Press Release
ECE/STAT/00/3
Geneva, 12 May 2000
Joint ECE/OECD/Eurostat Meeting on
National Accounts
Are we richer than we think?
Are we richer than we think? Aren't GDP figures under-estimated? This
was one of many statistical issues considered at a meeting in Geneva organized jointly by
the United Nations Economic Commission for Europe (UN/ECE), OECD and the Statistical
Office of the European Union (Eurostat). Experts from over 40 countries in Europe, North
America, Asia and Africa discussed how to better assess Gross Domestic Product (GDP) --
which measures overall economic performance -- and to improve its comparability across
countries.
The new system of national accounting, known as SNA 93, has immensely
improved the conceptual framework and provides better tools for macroeconomic analysis. It
has been implemented by many more countries world wide than its predecessor, and this
alone has improved comparability. "Despite progress made in better assessing the
value of GDP, there is still some way to go before all growth factors are taken into
account", says Lidia Bratanova responsible for national accounts work with the
UN/ECE. "The fact is that some countries still do not include estimates for such
elements as the use of financial services, investments in computer software or estimates
of non-observed economy, etc."
Use of financial services
Banks provide some services such as check cashing, provision of
bankcards and Automated Teller Machines, safekeeping and so on without directly charging
for them. Since there is not a direct charge these services are not reflected in GDP
unless special adjustments are made. Australia, Canada, and the United States make more
detailed adjustments to reflect the use of financial services than the countries in
Europe. The meeting reviewed an experimental study undertaken by Eurostat showing that
similar adjustments would raise GDP in the European countries by anywhere from 0.9% to
2.7%.
Measuring the "new economy"
An element which has a potentially significant upwards impact on GDP is
the definition of investment. The current accounting system considers purchases of
computer software and development of large databases to be an investment whereas the old
one considered these expenditures to be intermediate consumption. This change raised
investment in some countries by around 10% in recent years, and GDP by almost 2%,
reflecting some of the contribution of the "new economy". Spending on research
and development and on the development of human capital through activities such as
education, however, is not regarded as investment. "If spending on R&D and on
human capital were treated as investment, as some experts advocate, this would lead to
further upward revisions to the GDP estimates", says Lidia Bratanova.
Underground and other non-observed activities
The non-observed economy (NOE) comprises production activities that are
underground, illegal or simply missed by the statistical system. Unless efforts are made
to deal with the NOE, economic activity indicators could be under-estimated. This is of
particular importance for those countries where the share of NOE is significant. While
various countries are able to account for different aspects of the NOE, current rough
estimates indicate that the share of informal and underground activities in GDP varies
considerably among the CIS countries: from 10 % in Uzbekistan, Belarus and Ukraine, to 25
% in the Russian Federation and 33 % in Armenia and Georgia.
***
For more information about the meeting please contact:
Ms. Lidia Bratanova
Statistical Division
United Nations Economic Commission for Europe (UN/ECE)
Palais des Nations
CH - 1211 Geneva 10, Switzerland
Phone: +41 22 917 17 72
Fax: +41 22 917 00 40
E-mail: [email protected]
Website: http://www.unece.org/stats/documents/2000.04.sna.htm