NOTES ON DEVELOPING COUNTRIES AND THEIR STATISTICS

Statistics for developing countries often are misunderstood and misinterpreted because the published data do not distinguish between the economically modern and the traditional sectors. The purpose of economic development is to move a nation from the traditional, or largely non-monetary, subsistence agriculture type of life, to the modern or money oriented and technologically developed type. Statistics of national accounts, the economically active (the working force), and other topics often fail to be useful for economic development purposes because they are presented for the totality of the country and do not show the modern-traditional sectors separately.
In addition, data are often misinterpreted and used incorrectly because the development economists do not understand the nature of the data—how they were collected and what they really signify. This point is illustrated with the economically active statistics. Finally, a plea is made for more statistics and information about families.     

PERCEPTIONS, PROBLEMS AND METHODS OF PREPARING LABOUR FORCE ACCOUNTS IN INDIA

The paper concerns the links between labour force accounts and national accounts. It first discusses the variation in the perception of labour force among countries which results in much disparity in recorded participation rates. This obviously makes international comparison difficult. Since benchmark labour force information is often tied to population censuses which are infrequent and vary in concepts and approaches, even comparisons within a country over time are difficult. Finally a discussion of the use of labour force data to estimate the unrecorded economy is followed by suggestions on the direction for future work.     

Measuring the Labor Income Share of Developing Countries: Lessons From Social Accounting Matrices

This paper addresses the challenges of measuring the labor income share of developing countries. The poor availability and reliability of national account data as well as the fact that self-employed—whose labor income is hard to capture—account for a major share of the workforce and often work in the informal sector render its computation difficult. Consequently, measuring the labor share requires assumptions. I consult social accounting matrices in addition to national account data to gain information on the production structure and self-employed incomes in developing countries. The final data set covers about 90 developing countries from 1990 to 2011. The data suggest that the finding of declining labor shares of previous studies also applies to the sample of low and middle-income countries. Furthermore, I find the labor share in developing countries to be about one-half in size and hence less than the standard “two-thirds” in economic literature.     

THE UNITED NATIONS SYSTEM OF NATIONAL ACCOUNTS IN THE MIDDLE EAST

After an introduction setting out the general state of work on the national accounts in the Middle East the author considers the principal uses of national accounts statistics in less developed countries. The first group of uses discussed is in connexion with the measurement of growth and the making of international comparisons. The author is of the opinion that in many cases the primary statistical series are so weak that the fact they they are combined together into a series called national income or gross domestic product lends to them a significance which they do not really possess. The real problem is to improve the quality of the primary series. A second use of national accounts statistics is in connexion with fiscal and budgetary policy. In the statistically advanced countries this is one of the most important uses but in the less developed countries budgetary policy has not yet reached a level of sophistication which would call for the use of national accounts data. Moreover, the time factor involved in assembling accurate national accounts estimates militates against their effective use for short term forecasting. The author considers that the most important use for national accounts statistics is to provide a framework for development planning. The United Nations system is not altogether appropriate for this purpose. It grew up primarily as a system for recording income flows but in development planning one is concerned equally with commodity flows with a great deal of attention being focussed upon intermediate products. The proposals of the working group of African Statisticians for an adaptation of the S.N.A. to African countries represents a most important advance in this respect. In the final section of the paper the author advocates a broader definition of capital formation to include developmental expenditure which is not properly defined as fixed capital formation. Education expenditure is cited as an example. It is suggested that in the national accounts it would be desirable to operate with gross concepts. However, the growth of the capital stock is obviously important in less developed countries and it is suggested that statistical techniques be devised to measure it directly wherever possible. Finally, attention is drawn to the ambiguities and weaknesses in the concept of residence as used at present in the S.N.A.     

SURVEY OF COUNTRY PRACTICES IN COMPILING BALANCE-SHEET STATISTICS

From a survey of the 150 members of the United Nations it appears that only one country could at present provide the full range of balance-sheet statistics called for in the United Nations guidelines on this topic. Seven countries could compile balance sheets confined to conventional types of assets and liabilities–excluding assets like consumer durables and mineral deposits. A further 31 countries presently publish some statistics on certain balance sheet items, but as the data have generally not been collected with a view to constructing national balance sheets they tend to be deficient for such purposes both in coverage and valuation. In other countries only rather trivial kinds of balance-sheet data are available, such as certain banking statistics collected by the central monetary authority for purposes of bank regulation.
A review of sources and methods shows that for financial assets and liabilities extensive use is made of company accounts and enterprise surveys. The estate multiplier method is used in several countries for measuring household assets and net worth. As regards producers' fixed assets, countries with centrally-planned economies generally take direct surveys of assets, while in countries with market economies the perpetual inventory method is preferred.
It is noted that many of the purposes for which balance-sheet statistics are used can be adequately served without constructing a complete set of accounts. To date balance-sheet statistics have therefore tended to be developed in a piecemeal fashion with priority going to those parts of the accounts whose uses for economic analysis are most obvious. Chief among these are statistics on the financial assets and liabilities of corporate enterprises and statistics on the stock of producers' fixed assets. These two areas also predominate in countries' plans for the future development of balance-sheet statistics.     

MEASURES OF TOTAL HOUSEHOLD CONSUMPTION

By expenditure on education, health, housing and other public services, governments provide many goods and services which are alternatives to, or additional to, household expenditure on consumption. In most Western national accounts, the two forms of consumption are rigidly separated. Yet the combination of the two–the concept of total household consumption–has obvious importance for the measurement and comparison of living standards and for the formulation and analysis of policy. This concept is recommended as an additional aggregate in the revised SNA. It is displayed in the UN International Comparison Project (ICP). It is used as a major aggregate ("total consumption of the population"), although hitherto generally excluding nonmaterial services, in the Material Product System. Yet it is rarely shown explicitly in Western national accounts. One reason is the slow progress in the analysis by purpose of government expenditure.
This paper shows how far figures of total household consumption, and of its division between collective and private consumption, can in fact be derived, for the advanced countries, from the data provided to the UN Yearbook of National Accounts , supplemented b y the ICP. The results show first the wide national variations in the relation between the two forms of consumption but, secondly, the gaps in information on this crucially important topic. The relation between direct government expenditure for collective consumption and transfer payments to households ("social income") is also examined. High and low levels of these two forms of State support to consumption reinforce each other almost as often as they offset each other. But, again, the data provided by national accounting statistics are very incomplete.
This paper was prepared for the 16th General Conference of the IARIW, August 1979.     

EVIDENCE ON RELATIONSHIPS AMONG ALTERNATIVE MEASURES OF CONCENTRATION: A TOOL FOR ANALYSIS OF LDC INEQUALITY

The evidence on economic inequality in nearly all developing countries is both seriously incomplete and of moderate to poor quality. In addition, information often corresponds to distributions which appear to be less revealing and useful than other ones; thus it can be argued that the frequently available distribution of income among households ranked by household income is less helpful than the seldom found distribution of consumption among persons ranked by per capita household consumption. Whether one's objective is to assess inequality in some absolute sense or (especially) to make comparisons across countries or evaluate trends over time, it is useful to know whether systematic relationships exist among various measures of inequality, in particular between those most commonly available and those conceptually most interesting. Illustrative comparisons of a variety of inequality indicators are presented. They suggest that in developing countries the concentration of income among persons (assuming equal distribution within the family) does not differ much from the concentration among households. They also suggest that the concentration of consumption is somewhat less unequal than that of income, the ratio of the respective Gini coefficients tending to cluster around 0.85 to 0.90.     

AN EXAMINATION OF THE FEASIBILITY OF USING MONETARY DATA FOR NATIONAL INCOME ESTIMATES

In a number of underdeveloped countries today, adequate statistics for estimating national output by traditional national accounting methods are unavailable or unreliable. However, many of these same countries do publish data on monetary variables at an early stage in their development. These data can now be used to estimate national income.
In this study the money supply was defined to include all currency in circulation, private deposits subject to check at all banks and postal systems, all government deposits, and unused overdrafts less float. The national accounts data were taken from United Nations sources and data supplied by various foreign statistical offices. To make the accounts more comparable in terms of coverage and to limit reported income to the monetized sector of the economy, non-monetary imputations were deleted.
The monetary and national accounts data were combined in a multiple, stepwise regression. National income was used as the dependent variable and money supply and other data were used as the independent variables. The final estimating equations explained about 96 per cent of the variation in income between countries. Other tests were conducted using the currency ratio, transactions velocity, population, and per capita consumption. However, these variables did not augment the explanatory power of the regression equations.
When the equations were used to estimate national income for twenty-two under-developed countries, the derived estimates showed a high degree of concordance with reported income where it existed for comparative purposes. The results indicate that monetary data can be used to estimate national income for underdeveloped countries with a relatively high degree of accuracy, between countries, and from year to year within a country.     

FINANCIAL OPERATIONS AND MONETARY STATISTICS: IMPROVED CONCORDANCE IN THE FRENCH NATIONAL ACCOUNTS

National accounts are a powerful means of coordinating different statistical systems. The better their classifications are adapted to the basic statistics or the information blocks one wishes to use, the better the national accounts play their part. This statement explains why, taking the opportunity of revising the whole system, French national accountants tried to improve the concordance between financial operation tables and monetary statistics. Other reasons leading to this attempt can be found in the dissatisfaction of users having to face different and inconsistent financial information such as the monetary statistics on one hand and the financial aggregates of the national accounts on the other; and even more reasons appear in the organizational field since those two statistical systems are issued by two neighbour services of the Banque de France, often depending on the same sources. Further, many propitious factors are converging at the same time: the French financial system is undergoing profound transformations originating as much in the behaviour of economic agents as in the law, and the statistical operations have to adapt to these changes. The national accounts will in the near future include balance sheets in which financial asset holdings are directly comparable to the money supply aggregates. In its first part our paper sets forth the detailed reasons for our attempts, the conditions in which it took place and the present results. We have reached a much better degree of consistency between the two systems, even if the final scheme has not yet been adopted in either the monetary field or in the field of national accounts. But an important question remains open about the durability of the harmonization: we think that it could be relatively uncertain because of the differences in the goals pursued by the two systems and the constraints which they face. That is why in the second part of the paper we tried to review the way such a pragmatic undertaking as ours could call into question the way in which financial operations are described in the system of national accounts. If one agrees with the present boundary between the real and the financial sphere, the articulation must remain somewhat elementary. But if one wants to revise the usual so-called dichotomy between financial and non financial phenomena, we think that a complete rebuilding of the conceptual framework of the accounts has to be done; this would necessitate a considerable amount of theoretical and practical work.     

PRICE STATISTICS REQUIRED BY DEVELOPING COUNTRIES FOR NATIONAL ACCOUNTING PURPOSES

In both developed and developing countries, the national accounting statistician who wishes to establish a composite set of values in current and base year prices is faced with a series of difficulties arising from a lack of indicators which are adequate for relating quantities and values within the national accounting framework. Consequently, ad hoc solutions are extensively adopted and use is made of price data which in the majority of cases have been collected for completely different purposes. The inter-relationship of prices, quantities and values fundamental to the compatibility of the national accounts can therefore be, and often is, a rather tenuous one. In the case of many developing countries, the situation is accentuated by a very volatile behaviour of prices, a greater impact of price change and a much greater scarcity of useable statistical material. In addition, since structural change is frequently implicit in a development process, the pattern of values and of prices is often variable and irregular—this in turn creates problems in determining relative importance, in assigning weights and in imputing for prices of items not directly entering into the calculation of the indicators.
This paper analyses the series which are most commonly available, it points out the major deficiencies or limitations and it attempts to formulate a few guide-lines for determining priorities called for in an integrated network of price statistics.     

COMMENT MESURER LA CONTRIBUTION DU SECTEUR NON STRUCTURE A LA PRODUCTION NATIONALE DANS LES PAYS DU TIERS MONDE?*

This article discusses methods of integrating the “informal sector” in the national accounts of developing countries. This sector, defined generally as composed of producers who do not keep formal accounts, is difficult to capture by usual statistical collection techniques, and therefore is often neglected. The paper develops the requirements for a direct inquiry approach to obtaining data for this sector, emphasizing the need for national, exhaustive, and periodic coverage. It then proceees to propose methods of analysis for informal sector enterprises with and without fixed locations, tailored to the specific characteristics of each trade. The final section presents some results of application of the proposed methods in Tunisia and Niger.     

STUDIES OF INCOME REDISTRIBUTION IN DENMARK

Income redistribution studies on the macro–economic level have been undertaken in Denmark for the years 1938–39, 1949, 1955, and 1963. By use of national accounts figures and all other available statistics, it was on certain assumptions possible to distribute public sector income and expenditure by income groups.
A quite different approach is used in a Danish redistribution study on the micro-economic level for 1971, which relies solely on the comprehensive data from the family budget survey for that year. Unfortunately this study only relates to employee households.
This paper deals with the 1963 and 1971 studies. First it describes and discusses the differences in methodology between the two studies and indicates some ideas for future studies in this field in Denmark. In the following sections some main results of the two studies are given, briefly for the 1963 study and more comprehensively for the 1971 study. The studies show the great and growing strength of the policy of redistribution through public sector income and expenditure in Denmark.
It is the opinion of the authors that the appearance of redistribution studies based on comprehensive family budget surveys makes for a substantial improvement of redistribution figures, and that the purely micro-level frame of reference makes it possible to interpret the results in a more satisfactory way than before. Furthermore, the appearance of detailed input-output based national accounts data should bring about further improvements in redistribution figures through better data on indirect taxes and subsidies as well as supporting data which are necessary to link the micro and macro levels in a consistent way.     

NATIONAL ACCOUNTS ESTIMATION USING INDICATOR RATIOS

We propose a new approach to national accounts compilation, which also serves as a formalization of current compilation practices. When formalizing the procedure, a distinction is made between (basic) data, national accounts identities and so-called indicator ratios. The latter are ratios of or percentage relations between national accounts variables, such as the relation between output and value added. Indicator ratios are currently used in national accounts compilation practices in order to make adjustments to the basic data or to fill in missing data. The latter use is particularly relevant when basic data are scarce, which is the case not only in many developing countries, but also in developed countries when annual accounts are compiled for recent periods. The (basic) data, indicator ratios and identities together are used in a Bayesian approach to estimate the values of national accounts variables and analytical indicator ratios based thereon. The amendment of the current practices consists in introducing reliability intervals of basic data and indicator ratios, which allows for the use of a much larger number of indicator ratios in the compilation and checking of national accounts data. The Bayesian compilation approach makes it possible–in contrast to current practices–to use indicator ratios both as priors and as analytical indicators.     

ASPECTS OF THE OFFICIAL NATIONAL INCOMES TABLES OF FIJI*

This paper describes and examines three particular features of the official national income tables recently published by the Fiji Government. The need of development planners for a comprehensive set of national accounts incorporating detailed information relating to central government current expenditure, the operations of the private business sector, and the rural household economy has assumed special importance. The uses and limitations to the information contained under these specific headings is discussed and throughout an emphasis is placed on the need for the adoption of consistent and systematic methods of collection and estimation procedures to facilitate planning and decision making. As aids to more detailed interpretation and analysis, the features described are considered to be of general interest to other developing countries.     

Neural networks as a forecasting instrument for the polish stock exchange

The transformation of the economic systems taking place in Central and Eastern European countries has ruined the previous structures, even though the market economy mechanisms have not been created yet. The present mechanisms of economies in transition have not been recognized yet. Therefore, it is extremely difficult to apply traditional quantitative methods such as statistics, time series analysis, and econometrics to describe the economic system and to forecast the further development of the economic phenomena. In this paper, the author discusses the experience of constructing artificial neural networks and forecasts (using neural networks) for the Polish Stock Exchange in the early transition period. The traditional approach to prediction using an econometric model to compare the results obtained applying different methods will also be presented.     

ON THE TREATMENT OF TAXES AND GOVERNMENT IN THE NATIONAL ACCOUNTS

Framed in the context of the ongoing revision of the 1993 System of National Accounts (SNA), this note proposes a new presentation of the National Accounts. While it does not require new information, nor difficult calculations, it is suggested to be conceptually clearer and practically simpler. The changes concern the treatment of taxes and government in the national accounts which imply that: (i) GDP, measured at basic price, is now exactly the sum of all value added, which is split in the compensation of employees and an enlarged operating surplus; (ii) the two functions of government are clearly distinguished in a modified sequence of accounts, that is, as producing non-market services up to the allocation of primary income account, and then as redistributing the national income; and (iii) with a conventional allocation of government services and GDP broken down between market GDP and non-market GDP, households remain the only final consumer and the so called question of consumption subsidies is resolved.     

SOME CONCEPTUAL DILEMMAS IN THE USE OF PRESENT NATIONAL ACCOUNTS

The following note is a very concise summary of a paper² that was presented at the 17th General Conference of the International Association for Research in Income and Wealth at Montvillargenne, August, 1981. As such it may be considered a new paper, although it contains practically all the conceptual issues of the original paper. As in the original paper its intention is only to place these issues before a wider audience, while specific solutions will have to wait for a more detailed treatment. All issues concern certain conceptual dilemmas, arising in particular in the use of national accounts when available concepts do not coincide with those for which data are sought. A decision to change the existing basic concepts would however require not only the support of the scholars in this field but also the co-operation of the users of national accounts. Due to extreme summarizing, certain statements are now fairly compact—compared with the original paper. It is nevertheless hoped that the basic problems still shine through. The following note gives instances in which the traditional national accounts, as established according to existing rules and statistics, may not suffice for actual data requirements, yielding differences in growth rates of several percentage points.