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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
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
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
recording
of the flows and stocks of an
economy
in a systematic and integrated
manner.
Flows and stocks
Stocks are holdings of assets and liabilities at a given
time
Fixed capital, inventories, money and wealth
Flows reflect the creation, transformation,
exchange, transfer or loss of economic value
Flows provide a “moving picture” of the economy
Production aggregates, consumption expenditure,
investment and saving are all flow variables
Flows and stocks
The way flows and stocks are recorded is
governed by a number of specific rules and
conventions aiming at quantifying the
economic entries as precise and consistent as
possible.
These have to do with timing, valuation, and
the boundaries that distinguish economic flows
and stocks from non-economic variables.
Compilation
Compilers of the NA have to content with
all sorts of conceptual and data problems
To cope with these problems a variety of
conventions are used to classify, measure
and exclude various items
The NA are compiled in accordance with
the System of National Accounts (SNA)
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 Framework
Promotes 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
resources
Natural
resources
Produced
resources
Financial
resources
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 Resources
Population ( Children, Adult, Elderly)
Source of labour for the economy
(means of production)
Capable of managing other resources
Can reproduce itself
Consumes/Uses resources
Object of development
Natural Resources
(Air, Land, Water, Atmosphere, Biota,
Forest, Etc.)
Provide means and material inputs
for production
Absorb waste and residuals
Reproduce itself, Mostly
Provide environment for living and
consumption services
Produced Resources.. Fixed assets
(Buildings, Infrastructure, Transports, Goods in
Inventory, Livestock, etc.)
Result of production process
Used as means or material input to
production
Help 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 transaction
Provide means for flows and use of
resources
OPENING STOCK OF RESOURCES
Human
Produced
Natural
Financial
PRODUCTION
Income
Goods & Services
Residuals
DISTRIBUTION & USE
Intermediate
consumption
Final
Consumption
Other changes
(volume, price)
+
Accumulation
CHANGE:
human
CHANGE:
produced, natural, financial
CLOSING STOCK OF RESOURCES
Human
Produced
Natural
Exports
Financial
Format of the Integrated Framework Presenting Stock and Flows
Stock of resources (opening)
Production
Consumption
Capital formation, Net Exports
Other Changes in Volume/Price
Stock 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 Flows
Actors, 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 corporations
Financial corporations
Government units, including social security
funds
NPIs 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)
The GDP is the total value of goods and
services produced within the boundaries of
a country in a particular period
GDP methods
There are three ways to calculate the
gross domestic product of a country
Total value of production
= Output - intermediate consumption
Total value of final sales
= Final consumption + Capital formation +
Exports - Imports
Total income earned
= Compensation + Operating surplus
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
 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.
Simple example
Standard Industrial Classification of all
Economic Activities (ISIC Rev3)
A+B.
C.
D.
E.
F.
G+H.
I.
J+K.
Agriculture, forestry and fishing
Mining and quarrying
Manufacturing
Electricity, gas and water
Construction
Wholesale and retail trade, hotels and restaurants
Transport, storage and communication
Financial intermediation, insurance, real
estate and business services
L+M +N. Public Admin, education, health, social work
O.
Other community, social and personal services
Standard Industrial Classification of all
Economic Activities (ISIC Rev4)
A.
B,C,D+E.
of which C.
F.
G,H+I.
J.
J+K.
L.
M+N
O,P,Q.
R,S,T+U.
Agriculture, forestry and fishing
Mining and quarrying, manufacturing, electricity, gas and water
Manufacturing
Construction
Wholesale and retail trade, transport accomm. and food services
Information and communication
Financial intermediation, insurance,
Real estate
Business services
Public Admin, education, health, social work
Other services
Institutional sectors
 Financial corporate sector
 Non-financial corporate sector
 General government sector
 Household sector
 NPISHs
 ROW
Transaction flows in the economy
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
All Activities
General production boundary
Productive
Economic
SNA production boundary
Non-economic
Basic human
activities, natural
processes
Non-productive
Rule: if the performance of an
activity cannot be delegated
to another without the same
desired results/outcomes
SNA 93 Production Boundary
Implications for production of labour statistics
Productive activities
Economic
ALL goods*
Non-Economic
ALL services for sale,
Some services for
barter or in-kind pay own-final consumption
Activities covered to determine
economically active population
Some services for
own final consumption
Own final consumption.. services
Included:
 own account production of housing services
 domestic and personal services produced by
paid domestic staff
Excluded:
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 Use
By-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 ConsumptionHousehold 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
Labour
Consumption
Incomes
Expenditures
Goods &
Services
Circular Flow of Income and Expenditure
[Showing also Leakages: Saving, Taxes, Imports; and Injections: Investment, Govt Expenditure, Exports]
Exports
Govt. Expenditure
Firms
Investment
Rest of
the World
Financial
Market
Governm
ent
Consumption
Income
Saving
Imports
Households
Taxes
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 production
Production 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
duplicated
eg: 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