CES/1995/R.12/Add.4
9 March 1995
Submitted by the Central Statistical Office of Poland
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2. There are different concepts and definitions of integration . Integration according to Webster's Dictionary means "to absorb into an existing whole". According to F. Perroux integration consists in the consolidation of two or more economic units in a certain whole. R. Marjolin treats integration as the process of unification. Balassa and Giersh put emphasis on the free movement of commodities, labor and capital as prerequisites of integration (I would add here a free movement of information and ideas). It seems that the Maastricht Treaty goes further and the notion of integration is treated more broadly since it includes in the entry criteria of the European Union inter alia stabilization of democracy and law and the establishment of institutions guaranteeing minority and human rights, decrease in the gap in economic levels and establishment of an effective market economy.
3. There seems to be a distinction between integration processes and effects in the European Union Treaty in which we read that the integration processes such as the creation of the common market and the realization of a common policy are to have as an objective a stable non-inflationary growth, environment protection, high level of employment and social security, rising level of well-being and of the quality of life as well as economic and social compatibility and solidarity among member states.
4. In the present paper (i) I shall understand integration broadly and not limit this notion to the economic sphere only, and (ii) I shall not try for the time being to distinguish between processes and effects but include both in the proposal of statistical indicators describing ongoing integration. In connection with the latter I should like to say that in my opinion it will be always very difficult to single out effects of integration processes from those which are not directly dependent on integration. Thus statistics can do nothing more than describe those changes in the situations (economic and other) which occur during integration and which (according to our assumption) are to a large extent connected with integration.
5. According to another, restrictive approach, statistics could relate only to certain processes (however not effects) described by convergence criteria and to processes (actions) described in the so-called "growth initiative" and similar documents of the European Union.
6. Statistical indicators aiming at the description of the integration processes and effects should relate to the following spheres:
ECONOMY
- general economic situation
- commodity markets
- labor markets
- finance
CULTURE
- production and distribution of cultural goods
- knowledge of the European cultural heritage and present cultural development
EDUCATION
- level of education
- educational systems and profiles
SOCIAL SECURITY AND HEALTH
- social security
- health and health protection
DEMOCRACY AND LAW 7. The question is of course whether statistical indicators can be found to describe all the spheres mentioned above. Sometime information needed does not have a statistical character. The problem may also be - in certain cases - to find the most important indicators from a range of indicators characterizing a given sphere (the number of indicators should be in practice limited).
8. Indicators relating to the economy will be probably the core of the whole statistics on integration, which does not mean that other indicators are less important.
9. It is sometimes difficult to distinguish between the condition for and the integration processes as such. Effective integration cannot take place between economies whose level of economic development and economic structures are dramatically different. For example an obstacle to integration may be a large share of agriculture in a given country in comparison with shares of agriculture in other countries, since in such a situation a common agricultural policy is impossible in practice. The same relates to large differences in the level of wages and real disposable incomes or large differences in the productivity of labor. In such situations one can expect that certain regulations restricting the free movement of people and commodities (protection of home markets) are introduced, which is against the very idea of integration. The same or similar arguments can be used in relation to differences in the level of unemployment, rate of inflation, level of interest rate, rate of exchange etc. Thus it is not easy to say precisely when integration processes begin and a preparatory phase ends.
10. One can expect that when the effects of integration processes start to be visible the gaps in economic levels would decrease, the economic structures would become less different (but not identical), disparities in the levels of wages and incomes would become less acute, etc.
11. I shall not try to distinguish conditions for integration from the processes of integration in the proposal of a set of statistical indicators describing integration processes and effects in general.
12. In describing a general economic situation the differences in the level of economic development, in the structure of the economy and in the growth rates should be taken into account. The differences in the level of economic development could be measured by indicators such as GDP per capita recalculated to international currency, households incomes and consumption per capita recalculated to international currency, capital formation recalculated to international currency, productivity of labor recalculated into international currency, and by several indicators of economic infrastructure. The differences in the structures could be described by the share of agriculture, of manufacturing and of market and non market service sectors in GDP, by the structure of employment by main sections, by the share of foreign capital and the level of internationalization of the processes of production (patents, licenses, or international cooperation network). As far as growth rates are concerned it seems to me that the indicators of growth rates of GDP, consumption, capital formation and productivity of labor would describe the differences sufficiently (the relatively higher growth rates of less developed economies indicate a progress in the integration). All those data seem to be available from general statistics.
13. As far as characteristic of commodity markets are concerned the statistical indicators should relate to differences in the structure of production (to give a base for studies in the compatibility of structures of economies concerned, including the cooperation in the production of high-tech products), to final demand and above all to indicators which relate to all types of international relations (export of goods and services, movement of capital etc.) between economies which integrate and with other economies. For the latter purpose foreign trade statistics and balance of payment statistics could be used. Information on the levels and changes in the level of customs (if any) and other tariffs which are an obstacle to trade as well as information on anti dumping measures could give additional insight into the integration processes (especially in the case of Poland and other Central European countries).
14. Indicators on labor markets should give information on the average level of wages and salaries by sections of the economy, recalculated to an international currency, on the level of employment and unemployment by age, sex etc. and on migration. Indices of growth of real wages and salaries would give information on the relative decrease in the differences in the wage level. The problem of employment of foreign workers could be characterized by the description of rules concerning the employment of foreign labor. Most indicators are available from labour statistics.
15. Statistical indicators relating to the financial situation are practically speaking those which are listed in connection with convergence criteria (c.c.) and apart from inflation they characterize processes rather than effects. The indicators are: (i) ratio of the public debt to GDP (according to c.c. not higher than 60%), (ii) ratio of the budget deficit to GDP (according to c.c. not higher than 3%), (iii) average rate of inflation (CPI) - which according to c.c. does not exceed more than by 1.5 percentage inflation in the three member states with the lowest inflation, (iv) interest rate (long term) - which according to c.c. is not higher more than 2 percentage points from the interest rate in the three member states with the lowest inflation, and (v) exchange rate - which should be according to c.c. within agreed limits. All these indicators are available from the financial statistics.
16. As far as other than "economy" spheres listed in paragraph 2 are concerned the proposals put forward in this paper will be still more general and tentative in character than those relating to the former one.
17. The following two types of indicators could be used to characterize the integration processes and effects in the sphere of culture .
18. The first set of indicators could be based on current statistics probably available in most countries. For the second set special investigations (household survey) would be needed. The first set would consist of five indicators (per capita): (i) books issued according to UNESCO classification, (ii) books translated from foreign languages according to UNESCO classification, (iii) periodicals issued according to UNESCO classification, and (iv) number of newspapers issued and size of editions.
19. The second set of indicators should give answers to the following: (i) average number of books read in a year, (ii) average number of newspapers/periodicals read per month, (iii) average number of participations in the theater or musical performances per year, and (iv) knowledge of the most famous European writers, painters, composers (names and works) and other cultural achievements.
20. It seems to me that only a few indicators could be found to give comparable statistical information in the field of education (systems of education are rather different and it is difficult to find comparable indicators). Those indicators could relate to: (i) population by broad educational level (by years of education), and (ii) pupils in schools of different level per 1000 of population or per age groups. On the other hand there is a need for non-statistical (or quasi statistical) information on the educational systems and profiles since certain unification in this field will probably be the result of integration processes.
21. As far as social security is concerned it is rather difficult to find statistical indicators which could be used to evaluate the increase in the social security level as the result of integration. The obvious "candidates" are: (i) number of persons above 65 receiving pensions in relation to the total number of population over 65 and (ii) the relation of the average pension to the average wage. It is certainly not enough. As in the case of "Education" there seems to be a need for descriptions of the social security systems in general to study the level of uniformity in this respect.
22. In the case of indicators relating to health there are several statistical indicators available which could be used as the base for evaluation of the integration effects. A tentative proposal is the following: (i) percent of expenditures on public health in the state budget and size of such expenditure in common currency per capita, (ii) average length of life, (iii) infant mortality, (iv) number of doctors per 1000 population, (v) incidence of major diseases, and (vi) outfit of hospitals in modern equipment (a special survey would be needed). In addition, a general description of the health protection systems would be needed (non-statistical information).
23. For the section entitled "Democracy and Law" I shall only list problems which in my opinion should be covered, without any - even tentative - proposal of statistical indicators (special studies relating to these spheres are probably needed). The problems I have in mind are the following: (i) human rights, (ii) minority rights, (iii) violation of law, (iv) economic order - monopolies and competition, and (v) wage and income distribution.
24. Finally it should be stressed that there is a danger of certain incomparability between countries in categories such as GDP (esp. problem of coverage and methods of estimates of hidden economy), budget deficit and level of public debt. Methodological studies in this respect seem to be needed.