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SNA News and Notes
SNA News and Notes
Issue 12, December 2000
Current issues of the implementation of the 1993 SNA: Treatment of
Mobile Phone Licences
By Paul McCarthy, OECD
(For Information)
The amounts realised by
some European governments in recent months from selling licences to use
the radio spectrum for the operation of third generation mobile phones
have been significant. In some cases, they are equivalent to two percent
(or more) of GDP. An important question arises about how such licences
should be recorded in the national accounts, a question which the 1993
SNA does not address specifically because the third generation mobile
phone technology has been so recently developed. Eurostat was asked to
make a decision by the end of June on the appropriate recording of the
related transactions and so the ISWGNA held a special meeting on 23 June
2000 to discuss the issue.
Four options were considered
for the treatment of the purchase of the licence:
- payment of taxes
- purchase of services
- payment of rent
- the purchase of an asset.
Treatment as taxes was ruled
out because the payments for licences are neither compulsory nor unrequited;
indeed there is fierce competition to make the payment. The purchase of
a service was also ruled out because the payments made are clearly out
of all proportion to the costs to government of making the spectrum available
to the licensee. By elimination, therefore, the licensee is acquiring
access to an asset. The asset could be either rented by the owner or sold
to the licensee. The first question was the nature of the asset involved
because the radio spectrum is not explicitly included in the 1993 SNA
classification of assets. The ISWGNA considered it fits best into the
category of tangible non-produced assets, which are described as covering
"mainly land and subsoil assets" (paragraph 7.87). In addition, the right
to use the spectrum could be treated as a new asset separate from the
spectrum itself. This asset, the licence in a narrow sense, is a legal
construct and thus would be classified with other legal constructs as
an intangible non-produced asset. The choice between options (iii) and
(iv) above is thus between the rent of the spectrum (option (iii)) and
the creation and purchase/sale of the licence as an asset in its own right
(option (iv)). Payments for the licence can consist of (1) an upfront
payment, (2) regular payments at specified intervals, or (3) a combination
of these two. The means of payment does not directly affect the classification
as rent or purchase of an asset. The ISWGNA considered that the licence
should be regarded as the acquisition of an asset if it is issued for
a term of more than one year; if the licence is for one year or less,
then it does not represent an asset and the payments should be recorded
as rent. In the 1993 SNA, intangible non-produced assets are described
as consisting of "patented entities, leases or other transferable contracts,
purchased goodwill and other intangible non-produced assets" (paragraph
10.130). Mobile phone licences are sometimes made available on the condition
that they cannot be resold by the licensee to a third party. Does this
mean that allocating the licence to the heading of intangible non-produced
assets is invalid because it is not a "transferable contract"?
The 1993 SNA definition
of an asset (paragraph 10.2) does not include transferability as a criterion
for an entity to be classified as an asset although, as indicated above,
the term "transferable" is included in paragraph 10.130 with respect to
"..... leases or other transferable contracts .....". Members of the ISWGNA
who had been involved in writing the 1993 SNA confirmed that the term
"transferable" was included in this paragraph as a sufficient, rather
than as a necessary, condition to record an asset because it defines a
time when a market value can be established for it. Thus, the licence
itself is an asset because it provides economic benefits to its owners
over a period of time. Even if the licence were strictly non-transferable
and had to be relinquished to its original owner if the licensee were
taken over by another firm, it could still be classified as an intangible
non-produced asset in the hands of the licensee. In any case, the ISWGNA
is of the opinion that most licences are transferable indirectly (through
the licensee being acquired by a take-over) even if they are not able
to be sold directly. The ISWGNA reviewed this decision on 21 September
2000 at its regular bi-annual meeting in the light of papers being presented
at the OECD meeting of national accounts experts in the following week.
The ISWGNA considered that no new arguments were being advanced and thus
the decision taken at the June meeting should remain its collective view.
Also it considers there is no need to formally change the 1993 SNA specifically
to handle this case though some clarification of the issues may be helpful.
An electronic discussion group (EDG) has been set up by the OECD on behalf
of the ISWGNA to obtain views on this issue. It can be found under the
"EDG" button at http://www.oecd.org/std/nahome.htm
Current issues on the
implementation of the 1993 SNA: Tourism Satellite Accounts
By WTO, OECD, Eurostat,
UNSD (For Information)
In the early 1990s, both
the World Tourism Organisation and the OECD independently started work
to improve understanding of the socio-economic importance of the tourism
industry. Both organisations drew on work initiated by some National Statistical
Offices and built around the System of National Accounts 1993. Several
years were necessary to agree on how to treat some difficult measurement
issues and on a clear delineation of the tourism economy. In 1999, the
"World Conference on the measurement of the economic impact of tourism"
(Nice, France, 15-18 June 1999) recognised this early work but requested
that a single tool for all nations be developed to measure the economic
impact of tourism. The World Tourism Organisation, OECD and Eurostat therefore
created an Inter-Secretariat Working Group on Tourism Satellite Accounts
to develop rapidly - on the basis of existing frameworks - a common conceptual
framework for a Tourism Satellite Account. The objective was to present
it to the thirty-first session of the United Nations Statistical Commission
(UNSC) between 29 February and 3 March 2000. They presented an agreed
framework to the UNSC, which approved and adopted the "Tourism Satellite
Account: Recommended Methodological Framework (TSA: RMF)" on 1 March 2000.
This common conceptual framework is now in the process of being jointly
published by the WTO, the OECD, Eurostat and the United Nations. It is
expected that the publication will be made available in 2001. The Tourism
Satellite Account offers policy makers an overview of tourism in relation
to other economic sectors, and enables comparisons to be drawn between
the tourism industry and other industries. TSA: RMF is in compliance with
national accounts principles. It sets a series of global standards and
definitions that measure the industry's contribution to national economies
in terms of percentage of GDP; jobs; capital investment; tax revenues;
and allows the measurement of the role of tourism in a nation's balance
of payments.
Current issues on the
implementation of the 1993 SNA: Employee Share (Stock) Options
By Paul McCarthy, OECD
(For Information)
It is becoming increasingly common for employers to
reward their employees by giving them the option to buy shares (or stocks)
in their firm at some future date. The offer is usually conditional on
the employee serving a minimum number of years with the firm and it may
be possible to exercise the option to buy only after a specified period
has elapsed. In some countries, Finland being a good example, a small
number of large firms providing such rewards to employees has a potentially
significant impact on a number of key SNA aggregates. Should the award
of a share option be counted as part of compensation of employees? Most
participants at the 2000 OECD meeting on national accounts felt the answer
is clearly "yes" but the subsequent questions of the point in time at
which this should be recorded and the value to be assigned are more difficult
to answer precisely. Another important question concerns the recording
of the value of the shares that the employees eventually receive when
they exercise their right to purchase. If the employer provides these
by issuing new shares, there are implications for the net worth of the
firm and pre-existing shareholders. Because of the growing importance
of this matter, the OECD will prepare a position paper on the options
available, the arguments for and against each of these, and the effects
on the different accounts. The paper will be made available in early 2001
and will be put on the OECD national accounts website (http://www.oecd.org/std/nahome.htm).
Draft
Manual on Statistics of International Trade in Services
By Eurostat, IMF, OECD,
UN, UNCTAD, WTO (For Information)
A Manual on Statistics
of International Trade in Services (Manual) was submitted in November
2000 to the United Nations Statistical Commission for approval with publication
planned to follow this approval. The Manual is the result of the work
of an interagency Task Force established by the United Nations Statistical
Commission in 1994, and convened by the Organisation for Economic Co-operation
and Development (OECD). Membership also includes Eurostat, the IMF, the
UNSD, UNCTAD and the World Trade Organization (WTO). The United Nations
convened an Expert Group in July 2000 to review the draft Manual and to
recommend to the Statistical Commission the next steps to be taken with
the Manual. The Experts represented both users and producers of statistics,
including national statistical offices, data compilers, users from business
and trade negotiators. The Experts noted the importance of the Manual
for the work on statistics on International Trade in Services and commended
the Task Force for its work in preparing the draft of the Manual. The
Experts recommended that the Task Force make a number of changes to improve
the presentation of the Manual including a final editing before its submission
to the United Nations Statistical Commission in 2001. They asked that
the Statistical Commission consider future actions, post-publication,
including a decision on which agency or agencies will be the international
collector of data on Trade in Services and ways to further the implementation
of the Manual as proposed below.
The Experts also recommended
that:
- a user's manual on data collection for International Trade in Services
be prepared, supplementing already existing international compilation
guidelines, which should have a priority in the medium-term plan for
implementation of the Manual;
- a procedure be put in place to assess the different phases of countries'
implementation of the manual and record existing pilot projects for
data collection. Information on methodological approaches and experiences
should be accessible to all interested parties;
- future development work focus on areas including telecommunications,
financial services, internet related services and movement of natural
persons and should engage producers and users of statistics, including
trade negotiators, business users and statistical compilers;
- the Statistical Commission encourage National Statistical Offices
and Central Banks to allocate adequate resources for the successful
implementation and further development of international trade in services
statistics as proposed in the Manual.
The Manual was subsequently
revised by the Task Force to take into consideration the conclusions and
recommendations of the Expert Group and is being translated into all United
Nations languages for submission and adoption by the United Nations Statistical
Commission in March 2001.
Summary of The Manual
on Statistics of International Trade in Services
This first Manual has been
prepared to meet the needs of a variety of producers and users of statistics.
A particular impetus for the preparation of a separate manual on statistics
of international trade in services has been the recent tendency for international
trade agreements to cover services as well as goods, and the need for
statistics both to guide the negotiations relating to these agreements
and to monitor the outcomes. While the Manual broadens the statistical
definition of international trade in services, it does so by building
upon, rather than by modifying, internationally agreed standards for statistical
compilation. It provides a framework and a set of recommendations that
will allow for the provision of a range of statistics on international
trade in services. These recommendations are summarized in Chapter 1 and
elaborated on in the remainder of the Manual. Chapter 2 proposes the framework
and describes its links to existing international standards and frameworks.
Chapter 3 focuses on the compilation of statistics relating to resident-nonresident
trade in services, building on the balance of payments framework described
in the fifth edition of the Balance of Payments Manual (BPM5). Chapter
4 recommends standards for compiling statistics on "foreign affiliates
trade in services", or FATS, drawing to a considerable extent on the concepts
and definitions of the System of National Accounts 1993 (1993 SNA) in
a way that is consistent with the expected recommendations of the forthcoming
OECD Globalization Manual. The Manual describes four modes through which
services may be traded internationally. It does so by considering the
location of both the supplier and consumer of the traded service. The
first of these modes, mode 1 or cross-border supply, applies when suppliers
of services in one country supply services to consumers in another country
without either supplier or consumer moving into the territory of the other.
Mode 2, consumption abroad, describes the process by which a consumer
resident in one country moves to another country to obtain a service.
Further, enterprises in an economy may supply services internationally
through the activities of their foreign affiliates abroad. This mode of
supply, mode 3, is called commercial presence. The last of these modes
of supply, mode 4 or presence of natural persons describes the process
of supply of a service when the producer moves to the country of the consumer
in order to provide the service.
The BPM5 framework contains,
inter alia, recommendations for the definition, valuation, classification,
and recording of resident-nonresident trade in services. By building on
this framework, the Manual recommends extending the BPM5 classification
of transactions by type of service to provide more detail through the
Extended Balance of Payments Services (EBOPS) classification. A correspondence
table showing the relationship between the EBOPS classification, version
1.0 of the Central Product Classification and the GATS Services Sectoral
Classification is to be included as an annex to the Manual. This table
assists in the provision of clear definitions of the various components
of the EBOPS classification. Except for the treatment of construction
services, the recommendations contained in the Manual are consistent with
BPM5. Thus, a country's balance of payments statistics will provide many
of the data that are needed to implement the recommendations relating
to the measurement of resident-nonresident trade in services. Recommendations
are made in the Manual on the attribution of resident-nonresident transactions
across the modes of supply. As well as providing services by way of trade
between residents and nonresidents of an economy (measured in balance
of payments statistics), enterprises in an economy may also supply services
internationally through the activities of foreign affiliates abroad. The
Manual recognizes this in its discussions on and recommendations for FATS
statistics, which comprise the major part of the third mode of supply,
commercial presence. Included are recommendations on (1) the selection
of foreign affiliates to be covered (which follows the definition of foreign-controlled
enterprises used in the 1993 SNA - this is implemented statistically as
covering affiliates that are majority-owned by a direct investor); (2)
the attribution of FATS statistics (including a discussion on attribution
by activity and by product); and (3) the variables to be compiled. While
this is a less well-developed area statistically than the balance of payments
statistics, some FATS statistics for foreign-owned affiliates in the compiling
economy may be found in, or derived from, existing statistics on domestic
production, including national accounts statistics based on the recommendations
of the 1993 SNA.
The recommended basic FATS
variables discussed in this draft of the Manual are: sales (turnover)
and/or output, employment, value added, exports and imports of goods and
services, and number of enterprises. Additional FATS variables considered
relevant are also identified. The definitions of these variables are drawn
from the 1993 SNA. For both resident-nonresident trade and FATS statistics
the Manual recommends the compilation of trade by partner country. Finally
one area in which the Manual moves beyond existing statistical frameworks
is in the area where services in one country are provided by individuals
(described as natural persons) from another country moving to the first
country on a non-permanent basis. This area, which is part of Mode 4,
is one in which countries make commitments under the General Agreement
on Trade in Services, and while some limited data are available from balance
of payments statistics, there is a need for further development of statistics
related to employment and income of foreign nationals. Consequently there
is only limited discussion on, and recommendations for, compiling relevant
statistics included in the main text of the Manual. A fuller discussion
of the measurement of the movement of natural persons in relation to trade
is included in Annex 1. The Manual proposes a phased approach to implementation
so that countries, including those that are beginning to develop statistics
on international trade in services, can implement these developments gradually
and begin to structure available information in line with this new international
standard framework. The sequence of elements, as suggested, takes into
account the relative ease that many compilers may find in their implementation.
However, the order is quite flexible, so that countries can meet the priority
needs of their own institutions. Full implementation - to be seen as a
long-term goal - would represent a considerable increase in the detail
of information available on trade in services.
Implementing the 1993
SNA: Inconsistent Treatment of Patents and Scientific Originals
By Cristina Hannig, UNSD
(ISWGNA official position))
An article written by Peter
Hill was published in SNA News and Notes No. 6 clarifying the treatment
of intangible assets, patents and copyrights in the 1993 SNA. The article
concluded that there is a clear inconsistency in the way the 1993 SNA
treats patents that confer ownership rights over scientific originals
as compared with the treatment of copyrights that confer ownership rights
over entertainment, literary or artistic originals. The main reason for
this inconsistency is that the 1993 SNA treats all expenditures on research
and development that create scientific originals as current expenditures.
On the other hand, expenditures for creating entertainment, literary or
artistic originals are treated as capital expenditures and the originals
themselves are classified as produced intangible fixed assets. Since the
expenditures on research and development (R & D) are treated as being
consumed as they are produced, the resulting scientific originals cannot
be treated as assets per se by the 1993 SNA. On the other hand, the 1993
SNA had to recognize that assets do exist in this context and they had
to be classified somewhere. The solution was to classify them as non-produced
intangible assets. However, it was also decided to treat payments of royalties
to holders of patents as payments of services which is inconsistent with
both the classification of patented entities as non-produced intangible
assets and with the decision to treat all R & D expenditures as current.
The ISWGNA has recently re-discussed this issue and has decided to officially
recognize this inconsistency in the 1993 SNA instead of proposing a change.
The main reason for this decision is embedded in the ISWGNA mechanism
for up-dating the 1993 SNA approved by the Statistical Commission. It
was agreed that unless significant new economic developments have taken
place, issues of a controversial nature should not be reopened if a deliberate
decision was taken by the experts during the course of the revision process
of the 1993 SNA and this was the case regarding this treatment.
First Global Results
from Implementing the New UN National Accounts Questionnaire Based on
the 1993 SNA
By Felizardo Suzara and
Cristina Hannig, UN Statistics Division (For
Information)
As announced in SNA News
& Notes No. 10, the new UN National Accounts Questionnaire based on the
1993 SNA was implemented by the UNSD for the first time in October 1999
requesting data up to 1998. Of the 208 countries included in the UNSD
national accounts database, data for 56 countries were directly converted
from the replies to the ESA95/SNA93 questionnaires implemented by Eurostat,
OECD and/or UNECE. Of these 56 countries, 47 countries have officially
claimed they have implemented the 1993 SNA. With respect to the other
152 countries to which UNSD sent directly the new questionnaires, only
8 countries have officially claimed they have implemented the 1993 SNA.
Consequently, as of August 2000 only 55 out 208 countries, that is 26.4
% of the total number of countries included in the UNSD database, have
officially claimed implementation of the 1993 SNA. However, it is interesting
to see that in terms of world share of GNI, the GNI of these 57 countries
represent approximately 40 % of world GNI. This share will increase considerably
when UNSD updates its database to include data recently submitted by USA
to OECD based on the 1993 SNA (approx. to 67.8 %).
A large majority of countries
have not yet officially implemented the 1993 SNA and for many of them
the period of transition to the new system will take anywhere from 5 to
10 more years. From the point of view of the users this raises a concern
regarding the international comparability of data between those countries
that have adopted the 1993 SNA and those that are lagging behind. It is
well known that the implementation of the 1993 SNA involves a series of
changes to the accounts, concepts and classifications of the System that
in one way or another affect the national accounts statistics compiled
by countries. However, the following general considerations should be
taken into account when using or analysing the new estimates based on
the 1993 SNA:
- The changes have a limited impact on the movements and the level of
total GDP and GNI as compared with the 1968 SNA. This is due to the
fact that most of the changes at the more disaggregated levels (i.e.
final consumption, gross capital formation, exports and imports, etc.)
offset each other at the level of the total economy;
- The changes in the level of GDP and GNI are generally upwards when
countries move to the 1993 SNA but they can vary greatly from country
to country, depending on the relative importance that certain new concepts
may or may not have in the economy of each country;
- Certain countries may have decided on a one time overall methodological
conversion from the 1968 SNA to the 1993 SNA while others are implementing
or planning to implement the new concepts and classifications gradually
in a phased manner over a certain period of time;
- Most countries when implementing the 1993 SNA also make benchmark
year revisions to their accounts, greatly improving the sources and
methods of estimation. This makes it very difficult or practically impossible
to distinguish between the effect of the new concepts and the effect
of the new and better sources and methods of estimation.
In view of the above, at
the international level there is no straight forward criteria that can
be applied to adjust either the 1993 SNA estimates to the 1968 SNA concepts
or vice-versa in order to produce conceptually closer comparable series.
Thus, for purposes of regional and global analyses as well as for administrative
purposes as in the case of the UN Committee on Contributions, UNSD provides
users with data sets that include the latest reported or published estimates
for each country regardless of whether they are based on the 1993 SNA
or the 1968 SNA. Clearly this dissemination policy gives more weight to
the use of the most updated and reliable data available for countries
rather than the most strictly conceptually comparable until a majority
of countries implements the 1993 SNA.
Progress in Implementing
the 1993 SNA in Jordan
By Kamil Al-Adhadb, UN
ESCWA Statistics Division (For Information)
The General-Directorate
of Statistics (GDS) is the official Body responsible for the collection,
processing and dissemination of official statistical data in Jordan. The
GDS through its Department of Economic Statistics (National Accounts Section)
started since the mid 1990s preparing data sources and revising all relevant
statistical questionnaires and other forms for the application of the
1993 SNA. In this direction the GDS cooperated with ESCWA which provided
the technical assistance required by sending its regional adviser on national
accounts and economic statistics on mission to Jordan for this purpose.
The following were the major
steps in the implementation:
1. A medium-term survey
plan was proposed and adopted. This plan covers almost the entire spectrum
of economic activities during the period 1999-2005; 2. A work-plan for
the same period was proposed and is being implemented by stages for the
actual construction of the integrated economic accounts (IEA) of the system;
3. Major revisions to some questionnaires of industry and some other activities
are either being implemented or are in progress, in concordance with the
SNA criteria and needs of statistical data for the building up of the
IEA's; 4. The classification of institutional units and sectors was revised
in light of SNA recommendations, including slight modifications and is,
presently, partially applied; 5. Complete integrated accounts for the
General Government account were compiled, but are still to be refined
with respect to the detailed classification of government by functions;
6. Complete integrated accounts for the Financial Sector were partially
constructed, but still need to be reviewed, evaluated and completed; 7.
Complete integrated accounts for the Non-Financial Sector are underway.
At present, they are under review and evaluation by the ESCWA Regional
Adviser on National Accounts; 8. The Household Sector accounts have not
yet been attempted fully, but preparations are underway; 9. It should
be noted that all integrated accounts attempted so far are up to the financial
account, i.e. other accumulation accounts and balance sheets accounts
have not been started yet because of data limitations at the present stage
of statistical development; 10. A very serious and elaborated attempt
is now in progress to complete CCIS (cross classification of industries
and sectors) and SUT (supply and use table relating products to industries
and to sectors, as well as to accounts).
Meetings, seminars
11-12 December 2000: OECD/Eurostat Expert Meeting on Statistics of International
Trade in Services, Paris
31 January - 2 February 2001: Seminar on Methods and Application of Purchasing
Power Parities, Washington, D.C.
13-16 February 2001: ADB/ESCAP Concluding workshop on Re-basing and Linking
National Accounts series, Bangkok
21-23 February 2001: WTO/ESCAP Regional Seminar on Statistics and Tourism
Satellite Accounts, Bangkok
14-16 March 2001: Seminar on the new EU handbook on Price and Volume
Measures in National Accounts organized by Statistics Netherlands and
Eurostat, Voorburg, the Netherlands
March 2001: ESCAP Pacific Sub-regional Workshop on National Accounts,
Suva, Fiji (date is to be determined later)
2-6 April 2001: Ottawa Group on Price Statistics, Canberra, Australia
May 2001: Extended London Group Meeting for review of complete draft
of the System of Integrated Environmental and Economic Accounts (SEEA)
2000, Voorburg, organized by CBS Netherlands on behalf of the London Group
18-20 June 2001: UN Expert Group Meeting on International Economic and
Social Classifications, New York
8-11 July 2001: UN Expert Group Meeting to review the Handbook on Non-Profit
Institutions (NPIs), New York
9-12 October 2001: Meeting of OECD National Accounts Experts, Paris
Editorial Note
SNA News and Notes is a bi-annual information service of the ISWGNA prepared
by United Nations Statistics Division (UNSD). It does not necessarily
express the official position of any of the members of the ISWGNA (European
Union, IMF, OECD, United Nations and World Bank)
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SNA News and Notes is published in four languages (English, French, Russian
and Spanish) and can be accessed on the internet: http://www.un.org/Depts/unsd
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Correspondence including requests for free subscriptions should be addressed
to: UNSD, Room DC2-1720, New York, NY 10017; tel.:+1-212-963-4854,
fax:1-212-963-1374, e-mail: sna@un.org
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