Gerard J. Eding Director National Accounts

Session 3: National Accounts in the

wider statistical context

Two papers

– Jacques Magniez (National Institute of Statistics and Economic Studies), "The Platypus Syndrome"

– Erich Oltmanns (Federal Statistical Office of Germany) and Klau Heine (University of Rotterdam), "W(h)ither R&D in the SNA?".

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The Platypus Syndrome

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For a platypus, Perry has above-normal strength, speed, stamina, accuracy, and reflexes

A historical perspective I

– On the shoulders of giants• Normalisation of NA started following WO II• Adventure lead by some individuals and restricted groups• Designed and drafted by a small group of experts• Under leadership of 2 prominent figures (academic &

practicioner)• Publication 1993 marks end of this period

– Secularisation of NA• Compilation of accounts becomes kind of industrial

process• Major component of economic information, Quarterly data• Satellite accounts, Multipurpose & Administrative use

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A historical perspective II

– Updating and revising the SNA, it becomes a democracy?• ISWGNA, 1999 -> continues updating at shorter intervals• Global revisions, larger intervals• Incremental updating process, AEG established in 2002• Broad involvement of the statistical community• Update process is designed to be limited, targeted and

democratic

– The SNA 2008 updating process, a shirked termination• Role AEG, recommendations on 44 issues• Worldwide consultation process, in a short period of time• Approval on 44 issues, rather than new text?

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The updating process and its output

– Substance• Some issues were consider in a to narrow perspective• Implementation revealed unanticipated consequences• Individual countries remain completely free to implement

or not– Form

• Not as clearly written as SNA1993• Need for tools to compare text paragraph by paragraph,

consistency• Role AEG, should have been more prominent?• Additional materials could have been provided

– Implementation, combinations with Benchmark and SNA93 issues

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The need of a conceptual expertise

– SNA 2008 release proved its accounting soundness, as most issues fit the central framework

– 2 topics could question the framework• A change in the definition of income• The introduction of human capital

– 2 topics need a conceptual investment• Globalisation• Relation economy – environment

– Finance does not seem to be a topic

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Next update, learning from the IASB

– Large, open and public consultation process– Most standards well worded– Interpretation services

– But also differences• Scope NA larger• IFRS no need for backward timeseries• NA more diverse users

– Strong point IASB, helping its users to understand the standard

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But we also need …

– Expertise from economist interested in descriptive and institutional aspects of economic life

– More cooperation National Accountants and Academics– More focus and expertise AEG on conceptual issues– Leadership– Different approaches in updating, to stimulate

reflections, progress and research• Experimental• “Why not” approach

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Write a conceptual framework!

– Short document (50 pages)• Explaining fundamental concepts of central

framework• In relation to underlying economic principles• To counterbalance increasing pragmatism, which

may lead to inconsistencies

– Paper contains a proposal for its contents• Based on IASB• Incorporating the principles mentioned above• Add: prices and volumes, production concept,

economic ownership

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“W(h)ither R&D in the SNA?”

Paper presents 2 issues:

1. Influence on GDP (and the uncertainties related …)2. Guidelines in context of legal systems (and their

application to NA …)

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R&D in the SNA 2008

– Capitalised R&D a long discussed issue, – Even since the discussions in the SNA 1968 update – Revised SNA, march 2008:

R&D is treated as capital formation except in cases where it is clear that the activity does not entail any

economic benefit for its owner In which case it is treated as intermediate consumption (par. 6.230)

– Introduction new concept is labour intensive -> handbooks and manuals to help -> a large set of rules, guidelines and “laws”

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R&D and a new level of GDP …

– OECD countries: average impact 2.2 % in 2010

– R&D intensity differs between nations, thus different impact on GDP

– From 0.5 to 4.0 %– Gross expenditure on

R&D as proxy

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Four issues impact R&D on GDP

1. Property as a produced asset?

2. Delineation of GFCF and intermediate consumption, e.g.• all activities are GFCF? • what about freely available R&D? • selection by socio-economic purposes? • unsuccessful R&D?• Conclusion: all R&D activities should be

capitalised, except the purchases of R&D products by the R&D industry (but ?)

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GFCF versus Intermediate consumption

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Four issues impact R&D on GDP

3. Shares of market production and production for own final use determine impact

4. How about service lives, what to assume?

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2nd part: NA and legal systems

– Systems of law:• Origin and spread• Codification• Precedents• Logical reasoning

– Are NA thus based on a legal system?

– EU differs from the rest of the world…

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Common law versus civil law

– Applying these principles to two special issues

• Property of R&D a produced asset• Delineation of R&D as GFCF or intermediate

consumption

– May lead to different outcomes …

– Recommended to keep these principles of law in mind for future revisions of NA concepts!

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Discussion: Pragmatism versus Concepts

Yes, SNA must have a strong conceptual basisBut, must be also balanced with pragmatism

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SNA needs a reality check?

Discussion: Sensitivity to assumptions

– Assumptions in measuring

– See R&D, but also FISIM, economic ownership, etc.

– Comparability and how to explain it to our users?

– We need more focus on the uncertainties in NA?

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Process towards a next SNA ….

– Excellent suggestions papers:

• Combine conceptual and statistical knowledge

• IASB/Framework• Legal perspective• Leadership

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But how about a modernisation of our discussion and communities?