L. Real estateM+N Business servicesO,P,Q. Public Admin, education, health, social work R,S,T+U. Other services
Standard Industrial Classification of all Economic Activities (ISIC Rev4)
Standard Industrial Classification of all Economic Activities (ISIC Rev4)
Financial corporate sector Financial corporate sector
Institutional sectorsInstitutional sectors
ROW ROW
NPISHs NPISHs
Household sector Household sector
General government sector General government sector
Non-financial corporate sector Non-financial corporate sector
Transaction flows in the economy
A National Accounts perspective
Use of disposableincome
Production
Financing &capital transfers
Generation ofincome
Allocation ofprimary income
Secondarydistribution of income
Redistributionof income in kind
Final consumption
Capital formation
Saving
PRODUCTION BOUNDARY OF 1993 SNA
The production of all individual or collective goods or services that are supplied to units or intended to be so supplied, including the production of goods and services used up in the process of producing such goods and services;
Own-account production of all goods that are retained by their producers for their own final consumption or gross capital formation;
PRODUCTION BOUNDARY OF 1993 SNA (Contd.)
Own-account production of housing services by owner-occupiers (ownership of dwellings) and of domestic and personal services produced by employing paid domestic staff
The 1993 SNA includes the production of all goods within the production boundary
SNA 93 Production Boundary
Defines what are productive and economic activities
Basic human activities, natural processes
Non-productive
Economic
All Activities
Productive
Non-economic
General production boundary
SNA production boundary
Rule: if the performance of an activity cannot be delegated to another without the same desired results/outcomes
SNA 93 Production Boundary
ALL goods*
Productive activities
ALL services for sale, barter or in-kind pay
Some services forown-final consumption
Economic Non-Economic
Some services forown final consumption
Implications for production of labour statistics
Activities covered to determine economically active population
Own final consumption.. services
Included: own account production of housing services domestic and personal services produced by
paid domestic staffExcluded:
Cleaning, decoration, cooking caring maintenance and repair of dwelling and durables within the same household
Note: all goods for own consumption included.
Other Changes in Volume.. Included..(p7)(during the period)
Events not connected with production/ economic processes-
-Destruction of Resource--Fire, Flood, Earthquake, Typhoon, Cyclone, etc.
-Appearance new Resource--New oil reserve, mineral reserve, etc.
Production (Contd.)
-Goods and Services
Production of Goods and Services Supply Use
Products Intermediate and Final UseBy-products Intermediate and Final Use Residuals Recycled, Left to be absorbed
back by Nature Production of Goods and Services
- Generates Income to Resources
Production (Contd.)
- Generation of Income & Use Generation of Income-Shares to Resources Resource Share Human Compensation of Employees Natural Rent Produced
(Fixed Assets) Consumption of Fixed Capital Financial Operating surplus (Interest) Others Operating surplus (Profit) [ Other resources- Entrepreneurship, Technology ]Income includes Taxes Income is used for final consumption and saving
Distribution of Goods and Services
Final Consumption- Household Final Consumption Expenditure Private Non-Profit Institution Final Cons. Exp. Government Final Consumption Expenditure
Accumulation (Investment)- Fixed Capital Formation of Produced Assets Additions to stock of Inventories Improvement of Natural Assets
Exports-net of Imports for gaining Financial Assets
Production-Consumption Cycle
Production
Consumption
LabourGoods & Services
Exp
end
iture
s
Incom
es
Government
Households
Consumption
Income
Govt. Expenditure
FinancialMarket
Saving
Investment Rest of the World
Imports
Exports
Circular Flow of Income and Expenditure[Showing also Leakages: Saving, Taxes, Imports; and Injections: Investment, Govt Expenditure, Exports]
Taxes
Firms
Table
Gross Domestic Product (GDP) – Concept – in Detail…
Gross Domestic Product (GDP) at market prices represents the final result of the production activity of resident producer units of an economy
Production is what is in Production Boundary
Gross Domestic Product (GDP)- Definition Contd.
GDP of an economy is a measure in monetary terms of production of all goods and services (also called products), counted without duplication, as sum of gross value added of all resident producer units (industries) within the economic borders of country during a given period of time and taxes less subsidies on products
Gross Domestic Product (GDP)- Definition Contd.
GDP is also equal to the sum of final uses of goods and services, less value of imports of goods and services
GDP is also equal to the sum of primary incomes distributed by resident producer units
GDP includes
All goods & services for which producers receive compensation
Illegal and Concealed productionProduction of goods for own
consumption
GDP includes (Contd.)
Production of services by government and NPI
Services of own occupied dwelling units of HHs
Domestic & Personal services produced by HHs for own consumption by paid domestic help
GDP excludes
Production of Personal and domestic services by unpaid Household member for own use
Social activities, Cultural activities and Unpaid Volunteers in NPI or Government
Do-it-yourself decoration, Maintenance and Small Repairs to Durables and Dwellings by Households
Gross Value Added (GVA)
For obtaining Gross Value Added (GVA) economy is divided into mutually exclusive sectors (industries)
Unduplicated output (GDP) is obtained by taking only the GVA in each of the sectors instead of output which is always duplicatedeg: flour mill and a bakery..
Gross Value Added (GVA) (Contd.)
GVA at basic price
= Value of Output at basic price
– Value of material inputs at purchaser’s price
GVA avoids duplication, gives GDP when added over all sectors of the economy including taxes less subsidies on products
Basic / producer prices
Basic price: amount received by producer from purchaser for a unit of output, excluding taxes on products
Producer price: basic price + taxes on output invoiced to purchaser less subsidies received by producer from government
Purchasers’ price: producer price + trade, transport margins on products, which are not separately invoiced
Valuation of NA aggregates
Gs & Ss may be valued differently, but should satisfy three principles:
Uniformity in the elements when they have to be aggregated
Avoidance of double counting Purchaser's price = basic price + trade margins
+ taxes less subsidies on products
GVA at basic / producer prices
GVA at basic price = Output at basic price
– intermediate consumption at purchaser’s price
GVA at producer price = Output at producer price
– intermediate consumption at purchaser’s price
GVA at basic / producer prices and GDP
GDP which is at market price can be obtained as: GDP = GVA at basic prices
+ taxes less subsidies on products GDP = GVA at producer prices
+ import duties*
*since output at producer price include taxes on products only for domestic output and does not include import duties