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1993 SNA Update Information - Consistency Issues
Non-profit Institutions

Moderator
Anne Harrison
Description
NPIs are diffused among various sectors. Some are in general government, some are in financial and non-financial corporations and are some in NPISHs. The Handbook on Non-Profit Institutions in the System of National Accounts suggests compiling accounts where all these NPIs are identified.
Should the sector classification include identifying NPIs within government and the corporation sectors for ease of compilation of an NPI satellite account? If so, would this extra information be included as standard or supplementary items? If either, would the identification within corporations appear before or after distinguishing the public, foreign controlled and national private sub-sectors?
For corporations, as just noted, the SNA recommends a sub-sectoring showing publicly controlled, foreign controlled and national private sub-sectors. There are no publicly controlled NPISHs; those NPIs that are publicly controlled non-market producers are included within government. However, there may be foreign controlled NPISHs and the role of these might be significant in countries having suffered major natural disasters.
Would it be desirable to suggest that NPISHs should be sub-sectored into foreign controlled and national private elements? If so, should this be a standard or supplementary breakdown?
Next Steps
See the paper below, which requests views and provides a background note by Karen Wilson of Statistics Canada.

Responses are requested no later than mid-September.
Paper prepared by Statistics Canada:  
Comments
Number of comments: 16
  Date postedSourceComment
 04/10/2006Jan Helleragreement with flexibility
 04/10/2006Irena TvarijonaviciuteI am for two alternative ways.
 04/10/2006Robin LynchI do not believe these should be a main defining characteristic of economic sectoing - they should be subsidiary and/or alternative.
 02/10/2006Ole BernerAgree with the proposed flexibility
 02/10/2006Brent MoultonI agree with the proposed clarification.
 30/09/2006Peter van de VenIf I have to choose between two hierarchies, I would prefer to have, for corporations, the distinction between publicly controlled, national private and foreign controlled at the first level, and the distinction between NPIs and other units at the second level. In my opinion, the former distinction is much more important from an analytical point of view; looking at the ever increasing level of internationalisation and globalisation, this may become more and more true in future. Similarly, I prefer, for government, the distinction between central, state and local government at the first level. On the other hand however, I can also see the point made by Pete Harper, i.e. that it is preferable to have two alternative ways of sub-sectoring, instead of having two layers.
 29/09/2006Bank of Koreaa
 29/09/2006A.C. KulshreshtaThe general description of the proposed classification is o.k. However, most developing countries will find it difficult to get numbers on them.
 29/09/2006Johan PrinslooYes, the conclusion of the ISWGNA on NPI’s is acceptable.
 28/09/2006Reimund MinkI agree with a general description of the proposed classifications in the text, but we should avoid to recommend them as a standard in the updated SNA.
 28/09/2006Peter HarperMy strong preference would be that NPI/Other classification for General Government and the two corporations sectors be an alternative to the existing sub-sector classification, and not as a further 'layer' of classification (either 'below' or 'above' the existing sub-sector classification). Otherwise, we will finish up with a large number of sub-sub-sector classifications, with many of the categories having only negligible economic activity recorded in them.
 27/09/2006Mariam CoverI support the proposal made regarding NPIs. I prefer the breakdown being made at the first level as stated in the paper for corporations, but I guess there could be some flexibility about it.
 26/09/2006Heidi ArboledaI agree with the guidance although in practice, developing countries might not have the all finer distinction proposed in the guidance.
 20/09/2006Roberto Luis Olinto RamosI support the paper conclusions. It would not seem appropriate a new sector with NPIs but it is important to be able to identify then. Then the clarification of these principles must be presented.
 15/09/2006Johann Prinsloo• The sector classification should identify NPIs within government and the corporate sector.
• It would be sufficient to have it as supplementary items in the 1993 SNA update.
• Preferable NPIs should be identified within corporations before distinguishing the public, national private and foreign controlled sub-sectors.
• For general government, separate NPIs before the split into central, provincial (state) and local government.
• A general remark is that much of the classification issues could depend on the detail of information, and that there should be some flexibility for country specific circumstances.
 12/09/2006Heidi ArboledaOne of the questions I asked myself in the 1993 SNA is why there was only an NPISH as a sectoral classification. Why not put all the NPIs under one sector since they have a common characteristics and role in the economy. They produce goods and services and their income is generated from sale of goods and services and property income and current transfers and they do not distribute the surplus to the owners or members of the NPI. Also since NPISH is a small sector, the size of the sector is quite small compared with the other sectors. As a consequence, estimates are often combined with the household sector.
Would it be therefore possible to put all the NPIs under one sector with the same name. The different NPIs will just be sub sectors and NPISH will just be one of the NPIs. Like government sector, NPI produces market or non-market goods. For analytical purposes this would be more useful because unlike corporations and household enterprises, the NPIs retains the surplus and therefore they have more resources for research or capital formation. For example, NPI that produces education services at market prices, are able to provide quality education and have better opportunity of expansion. These schools usually have good facilities.
Putting all the NPIs on one sector is also convenient for compilation as most of the data sources of these NPIs are found in one or few sources.
However, if putting all the NPI in one sector is not feasible in the revision. It would be better if they will be included as a sub sector of the different sectors. It will facilitate the compilation of NPI satellite accounts and it will put more emphasize to the need to include them in compilation.
Conclusion
The ISWGNA discussed the categorization of NPIs. They agreed that given the importance of NPIS, countries might want to choose to classify NPIs early in the categorization of institutional units and sectors, such as corporate profit institutions and corporate non-profit institutions, and then, government and non-profit institutions. For corporations, the distinction between NPIs and other units in the sector might be at the first level, with the breakdown between publicly controlled, national private and foreign controlled at the second level or the reverse. Similarly, for general government, the choice of which disaggregation to put at the higher level is a matter of choice.

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