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Statistics for policy use
Seminar on Developing a Programme on Integrated
Statistics in support of the Implementation of the
SNA for CARICOM countries
3-5 February 2014, Castries, Saint Lucia
United Nations Statistics Division
Outline of Presentation
 Introduction
 System of National Accounts
 Economic indicators approach to macroeconomic analysis
2
Macroeconomic framework
To establish an enabling macroeconomic policy
framework for equitable and sustainable development
Requires a clear understanding of the underlying
factors that drive national income growth, including:
• growth in capital accumulation,
• changes in employment rate,
• labour and capital productivity,
• changes in the terms of trade and
• linkages between macroeconomic policies and
industrial and sectoral policies.
3
The need to be informed
 This gives rise to the need, not only to monitor
progress but also to evaluate whether or not goals
are being achieved.
 To obtain this overview of the economic processes
data need to be organised in a framework that
integrates and reconciles the data.
4
The need to be informed
 Requires data of sufficient scope, detail and
timeliness to analyse:
• the external and internal economic and financial
vulnerabilities,
• the interconnectedness of the global production
and the global financial system;
• the causes of changes in economic growth and
employment patterns; and
• to inform about the trade-offs between fiscal,
monetary and debt reform and initiatives to
increase growth, employment and equity.
5
System of National Accounts
 SNA describes a coherent, consistent and integrated
set of macroeconomic accounts that provides an
overview of economic processes, recording how:
• production is distributed among consumers,
businesses, government and foreign nations.
• income originating in production, modified by taxes
and transfers, flows to these groups and
• they allocate these flows to consumption, saving and
investment.
• The latest version of the SNA is the 2008 SNA
http://unstats.un.org/unsd/nationalaccount/docs/SNA2
008.pdf
6
System of National Accounts
 The SNA embodies basic distinctions as required
by economic theory such as:
• production (supply) and use (demand) with prices
• factors of production such as labour, capital,
technology
• transactions such as income, consumption,
investment, exports, imports, transfers, financial assets
and liabilities
• balance sheets with positions of assets and liabilities
• (institutional) sectors such as household sector,
corporate sector, monetary sector, government sector,
external sector
7
System of National Accounts
 The national accounts support macroeconomic and
sectoral policies including those related to
• employment,
• inflation,
• international trade, and finance
• growth and productivity of the economy
 Consequently, the national accounts provide an
overarching framework for macroeconomic statistics
to facilitate economic analysis and policy formulation
8
SNA and Intermediate Accounts for Policy Analysis
ECONOMIC
THEORY
SYSTEM OF
NATIONAL
ACCOUNTS
ECONOMIC
ISSUES
Policies and
perspectives
Concepts and
definitions
Indicators
Accounts
Basic data and statistics
9
Economic indicators approach to macroeconomic
analysis
 A set of national accounts data is generally too large
and conceptually too complex for users to handle in
analysis.
 Users require that the data set be summarized into a
smaller set of indicators that could be used to assess
economic conditions and development of a country.
 Indicator analysis – generally indicator ratios are used.
 The reason for using ratios between data rather than the
data themselves is that data generally provide little
information, unless they are related to other data.
10
Economic indicators approach to macroeconomic
analysis
 Example:
 GDP figure becomes only meaningful

if its growth over time is analysed, a per capita figure
is derived that makes it possible to compare the data
between countries, or a

percentage breakdown by expenditures or activities
is presented.
 Similarly, data about the level of imports are not very
informative unless

they are related to exports or

to domestic output, or

a breakdown by products is shown.
11
Economic indicators approach to macroeconomic
analysis
 Aggregates, such as GDP and GDP per capita, are
widely used as summary indicators of economic
activity and welfare.
 While useful in their own right, they are not the most
suitable measures of people’s material conditions.
 The GDP as the single most important measure of
economic performance and social progress does not
reflect ordinary people’s perceptions of their economic
conditions.
 The GDP also don’t reflect the link between
environmental sustainability and economy
performance.
12
Economic indicators approach to macroeconomic
analysis
 National accounts provides valuable information on
household material conditions at the macro level,
such as:
• measures of household disposable income;
• social transfers in kind;
• consumption expenditure;
• investment; and assets and liabilities.
13
Economic indicators approach to macroeconomic
analysis
 By combining these macro level aggregates with
micro sources (surveys, administrative records,
and censuses), it would be possible to derive
measures across household groups of their
• distribution of income,
• consumption and
• wealth
14
Economic indicators approach to macroeconomic
analysis
 Indicator ratios are roughly grouped by types that describe
economic conditions and development of the economy and/or
policies aimed at influencing developments
 First - describe the total economy and its relations with the
ROW
• aggregates per capita and per worker, prices and BOP
 Second - describing production by industries and sectors
• Production, behaviour and participation of corporations in the
economy
 Third - elements of fiscal policies and the impact of those on
other sectors
• behaviour and participation of Government in the economy,
taxes
15
Economic indicators approach to macroeconomic
analysis
 By linking the indicators to macro-economic framework, it
would be possible to identify not only the issues but also
the underlying variables that could measure the impact of
policies addressing the issues.
 As a macro accounts framework is generally used to
address policy issues within a country, the development of
indicators based thereon
•
would stimulate the use of those indicators by national
Governments in their assessment of national conditions
and developments,
•
in addition to the present use of indicators by
international agencies.
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Advantages of economic indicators approach
 Simple and understandable economic constructs that
summarize the development of the economy and the
economic and financial vulnerabilities over time.
 Economic indicators within a balanced system of
national accounts are mutually consistent.
 Economic indicators use the real and financial
interconnectedness within sectors, between sectors
and their counterparties in the rest of the world.
 Economic indicator analysis improve the use of
national accounts and its quality and reveal data
gaps
17
Performance Indicators for Industrial Statistics
 Performance indicators make it possible to evaluate performance
of producer units and the industrial sector.
 Objectives of industrial performance indicators
• As a policy-relevant statistic, provide a summary of the
performance of a unit or the sector.
• Simplified means of summarizing and communicating
complex information to decision makers.
• Help policy makers monitor and evaluate industrial activity
and inform strategic decision making.
• Help businesses to assess business environment in which
they operate
• Assist researchers and academicians for making
comparisons across countries and industries over time.
18
Types of Performance Indicators
 3 broad types
• Growth rates
• Ratio indicators
• Share indicators
 Most have comparative dimension or a reference
point allowing for time series evaluation.
 Used to measure overall performance of the
industrial sector, so not desirable to sacrifice this goal for
achieving detailed compilation on indicators of minor
performance requiring much detailed data.
19
Performance Indicators: Growth Rates
 Value added growth
• Expressed as (Yt/Yt-1)-1
• Y and t denote the value added and time period, respectively.
 Growth of employment in the industrial sector
• Annual (monthly or quarterly) percentage change of persons
employed.
• Can be compiled by economic activities, by gender, and by
size class of establishments.
20
Performance Indicators: Ratio Indicators
 Output per person employed
• Useful for tracing labor requirement per unit output
• Reflects the change of the input coefficient of labor by
industry
 Output per hour worked: total output/hours worked
 Value added per person employed: popular method for
estimating trends in labor productivity
 Ratio of orders to shipment: useful for monitoring sub
annual trends
• New orders received
• Unfilled orders at the end of inquiry period
21
Performance Indicators: Ratio Indicators (II)
 Intensity of energy consumption by activity
• Quantity of energy consumed in terajoules per unit of value added
• Declining trends indicate improvements in energy efficiency
 Water-use intensity by economic activity
• Volumes of water (in cubic meters) per unit of value added. Volume
consists of the sum of a) quantity of water abstracted from the
environment, plus b) the quantity of water purchased, minus c)
quantity of water sold.
• Indicates extent of pressure of the economy on water resources
 Ratio of environmental protection expenditure to value added
• Measures the efforts of an industry to protect the environment
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Performance Indicators: Share Indicators
 Share of industrial activity value added in total value
added
• Depicts the structural composition of the economy
• Shows the contribution of individual economic activities to
GDP
 Employment in industrial activity as a share of total
employment
• Useful tool to assess segmentation and trends of the labor
market
• Ratio of total number of persons employed in industrial
activity to total number of person employed in the
economy.
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Links between statistics, macro accounts, indicators,
projections and policies
[c]
Projections
of future
development
[b]
[h]
[a]
Policy
analysis and
formulations
Selection and
compilation of
indicators
measuring past
trends
[g]
Macro
accounts
design and
compilation
[e]
Statistics and
statistical
development
[f]
[d]
24
Links between statistics, macro accounts, indicators,
projections and policies
 Indicators and macro accounts play a central role in
statistical development and policy formulation.
 Policy formulation could be based on the use of indicators
measuring past and present trends [a]
 May also take into account future developments that are
based on alternative values of the indicators in the future
[b].
 The use of indicators in projections is reflected in a direct
link with the indicators measuring past trends [c].
25
Links between statistics, macro accounts, indicators,
projections and policies
 In order to define statistical development that would
support policy formulation, links are needed to translate
policy formulation
• into indicators [d].
• indicators into the design and compilation of macro accounts
[e] and
• macro accounts into statistical development [f].
 The derivation of values of indicators are represented by
the reverse links
• between statistics and the compilation of macro accounts
[g], and
• between the macro accounts data and the derivation of
indicator values [h].
26
Scope of Macro-economic Analysis by Milestones and
Minimum Required Data Set (MRDS)
 Milestone 1.GDP by Industry and Expenditure in current and volumes
 Growth analysis
 Milestone 2. GNI of Total Economy and Balance of Payments (current,
capital and financial accounts) and GFS transaction accounts
 Relations with the rest of the world (BoP) analysis
 Milestone 3. Production and generation of income accounts for
institutional sectors and for GG income distribution accs (including IIP
for BoP and GFS transactions and stock in assets and liabilities)
 Productivity analysis and fiscal analysis
 Milestone 4. Production, generation, distribution, redistribution and use
of income accounts and capital accounts for all institutional sectors (up
to net lending)
 Income distribution analysis
 --------------- Minimum required macroeconomic data set, annual
institutional sector accounts up to net lending and quarterly GDP
and quarterly BoP
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Scope of Macro-economic Analysis by Milestones and
Minimum Required Data Set (MRDS)
 Milestone 5. Production, income and use accounts,
capital accounts and financial accounts for
institutional sectors
 Growth analysis, BOP analysis, productivity analysis,
fiscal, income distribution analysis and investmentfinancing analysis
 Milestone 6. All transaction and flows accounts plus
balance sheets
 Financing-debt analysis (Flow of funds) and
vulnerability analysis (currency mismatches, maturity
mismatches (roll-over of debt), capital structure
(equity vs debt), solvency (assets over liabilities)
28
Reference
http://unstats.un.org/unsd/publication/SeriesF/SeriesF_81E.pdf
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http://unstats.un.org/unsd/nationalaccount/default.asp
[email protected]
Point for discussion
 Does the present scope, detail and quality of National
Accounts of your country meet present policy
demands in an interconnected economic and financial
domestic and global economy?
31
Thank You
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