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27.20. Uses of ISIC. Since the adoption of the original version of ISIC in 1948,[111] ISIC has provided guidance to countries in developing national activity classifications and has become an important tool for comparing statistical data on economic activities at the international level. Wide use has been made of ISIC, both nationally and internationally, in classifying data according to kind of economic activity in the fields of economic and social statistics, including, inter alia, statistics on national accounts, demography of enterprises and employment.
27.21. Revision of ISIC. The original ISIC was revised four times. The third[212] and fourth revisions of ISIC put increased emphasis on harmonization with other activity classifications and product classifications, adding considerable complexity and constraints that had not applied in earlier revisions of ISIC. As ISIC occupies a central position in the international comparison and analysis of a wide range of statistics, a great deal of attention was devoted to ensuring that ISIC would be compatible with the economic structure, the statistical practice and the needs of the different countries (or areas) of the world.
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27.23. The principal activity of an economic entity is the activity that contributes most to the value added of the entity, as determined by the so-called top-down method. According to the top-down method, it is not necessary that the principal activity account for 50 per cent or more of the total value added of an entity or even that its generated value added exceed that of all other activities carried out by the unit, although in practice it will do so in the majority of cases[313].
27.24. Wide use has been made of ISIC both nationally and internationally in classifying data according to kind of economic activity. An increasing number of countries have adapted their national activity classifications to the ISIC structure or can provide their data according to ISIC.
27.25. The fourth revision of ISIC. The Statistical Commission, at its thirty-seventh session, in March 2006, adopted the structure of the current fourth revision of ISIC and recommended that it be recognized as the international standard for economic activity.[414] It contains 21 sections, 88 divisions, 238 groups and 419 classes. The ISIC sections are listed below:
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27.28. The results of the United Nations survey of country practices show that a significant proportion of countries publish trade data in terms of ISIC (15 per cent of developed countries and 24 per cent of developing countries). Usually, such data are obtained by the expression of HS data in terms of ISIC using a conversion table. While such a practice may yield an acceptable approximation of commodity exports generated by different economic activities (industries), the assignment of commodity imports to specific economic activities (industries) is in general more difficult. In general, the results of allocation of trade flows that were originally compiled by the HS classification to ISIC categories of economic activity using conversion tables may be misleading, as there is no one-to-one correspondence between products and activities. In this context, IMTS 2010 (para 3.29) gives preference to the approach in which countries obtain the additional information needed to identify the main economic activity of traders—for instance, by linking customs records with information in the business registers (see chap. XI)—and perform the appropriate aggregations on the original data at the microlevel. For details on the use of ISIC in trade data collection through enterprise surveys, see chapter IV.
[111] Statistical Papers, No. 4, Lake Success, New York, 31 October 1949.
[212] Inaternational Standard Industrial Classification of All Economic Activities, Statistical Papers, Series M, No.4, Rev.3 (United Nations Publication, Sales No. E.90.XVII.1).
[313] The The top-down method follows a hierarchical principle: the classification of a unit at the lowest level of the classification must be consistent with the classification of the unit at the higher levels. To satisfy this condition the process starts with the identification of the relevant category at the highest level and progresses down through the levels of the classification. For details, see International Standard Industrial Classification of All Economic Activities (ISIC), Rev. 4, Statistical Papers, Series M, No. 4, Rev. 4(United Nations publication, Sales No. E.08.XVII.25).
[414] See Official Records of the Economic and Social Council, 2006, Supplement No.4 (E/2006/24), chap. I, sect. C; decision 37/105, para. (a).
[515] These These and other correspondence tables are available in electronic format only and can be accessed at the United Nations Statistics Division website (at http://unstats.un.org/unsd/class).