The 1993 SNA represents a major advance in national accounting. While updating and clarifying the 1968 SNA, the 1993 SNA provides the basis for improving compilation of national accounts statistics, promoting integration of economic and related statistics, and enhancing analysis of economic developments. The 1993 SNA deals more clearly with relationships between economic flows (such as production, income, savings, accumulation, and financing) and links between these flows and stocks. At the same time the 1993 SNA reflects the many significant developments that have taken place in financial markets and completes the integration of balance sheets into the system. The 1993 SNA also suggests how satellite accounts (e.g. environmental accounts) and alternative classifications (e.g., through social accounting matrices) an be used to augment the central framework of the system.
System of National Accounts 1993
Prepared under the auspices of the Inter-Secretariat Working Group on National Accounts
Commission of the European Communities—Eurostat
International Monetary Fund
Organisation for Economic Co-operation and Development
Department for Economic and Social Information and Policy Analysis—Statistical Division
Economic Commission for Europe
Economic and Social Commission for Asia and the Pacific
Economic Commission for Latin America and the Caribbean
Economic Commission for Africa
Economic and Social Commission for Western Asia
Brussels/Luxembourg, New York, Paris, Washington, D.C., 1993
Office for Official Publications of the European Communities
Catalogue number CA-81-93-002-EN-C
International Monetary Fund
Publication Stock No. SNA-EA
Organisation for Economic Co-operation and Development
OECD Code 30 94 01 1
United Nations publication · Sales No.E.94. XVII.4, document symbol ST/ESA/STAT/SER.F/2/Rev.4
Organisation for Economic Co-operation and Development,
United Nations and World Bank
All rights reserved
Manufactured in United States of America
The revised System of National Accounts (SNA) presented in this volume has been undertaken under the joint responsibility of our five organizations. Through the mechanism of an Inter-Secretariat Group, the staff of our organizations have organized and managed the review process from the mid-1980s onwards. The resulting System is being published jointly by the five organizations.
The System is a comprehensive, consistent and flexible set of macroeconomic accounts intended to meet the needs of government and private-sector analysts, policy makers and decision takers. It is designed for use in countries with market economies, whatever their stage of economic development, and also in countries in transition to market economies. The System has been welcomed and unanimously approved by the Statistical Commission of the United Nations.
The revision process has required numerous meetings over several years in which experts in national accounts from countries throughout the world have participated. The revised System owes much to their collective advice and wisdom. The revision has been a major exercise in cooperation conducted at a world level between national and international statistical agencies. It serves as a model for future collaborative work on the development of improved statistical systems and standards, including national accounts. The SNA is intended for use by both national and international statistical agencies, and countries are advised to start to compile accounts utilizing the revised System as soon as possible.
Perspectives on the 1993 System of National Accounts: looking back and looking ahead
List of abbreviations and acronyms
Annex: Other presentations of the accounts
Appendix: Tables 2.6-2.12
III. Flows, stocks and accounting rules
IV. Institutional units and sectors
Annex: Extract from the resolution of the fifteenth International Conference of Labour Statisticians, January 1993, concerning statistics of employment in the informal sector
V. Establishments and industries
VI. The production account
VII. The primary distribution of income account
VIII. The secondary distribution of income account
IX. The use of income account
X. The capital account
Annex: Gross fixed capital formation and costs of ownership transfer
XI. The financial account
XII. Other changes in assets account
Annex: The definition and measurement of holding gains
XIII. The balance sheet
Annex: Definition of assets
XIV. The rest of the world account (external transactions account)
XV. Supply and use tables and input-output
XVI. Price and volume measures
XVII. Population and labour inputs
XVIII. Functional classifications
XIX. Application of the integrated framework to various circumstances and needs
Annex A: The treatment of official multiple exchange rate systems
Annex B: Parallel treatment of interest under significant inflation
XX. Social accounting matrices
XXI. Satellite analysis and accounts
I. Changes from the 1968 System of National Accounts
II. Relationship of the rest of the world account to the balance of payments accounts and the international investment position
III. Financial intermediation services indirectly measured (FISIM)
IV. The treatment of insurance, social insurance and pensions
V. Classifications and accounts
VI. List of expert group meetings on the revision of the System of National Accounts
A. New features and the role of the System of National Accounts
Perspectives on the 1993 System of National Accounts: looking back and looking ahead
A. Looking back
Forerunners of the System of National Accounts
The 1953 SNA
The research agenda: a case study
Manuals and the questionnaire
The 1968 SNA
The 1993 SNA: the review and revision process
B. Looking ahead: the research agenda
List of abbreviations and acronyms
A. The SNA as a System
B. Accounts and their corresponding economic activities
1. The sequence of accounts
Distribution and use of income accounts
2. Activities and transactions
C. The institutional sectors of the economy
D. Other features of the System
1. Supply and use tables
2. Price and volume measures
E. Concepts and classifications
1. The production boundary
Other production boundary problems
2. The consumption boundary
3. The asset boundary
4. National boundaries
F. Uses of the SNA
1. Specific uses
Monitoring the behaviour of the economy
Economic policy-making and decision-taking
2. Flexibility of implementation and use
3. The SNA as a coordinating framework for statistics
G. Harmonization between different statistical systems
H. Implementation of concepts and classifications
1. Final consumption, intermediate consumption and gross fixed capital formation
Training, research and development
Repairs, maintenance and gross fixed capital formation
2. Interpretation of the distinction between consumption and gross fixed capital formation
I. Links with business accounting and economic theory
J. The aggregates of the system as indicators of economic activity and welfare
2. The coverage of GDP and the role of estimates and imputations
3. Changes in welfare
Interaction with non-economic factors
Welfare, economic analysis and policy-making
1. Analysing flows and stocks
2. Recording flows and stocks
B. Main categories
1. Institutional units and sectors
Delimitation of the total economy and the rest of the world
2. Transactions and other flows
Main types of transactions and other flows
Characteristics of transactions in the System
Complementary classification of transactions and other flows
3. Assets and liabilities
4. Producing units and products
C. Rules of accounting
Terminology for the two sides of the accounts
Double entry/quadruple entry
2. Time of recording
Methods of valuation
Volume measures and measures in real terms
4. Consolidation and netting
D. The accounts
2. The integrated economic accounts and their components
A first glance at the integrated economic accounts
The full sequence of accounts for institutional units and sectors and their balancing items
Assets and liabilities accounts
Rest of the world account (external transactions account)
Integrated economic accounts: a complete view
3. The other parts of the accounting structure
The central supply and use table and other input-output tables
The tables of financial transactions and financial assets and liabilities
Complete balance sheets and assets and liabilities accounts
Population and labour inputs tables
E. The integrated central framework and flexibility
1. Applying the central framework in a flexible way
2. Introducing social accounting matrices
3. Introducing satellite accounts
Annex: Other presentations of the accounts
A. Diagrammatic presentation
C. Matrix presentation
Appendix: Tables 2.6-2.12
III. Flows, stocks and accounting rules
B. Stocks and Flows
Transactions with and without counterparts
Rearrangements of transactions
Remuneration in kind
Payments in kind other than remuneration in kind
Transfers in kind
Externalities and illegal actions
2. Other flows
Other changes in the volume of assets
Holding gains and losses
3. Balancing items in the flow accounts
2. Balancing items in the balance sheets
E. Accounting rules
1. General rules
2. Valuation of partitioned flows
3. Special valuations concerning products
G. Time of recording
2. Choice for recording on an accrual basis
3. Timing of exchanges and transfers
4. Timing of output and intermediate consumption
5. Timing of changes in inventories and consumption of fixed capital
6. Timing of composite transactions and balancing items
7. Timing of other flows
8. Balance sheet items
9. The accounting period
H. Aggregation, netting, consolidation
IV. Institutional units and sectors
1. Institutional units
2. Institutional sectors and sub-sectors: summary
3. Relationship between sectors and types of institutional units
5. Sectoring and economic behaviour
B. Institutional units in the form of legal or social entities
Ownership and control of corporations
Subsidiary, associate and holding corporations
2. Ancillary corporations
3. Cooperatives, limited liability partnerships, etc.
5. Non-profit institutions
The characteristics of NPIs
NPIs as market and non-market producers
NPIs engaged in market production
NPIs engaged in non-market production
C. The non-financial corporations sector and its sub-sectors (S.11)
The sub-sectors of the non-financial corporations sector
Public non-financial corporations (S.11001)
National private non-financial corporations (S.11002)
The detailed contents of the annexes including figures and tables may be found beginning on page 519.
The System of National Accounts 1993 (1993 SNA) represents a major advance in national accounting. Adoption of the 1993 SNA was unanimously recommended to the United Nations Economic and Social Council by its Statistical Commission at its twenty-seventh session, held in New York from 22 February to 3 March 1993.1 In its resolution 1993/5 of 12 July 1993, the Council recommends that member States consider using the 1993 SNA as the international standard for the compilation of their national accounts statistics, to promote the integration of economic and related statistics, as an analytical tool, and in the international reporting of comparable national accounting data. The Council further recommends that international organizations consider the 1993 SNA and its concepts when they review standards for particular fields of economic statistics and endeavour to achieve consistency with the 1993 SNA.
As another step in the evolution of national accounting, the 1993 SNA successfully maintains the proven strengths of the previous System2 while satisfying the Statistical Commission’s mandate to update the previous System to fit new circumstances, to clarify and simplify it, and to harmonize it more completely with other international statistical standards.
A. New features and the role of the System of National Accounts
The 1993 SNA embodies many new features. Many of the important ones can be summarized as aspects of updating, clarifying and simplifying, and harmonizing.
With respect to updating, economies have evolved in the 25 years since the 1968 SNA was published. Inflation has been a central policy concern. The role of government has changed in many countries, notably those now moving toward market economies. Service activities, especially business services such as communications and computing, have taken on increasing importance. Financial institutions and markets have become increasingly sophisticated, and financial instruments have spawned numerous hybrids. The environment’s interaction with the economy has become a major and growing concern.
The 1993 SNA is responsive to these and other changes in the institutions and policy concerns of the world’s economies in a number of ways.
It provides a separate account to record the revaluation of assets, a key impact of inflation. It also splits the holding gains recorded there into gains due to changes in the general level of prices and gains due to changes in relative prices.
It defines the aggregate actual final consumption for households, government, and non-profit institutions serving households. This aggregate sheds additional light on government activity.
It describes the treatment of services when their distinctive characteristics affect their recording in the accounts.
It establishes criteria for the delineation of the financial corporate sector and for the classification of financial instruments in light of the many innovations in this field.
It has opened toward environmental accounting in defining the asset boundary, in the classification of assets, and in other ways.
With respect to clarifying and simplifying, the 1993 SNA is meant to be applicable to economies that are increasingly complex or changing in other ways, but it aims to simplify the work of the economic accountant. First, it recognizes the wide range of conditions and institutional arrangements that may be found in developed and developing countries and in newly emerging market economies. Secondly, it provides the rationale for the treatments applied so that economic accountants can, by extension, decide on treatments for new conditions and institutional arrangements. Features of the publication itself that aim to help national accountants and other readers are described below in the “Reader’s guide”.
In addition to this general approach, the 1993 SNA provides clarification on a number of specific issues. By identifying the principles, it reduces the seeming complexity of such a comprehensive system. For example:
It identifies the rules of accounting—the principles of valuation, time of recording, and grouping by aggregation, netting and grossing—in a separate chapter.
It clearly states that illegality itself is not a reason for exclusion from the accounts.
It recommends a treatment for taxes of the valued-added type, which have been introduced in a number of countries since the 1968 SNA.
It recommends a treatment to be applied under official multiple exchange-rate systems.
It recommends that annual chain indices be used to compile an integrated set of prices and volume measures consistent with the concepts and accounting principles of the SNA (and that fixed base indices be used when the volume measures have to be additively consistent).
Finally, the 1993 SNA embodies the result of harmonizing the SNA and other international statistical standards more completely than in the past. The result, as of 1993, is most obvious for the balance of payments because, while working on the revision of the SNA itself, the International Monetary Fund was also revising its Balance of Payments Manual. Future readers will note that not only definitions, but even passages describing the concepts, are often the same in the two texts. Future Fund publications will show the greater harmonization between the SNA and the Fund’s government finance and financial statistics. The SNA and the International Standard Industrial Classification (ISIC, Rev.3) were brought together in that the definitions of kinds of activities and of statistical units are the same. With respect to population and related measures, the SNA and the International Labour Organisation (ILO) will use the same production boundary and the same key definitions, such as the definition of employment. Further, the 1993 SNA notes and makes use of the distinction between the informal and formal sectors so that when the ILO has completed work on criteria for distinguishing the two, they can be used in conjunction with other breakdowns in the SNA.
In such a vast undertaking, it was, of course, impossible to satisfy the definitions and treatments preferred by all countries on all subjects. Reservations were expressed in the Statistical Commission on several topics: the treatment of research and development expenditures as current and of mineral exploration as capital; the exclusion of rent on buildings owned and occupied by government and non-profit institutions serving households; the treatment of armaments as current expenditures; the degree of detail with which the production accounts for households are presented; the need for the distinction between actual final consumption and final consumption expenditure; and lack of identification of “consumer” subsidies. Nevertheless, the Commission felt that a satisfactory balance had emerged and that the draft adequately represented a general consensus on most issues. (See the discussion of the research agenda in the section below, “Perspectives on the 1993 SNA: looking back and looking ahead”.)
The adoption of the updated, simplified and clarified, and more completely harmonized SNA is one of the most important events in the field of official statistics in the past 25 years. That its adoption is so regarded is a reflection of the comprehensiveness of its coverage and the breadth of its applicability. Four points may be made about these features to highlight the role the SNA has come to play:
(a) The 1993 SNA provides a comprehensive view of an economy
It shows the economic behaviour of the economy’s participants, their interrelationships and the results of their economic activity. It completes the integration of balance sheets, thus providing a full picture of the resources at the economy’s disposal. It consolidates information on some important elements of the economy—for example, population and labour force, price and volume measures and purchasing power parities—that previously had been separate.
(b) The 1993 SNA is expected to provide guidance for national accounts almost universally
From the outset of the revision, it has been the express wish of developing countries that one framework be devised to be applicable to developed and developing economies alike. By the early 1990s, most of the countries with centrally planned economies that previously used the System of Balances of the National Economy (often called the Material Product System, or MPS) had announced their intent to move to the SNA. Throughout the revision, efforts had been made to harmonize MPS and SNA concepts and definitions, and in the final years special efforts were made to include explanations and clarifications that would ease these countries’ move to the SNA.
(c) The 1993 SNA recognizes the need for flexibility
It incorporates flexibility as the means of facilitating international comparisons and of encouraging the use of SNA in economies that differ widely, given that analytical requirements and data availability will dictate the varying emphases as matters of national statistical policy. As one aspect of flexibility, the 1993 SNA provides a classification system and an accounting framework that may be used at different levels of detail. The 1993 report suggests how satellite accounts can be used to present concepts that are additional to or that differ from those in the central framework. It shows how alternative classifications, in the framework of a social accounting matrix, augment the tools for analysing poverty and other social concerns.
(d) The 1993 SNA reinforces the central role of national accounts in statistics
National accounts serve as a framework for statistical systems and as a point of reference in establishing standards for related statistics. In one dimension, harmonization, such as between the SNA and the balance of payments, makes efficient use of statistical resources in both countries and international organizations. It also increases the analytical power of the statistics available to the variety of users. Analytical power was a prime focus in the SNA’s opening toward the environment, and developmental work is proceeding in recognition of the usefulness of having integrated economic and environmental accounting. In another dimension, the SNA will be the basis for elaborating national accounts for groups of countries, as evidenced by the expected consistency of the revised version of the European Communities’ system of accounts with the SNA.
The System of National Accounts 1993 is the result of a process that was notable for its breadth and openness. The decade-long, resource-intensive process took place under the auspices of the Inter-Secretariat Working Group on National Accounts (ISWGNA), comprised of Eurostat (the Statistical Office of the European Communities), the International Monetary Fund (IMF), the Organisation for Economic Co-operation and Development (OECD), the Statistical Division (UNSTAT) and regional commissions of the United Nations Secretariat, and the World Bank. The substantial achievements of the process were made possible through close cooperation among the five member organizations of ISWGNA and contributions, both in cash and in kind, from ISWGNA organizations, other international, regional and non-governmental organizations, a number of countries, and many individual experts in national accounting and related fields from all regions of the world.
Between 1982 and 1985, ISWGNA met several times to identify issues and group them together for discussion and to organize the subsequent revision process, and the individual member organizations of ISWGNA held a number of expert meetings to discuss issues. Between 1986 and 1989, one expert group meeting on the SNA structure and seven expert group meetings on specific subject areas were held (see annex VI). Sponsorship and finance were divided among the five ISWGNA member organizations. A core of five national accounts experts participated in all the subject-area expert group meetings to ensure consistency and continuity in decisions taken in different fields. These core experts were: Ms. Carol Carson (United States of America); Mr. Jagdish Kumar (India); Mr. Heinrich Lützel (Germany); Mr. Pablo Mandler (Argentina); and Mr. André Vanoli (France). Throughout the revision process, in addition to providing the secretariat for the various expert group meetings and seminars, the professional staff of the ISWGNA member organisations met together frequently to discuss substantive issues and make proposals and recommendations. The individuals who participated in most or all of these meetings were Mr. Derek Blades (OECD), Datuk Ramesh Chander (World Bank), Ms. Anne Harrison (OECD), Mr. Peter Hill (OECD), Mr. Brian Newson (Eurostat), Mr. Kevin O’Connor (IMF) and Mr. Jan van Tongeren (UNSTAT).
In 1989, the Expert Group on SNA Coordination was established. It consisted of the five core experts mentioned above plus the following experts who had participated in the eight previous expert group meetings: Mr. Eneas Avondoglio (Argentina); Mr. Jack Bame (United States of America); Mr. Adriaan Bloem (the Netherlands); Ms. Uma D. R. Choudhury (India); Mr. Youri Ivanov (Russia); Mr. Moffat Nyoni (Zimbabwe); Mr. Colin Pettigrew (United Kingdom); and Mr. René Rakotobe (Madagascar). Between 1989 and the first half of 1991, this Expert Group met five times to review the first set of draft chapters and to discuss outstanding issues. In all, 65 experts from 36 countries participated in one or more of these meetings, representing all regions and experience in a wide variety of specialized fields such as balance of payments, government finance, money and banking, labour statistics, input-output, household surveys, social accounting matrices, and environmental accounting. These experts, in addition to those already listed, were: Hans Adler (Canada), H.G. Akhniotis (Cyprus), Peter Al (Netherlands), Odd Aukrust (Norway), Michael Beekman (the Netherlands), Keith Blackburn (Australia), Cornelius van Bochove (the Netherlands), M. de Cartagena (Ecuador), Shirley Carter (United Kingdom), Margaret Costa (Brazil), Jean Courty (France), J.C. Dawson (United States of America), Pierre Demangel (Congo), Barbara Dunlop (Australia), Bernardo Ferrán (Venezuela), Alfred Franz (Austria), Rodolfo R. Fuentes (Cuba), M.E. Gomez-Luna (Mexico), Alan Heston (United States of America), Akinari Horii (Japan), Piroska Horvath (Hungary), P. Jayasundera (Sri Lanka), R.P. Katyal (India), Y. Kurabayashi (Japan), Kishori Lai (Canada), Marion Libreros (Colombia), Josė Lopez Pereda (Cuba), Devi Manraj (Mauritius), Salvador Marconi (Ecuador), M. Mouyelo-Katoula (Congo), M. van Nieuwkerk (Netherlands), Igor Pogosov (former USSR), Karin Polenske (United States of America), Graham Pyatt (United Kingdom), Boris Ryabushkin (former USSR), Jacob Ryten (Canada), K. Saleh (Indonesia), Gyorgy Sandor (Hungary), Stephan Schlosser (Czechoslovakia), Bogdan Sculz (Canada), John Shadlow (Papua New Guinea), Vaska Spasova (Bulgaria), Erkki Tassia (Finland), Bent Thage (Denmark), Seppo Varjonnen (Finland), Stewart Wells (Canada), C. Wibulswasdi (Thailand), John F. Wilson (United States of America), Liu Xiaofan (China), Sergio Zamora (Chile), and D. Zmanay (Mauritius).
A first set of 14 draft chapters and three draft annexes, based on the recommendations of these expert group meetings, was considered by the Statistical Commission at its twenty-sixth session in 1991. Most of these were prepared by Mr. Hill (on secondment from the OECD). Mr. Vanoli prepared an overview chapter and chapters on applications and on satellite accounts.
Additional technical meetings were organized by the five regional commissions of the United Nations (ECA, ECE, ECLAC, ESCAP and ESCWA), Eurostat, OECD, professional groups such as the International Association for Research in Income and Wealth (IARIW) and ISWGNA itself. Most meetings organized by ISWGNA were hosted by member organizations; the others were hosted by the national statistical offices of the former Soviet Union, Zimbabwe and Mexico. The last meetings were the Interregional Seminar on the Revision of the SNA, held in October 1992, and the sixth meeting of the Expert Group on SNA Coordination, which was held in conjunction with the Seminar. The Interregional Seminar provided the opportunity for over 80 country, regional and international experts from all over the world to express their views on the final draft SNA before its consideration at the twenty-seventh session of the Statistical Commission.
For the last critical years of the revision process, from 1989 to 1993, ISWGNA benefited from the coordination and management support provided by Ms. Carson of the United States Bureau of Economic Analysis (USBEA). With the assistance of Mr. Brian Grove, also from USBEA, she coordinated, monitored and tracked the many revisions to the various chapters and annexes and facilitated frequent communications among all the parties involved or interested in the revision process.
In the final revision process, from 1991 to 1993, Mr. Hill undertook additional drafting and revisions for chapters I, IV to X, the section of chapter XII dealing with the revaluation account, and chapter XVI. Mr. Vanoli undertook additional drafting and revisions for chapters II and XIX and the first three sections of chapter XXI. Other contributors in this final phase of drafting and revising were the following: Ms. Carson, assisted by Ms. Stephanie Howell (also of USBEA), major parts of the front matter, including the SNA history; Mr. Cor Gorter (the Netherlands, as consultant to Eurostat), in close collaboration with Mr. Newson (Eurostat), chapter III; Mr. O’Connor (IMF), chapter XI; Ms. Helen Stone Tice (USBEA), in close collaboration with Ms. Carson, the section of chapter XII dealing with other changes in the volume of assets account and chapter XIII; Mr. Bame (as consultant to IMF), chapter XIV; Mr. Erling Flottum (Norway, as consultant to Eurostat), in close collaboration with Mr. Newson, chapter XV; Mr. Ralph Turvey (United Kingdom, as consultant to OECD), chapter XVII; Mr. Blades (OECD), chapter XVIII; Mr. Steven Keuning (Central Bureau of Statistics of the Netherlands), chapter XX; Mr. van Tongeren (UNSTAT), the section of chapter XXI on environmental accounting; Ms. Cristina Hannig (UNSTAT), in close collaboration with Mr. van Tongeren, annex I; Mr. Mahinder Gill (IMF), assisted by Mr. Bame, annex II; Ms. Harrison (OECD), annexes III and IV.
The classifications and most accounts, tables and figures describing the System in the chapters and annexes were developed by Mr. Vanoli and Mr. van Tongeren, assisted by several UNSTAT staff members. Mr. van Tongeren, assisted by several UNSTAT staff, also prepared a list of SNA terms as a starting point for the index.
Numerous supporting papers and technical documents prepared for the expert group meetings by staff of ISWGNA member organizations and others, as well as the reports of the meetings and working drafts of chapters, were distributed for comments to over 200 experts all over the world. Their comments were valuable contributions at different stages of the revision process, particularly during the final stages.
In the last years of the process, in response to letters from ISWGNA seeking financial support for a number of tasks related to the revision work programme, contributions in cash and in kind were made by Australia, Austria, Canada, France, Germany, Netherlands, New Zealand, Norway, Sweden, Switzerland and the United States of America. IARIW acted as the administrator of contributions in cash. These contributions supplemented the very substantial) contributions in cash and in kind made by the five member organizations of ISWGNA and allowed the process to move ahead on several critical tasks.
During the last stage of the revision process, ISWGNA dealt with several important policy issues. The senior officials representing the member organizations of ISWGNA at this stage were Mr. Yves Franchet (Eurostat), Mr. John McLenaghan (IMF), Mr. Louis Kincannon (OECD), Mr. William Seltzer (UNSTAT) and Datuk Chander (World Bank).
The following other staff members and consultants to international organizations also participated in one or more of the expert group meetings: Roberto B. Ibarra (Centro de Estudios Monetarios Latinoamericanos (CEMLA)); René Rakotobe (ECA); George Szilagyi (ECE); Raúl García Belgrano (ECLAC); Meng Kow Loh, Jagdish Kumar (ESCAP); Kotb Salem (ESCWA);Piero Erba, Alain Chantraine, D. Glatzel, Hugo K, Locker, J. Roman, R. Salvat, Werner Thon (Eurostat); Ralf Hussmans (ILO); Arie Bouter, Warner Dannemann, Mahinder Gill, Jonathan Levin, Chandrakant Patel, Samuel Pizer (IMF); Lourdes Urdaneta-Ferrán (International Research and Training Institute for the Advancement of Women (INSTRAW)); J.E. Chapron, I, Divoy, Jeff Owens, Erwin Veil (OECD); Y.R. Cho, B. Dissmann, S. Lyakh, G. Robyn, M. Usui, T. Yamada (UNIDO); Lazslo Drechsler, Vladimir Drjuchin, Guadalupe Espinosa, Cristina Hannig, Y. Kurabayashi, Curtis McSween, Irene Tsao, Viet Vu (UNSTAT); Ernest Lutz, John O’Connor, M. Ward (World Bank).
Final publication of the English version of the 1993 SNA was coordinated, with the involvement of ISWGNA member organizations, by Mr. Robert Johnston from UNSTAT, in close collaboration with Mr. van Tongeren and Ms. Hannig. The Office of Conference Services, Department of Public Information, Division of Economic and Social Affairs and Secretariat Services and Office of General Services of the United Nations Secretariat provided extensive design, editorial and support services for the production process.
Finally, mention should be made of the many staff members from all the member organizations of ISWGNA and from USBEA who, in addition to those already mentioned above, greatly contributed to the success of the revision process with their many professional, technical, administrative and secretariat skills that supported such a complex and long-term work programme.
A System of National Accounts, Studies in Methods, Series F, No. 2, Rev.3 (United Nations publication, Sales No. E.69.XVII.3), often referred to as the 1968 SNA.
Perspectives on the 1993 SNA: looking back and looking ahead
With the 1993 SNA, significant advances in national accounting have been achieved. The significance of these advances is best appreciated in light of some historical background, provided in the first section below. The second section discusses a research agenda which looks ahead to the SNA’s continuing evolution in the future.
A. Looking back
From a historical perspective, the content of the 1993 SNA and the review and revision process reflect the broadening of the experience and expertise underlying the SNA, the increasing harmony between the SNA and other international statistical standards, and the changing research agenda.
The history of the SNA combines two threads—the development of national accounting and the “internationalization” of statistical concerns. The accounting history is too broad a topic to cover comprehensively. Instead, reference will be made to several “development indicators”, including the scope of the accounting structure, the number of countries reporting national accounting statistics internationally and the availability of practical guides. The internationalization history, in turn, encompasses two concerns relevant to the SNA—the comparability of economic statistics and the development of international standards and guidelines. These two threads will be traced by referring to official documents such as those of the United Nations Statistical Commission and publications of international organizations.
Forerunners of the System National Accounts
Official interest in the comparability of economic statistics dates back at least to 1928. In that year the League of Nations held an International Conference Relating to Economic Statistics to encourage the compilation of such statistics and the adoption of uniform presentation methods. The Final Act of the Conference stated that international comparability should be a goal, especially among countries with sophisticated statistical systems. It urged countries to consider extending the scope of official statistics to facilitate compilation of national income estimates at regular intervals.
Considerable impetus was given to the work on national income by the Great Depression of the 1930s, on the one hand, and by developments in macro-economic theory, on the other. In 1939 the League of Nations first published national income estimates. A table in its annual World Economic Survey shows estimates for all or part of the period 1929 to 1938 for 26 countries. Estimates for about half the countries were compiled as official estimates, and estimates for the rest as academic or other private studies.
In the same year, the Committee of Statistical Experts of the League of Nations recognized the need for guidance in the measurement of national income. The Committee, which viewed its general task as improving statistics and increasing their comparability, was already conducting work on several kinds of statistics—for example, indices of industrial production, housing, international trade and balance of payments. Because a number of countries were compiling statistics on national income but were using different methods, the Committee decided, in accordance with the 1928 Conference, to add the measurement of national income to its work programme.
The years immediately following this decision were eventful in the field of national accounting. A growing recognition of the usefulness of national income estimates to fiscal and economic policy-making—especially for war-time mobilization in some countries—strengthened official interest in the field. Although international comparability of the reported estimates was not the focus of the most intense work, that goal was kept in sight. For example, in 1944 and 1945, representatives from the United States of America, Canada, and the United Kingdom of Great Britain and Northern Ireland discussed the problems of international comparability. The result was the first international agreement on the conceptual methods and presentation of national estimates.
As the Second World War ended there was an immediate need for comparable measures of national income as a basis for apportioning the expenses of international organizations. To help address this need, the Sub-Committee on National Income Statistics of the League of Nations Committee of Statistical Experts was formed. Consisting primarily of experts who were directing the compilation of national income and related estimates in countries of Europe, North America and Australia, the Sub-Committee met in December 1945, working from a memorandum prepared by Richard Stone.
The origins of the SNA trace back to the Sub-Committee’s report, published in 1947.1 The Sub-Committee hoped, according to the preface, that the guiding principles and recommendations in the report and its appendix would be applied to the widest possible extent in each country in the computation of national income and related accounts in order to secure greater international comparability than in the past.
The 1947 report and its appendix, “Definition and measurement of the national income and related totals”, by Richard Stone, showed how to obtain national income and gross national product by selecting and combining the elementary transactions of an economic system and how to display the interdependence of these transactions. This approach, then called the social accounting approach, contrasted with an approach that focused on building up a single total, such as national income. It was viewed as a logical development of current work in the field and became the foundation for further work.
The report recommended a set of nine tables to present national income statistics. This set, adapted from the more detailed set of accounts outlined in Stone’s appendix, was viewed as having great utility in practical economic analysis and as being capable of estimation. It featured the derivations of, and relationships among, analytically important income, expenditure, capital formation and saving aggregates. The set of 24 accounts in Stone’s appendix was based on an underlying structure of current accounts (operating and appropriation) and capital accounts (capital and reserve) for five sectors—productive enterprises, financial intermediaries, insurance and social security agencies, final consumers and the rest of the world. Reflecting most of the experience to that time, the accounts were based on a model of an advanced industrial economy in which transactions in money dominated.
One chapter of the report, “Statistical sources and practical problems of implementation”, included an item-by-item survey of the procedures then in use to prepare estimates for the nine recommended tables. Reference was made to publications in various countries for more detail.
The 1953 SNA
Experience in national accounting accumulated rapidly in the early post-war years. Totals and breakdowns by industry of origin, type of income and category of expenditure provided essential information for the analysis of current economic trends, inflationary or deflationary tendencies, effects of foreign aid and, in general, factors that determine the level of employment and economic activity. These statistics were increasingly useful for studies of economically under-developed countries, where estimates of income by industry of origin and of capital formation were of special importance. By 1950 the United Nations Statistical Office was able to assemble estimates from country sources, for National Income Statistics, 1938-1948, for several years from 41 countries. Half of these estimates were published in country publications within 12 months after the close of the year to which they referred. These estimates included the 13 sets that were prepared by countries that were using the social accounting approach.2
In Europe, the national accounts served as a framework for information about economic conditions and performance that was used to administer post-war aid and encourage economic growth. The Organisation for European Economic Co-operation (OEEC), in 1950, published a set of accounts prepared by its National Accounts Research Unit, a unit set up to promote comparable national accounts statistics among member countries.3 This set of accounts was used to prepare a series of country studies, which provided a test of its practicability and convenience. This experience, supported by comments and further research, was the basis for A Standardised System of National Accounts, 4 published in 1952. The stated objectives were, first, to present a set of standard tables displaying the basic national accounting information that experience had shown to be useful in economic description and analysis and, secondly, to relate the entries in the tables in an articulated system of accounts and to define these entries and provide classifications for them. The Standardised System included for the first time detailed classifications of the main items of the accounts—for example, consumers’ expenditures.
Meanwhile, the Statistical Commission of the United Nations recommended continued work toward a uniform reporting basis for the wider group of United Nations members. It stressed the need for establishing international standards as quickly as possible, and in 1951 it allocated high priority to this work. An expert group appointed by the Secretary-General of the United Nations met in 1952 in New York to formulate a standard system. The result was the 1953 report A System of National Accounts and Supporting Tables.5
The 1953 report presented a set of six standard accounts. They were based on an underlying structure of production, appropriation, capital reconciliation and external transactions accounts for three basic sectors—enterprises, households and private non-profit institutions, and general government. The entries were arranged and consolidated so that each of the six standard accounts related to one of the familiar and important aggregates, such as national income. A set of 12 standard tables presented details and alternative classifications of these flows in the accounts. Compared to the presentation in the 1947 report, the 1953 accounts were further elaborated with respect to capital transactions.
The preface to the 1953 report noted that the concepts and definitions and the tables of the 1953 system were applicable to most countries: “The purpose of this report … is to set out a standard national accounting system in order to provide a framework for reporting national income and product statistics which is of general applicability.” This objective was ambitious; in fact, some countries, in commenting on the 1953 report, questioned the appropriateness of establishing international standards in the field at the time.
Unlike the 1947 system, the 1953 system explicitly took the needs of developing countries into consideration. For example, the report noted that the separation of households from enterprises and the inclusion of production for home consumption in total product were major practical problems for developing countries. Accordingly, the report attempted to provide clearly defined rules for drawing the production boundary. Further, one of the 12 standard tables, showing the receipts and disbursements of the rural sector, was designed to provide developing countries with a separate account for a part of the economy in which non-monetary transactions play an important role.6
The 1953 report recognized the importance of harmonizing international statistical standards. Specifically, it recognized that the international guidelines on economic and financial statistics and on national accounts should be consistent and well integrated. It noted the care that had been taken in drawing up the SNA to ensure consistency with definitions and classifications used or recommended by others, notably the International Monetary Fund on international transactions and the OEEC.
The first chapter of the 1953 report was on the development and uses of national accounting. The outstanding use of national accounting statistics had been in connection with public policy. Countries that rely mainly on monetary and fiscal measures find national accounts useful because they provide a systematic framework for assessing the probable course of economic development and the adjustments needed in government policy. Countries, both developed and developing, that apply national budgeting—that is, the matching of supply and demand of productive resources and their finance—also can use a national accounts framework. Different claims on the productive system can be coordinated to meet certain general requirements, such as the stability of the economic system as a whole, which cannot be taken into account if each claim is considered in isolation.
In discussing the development of national accounting, the first chapter noted that efforts to systematize the increasing amount of economic information had led to distinct but partially related sets of statistics: national income and product, input-output, financial flows, balance sheets, and prices and quantities. It was viewed as unlikely, however, that these investigations, which had been done primarily for individual countries, would lead at that time to the construction of comprehensive accounting systems that embraced all the available statistics. Further, given the practical needs and resources, the construction of such a system was not an immediate objective for economic statisticians.7
The research agenda: a case study
One of these areas of statistics—prices and quantities, specifically constant-price measures—provides a case study of how a topic on the research agenda moves through the research and consensus-building stages to incorporation in international standards and guidelines. Constant-price measures are used as the case study because a high priority was assigned to this item on the research agenda. One indication is that a long paragraph placed prominently in the preface acknowledged that the 1953 report was confined to accounts in current money terms and recognized the need for constant-price measures.
Earlier, National Income Statistics, 1938-1948 had included a section entitled “Intertemporal comparisons of real national income” in its chapter on conceptual problems. The section stated that for many purposes, particularly in periods of rapidly rising or falling prices, there was a need for statistics adjusted for fluctuations in the price level. An appendix presented national income in constant prices for 17 countries, noting that the methods used differed widely. It concluded that the series then published could be used for comparing intertemporal changes among countries “only with reservations”.
In 1952, the OEEC, referring to work on accounts in current money values as the first stage of national accounting, had begun research on comparisons over time. The foreword to a 1956 report, a product of that research, said that, although substantial agreement on concepts and methods had emerged from two conferences of national accounts experts in 1952 and 1955, “opinion and practice had not yet reached the point which would make the adoption of international standards practicable”.8
Work by the United Nations led to a report to the Statistical Commission in 1957.9 By the mid-1950s, many countries were producing constant-price national accounts measures. They still differed widely, however, in scope and quality. The report was based on a survey of country practices but went beyond practice; it attempted to define a system of quantity indexes—including quantity indexes for non-commodity flows—drawn up within a comprehensive, but abridged, SNA framework. Characterized as tentative and exploratory, the report noted the ongoing nature of the work and referred to the upcoming (1959) conference of the International Association for Research in Income and Wealth. That conference included a session that was described on the jacket of the volume containing the published papers as “the highly controversial subject of national account deflation, which created lively discussion”.
Lively discussion apparently continued into the 1960s. A draft of the proposals for revision of the SNA circulated in 1965 focused, in about 25 paragraphs, on constant-price measures of product flows. By 1967, widespread discussion—including three regional working groups devoted to national accounts at constant prices—led to a doubling in the number of paragraphs. Two new sections provided practical rules in specifying prices and quantities (for example, dealing with variations in quality and seasonal variation) and numerical illustrations. Foreshadowing the next section of this historical perspective, by the time of publication in 1968, the number of paragraphs had doubled again. A new section included a more explicit distinction between the approach of decomposing value into price and quantity to obtain constant-price measures and the approach of selecting a “basket” of items in terms of which to obtain purchasing power measures. It prominently explained why the results of obtaining quantity indexes within a balancing set of accounts—production, consumption and accumulation for a closed economy, much less with an external account—were not useful.
Subsequently, two slightly modified editions of the 1953 SNA were published. The second edition, published in 1960, reflected comments, invited by the Statistical Commission, on country experience in applying the 1953 SNA. A review of these comments in 1956 had led the Commission to conclude that, although no major changes were needed immediately, several minor modifications were needed to maintain or improve comparability with related international standards and to introduce clarifications and other adjustments. The Commission asked that proposals for amendments be formulated; most of the proposals were formulated by the United Nations jointly with the International Monetary Fund and OEEC at a meeting in 1956.
In looking toward a major review later, the 1958 Statistical Commission expressed the hope that a wider system could be established that would take account of the very considerable experience in the field by countries with planned economies. Such a system, the Commission noted, should also consider the differing requirements of countries at various levels of development, and for this purpose the system would need to be flexible.
The 1960 publication seems to reflect some move during the 1950s toward a more extended system; it was envisaged that the SNA would be extended at some future date to include, first, flow of funds and input-output tables and, as a longer-term objective, balance sheets. Countries were either already preparing or were considering preparing these extensions, and it was recognized that eventually international guidelines would have to be established.
The third edition of the 1953 SNA, published in 1964, improved consistency with the International Monetary Fund’s Balance of Payments Manual, corrected or clarified the text at several points and updated references to other international guidelines.10
Manuals and the questionnaire
In the 1953 report no attention was given to the statistical problems of compiling and measuring the items entering the accounts. For help on practical problems, reference was made to other reports that the United Nations intended to issue in the future. In 1955, the United Nations completed a provisional manual on methods of estimating national income.11 It was prepared with the needs of developing countries especially in mind. Even before the 1953 SNA, which was the basis for the exposition of methods, the Statistical Commission had repeatedly expressed interest in a report of this nature.
Using the 1953 SNA as a basis, the United Nations developed a questionnaire to be sent to member countries to collect national accounts information on a regular, systematic basis.12 The questionnaire requested estimates for nine of the standard tables and information about differences between the country estimates and the SNA. The responses, supplemented by information from country statistical offices and publications, were published, beginning in 1958, in the Yearbook of National Accounts Statistics.13 The first Yearbook showed national accounts statistics for 70 countries and territories.
The 1968 SNA
Even as the third edition was being published, the United Nations convened an expert group to make proposals for the extension and revision of the SNA. The expert group met for two weeks in 1964, basing its discussion on a draft paper prepared by Richard Stone and supplementary papers on selected aspects prepared by the United Nations and the Organisation for Economic Co-operation and Development (OECD). The document produced after the meeting was the basis for discussion by working groups of national statistical authorities within the United Nations regional commissions and by the Statistical Commission. In addition, there were rounds of discussions in the International Association for Research in Income and Wealth and in similar regional associations. A second document was prepared as a result of these discussions and further study; it was considered by the expert group at its second session in 1966 and by the Statistical Commission. Subsequently, the regional working groups considered national accounting at constant prices and income distribution statistics, and studies were made of input-output and other selected aspects. A third document was considered by the expert group at its third session in 1967 and submitted, along with the expert group’s conclusions, to the Statistical Commission.14 In 1968 the Statistical Commission approved a revised SNA.15
The introduction to the 1968 SNA reported that two developments since the 1953 SNA helped make the new SNA possible and, at the same time, made it necessary, if international standards were to keep pace with work going on in countries. The first development was the elaboration and development of national accounting. Along one line, more detail was being added to the accounts to respond to the growing needs of economic analysis; in the absence of a comprehensive framework, the new detail tended to take variant forms in different parts of the world. Often the result was a new statistical endeavour. Many countries prepared input-output accounts, some prepared flow of funds accounts, and a few had moved in the direction of balance sheets. Along another line, more attention was being given to estimates at constant prices.
Intensive efforts were made to bring the SNA and the System of Balances of the National Economy (often called the Material Product System, or MPS) closer together. The MPS, long used in the Soviet Union, was elaborated, beginning in 1965, under the auspices of the Council for Mutual Economic Assistance as a standard for the use of its members. The Statistical Commission, in 1971, requested that the description of the MPS be published and circulated widely.16
The second development behind the 1968 SNA was the construction of disaggregated economic models as an aid to economic analysis and policy. For many purposes, modelling in which the aggregates of output, consumption, investment and so on were subdivided exacerbated some problems that arose in building aggregate models and added certain others. First, the number of accounting identities was much larger. Secondly, subdivided aggregates needed to be classified in several ways according to the point of view taken in different parts of the analysis. Thirdly, general economic and accounting principles were no longer sufficient to resolve all the taxonomic problems; the needs of particular forms, such as input-output analysis, contributed to the choice of the solution.17
Accordingly, the 1968 SNA incorporated major extensions. These extensions with respect to the structure of the accounts were to (a) disaggregate the production account into input-output accounts; (b) disaggregate net lending or borrowing into sector financial flows; (c) divide the income and outlay accounts and capital accounts for the nation to show accounts for the sectors; and (d) add balance sheets for the sectors and the nation. The structure of the system was set out in a matrix. It represented each account—for opening assets, production, consumption, accumulation, the rest of the world, revaluations and closing assets—by a row and column pair. In addition, the 1968 SNA incorporated additional classifications for the activities of government and non-profit institutions and for transfers. Finally, reflecting the research and consensus-building previously described, the 1968 SNA integrated constant-price data for goods and services.
To incorporate these extensions, the 1968 SNA presented a set of 20 accounts, broken into three classes. Class I accounts are the consolidated accounts for the nation. They are an articulated set that summarizes the accounts on production, consumption expenditure, income and outlay, capital formation and capital finance and are closed by an account on the external transactions for the nation. Class II accounts relate to the production, consumption expenditure and capital formation accounts. They show the supply and disposition of goods and services, separately for commodities and other goods and services, and the production of goods and services, separately for the four classes of producers. Class III accounts relate to the income and outlay and capital finance accounts. They show these accounts for the institutional sectors into which resident transactors are divided—non-financial corporate and quasi-corporate enterprises, financial institutions, general government, private non-profit institutions serving households, and households.
A set of 26 standard supporting and supplementary tables exhibited detailed series that, although valuable and feasible to compile for national and international use, could not be shown in the form of accounts. A number of standard supporting tables presented the constant-price series. Others, such as the two tables on input-output, delineated the structure of the accounts as well as relevant detailed classifications. Yet others, such as the table on the income and outlay and the capital transactions of the socio-economic sub-sectors of the household sector, presented detailed classifications of selected accounts or an aspect of an account. These accounts and tables related to all aspects of the system except balance sheets.
The introduction to the 1968 SNA referred to the 1953 SNA’s role as a standard—that is, a basis of international reporting—as the system’s “main purpose”. It also noted its role as a guideline—that is, as an aid to countries wishing to work in the field. The 1968 SNA was also expected to guide countries. But reflecting its extended coverage, the 1968 SNA went beyond the previously stated purpose of guiding countries in preparing national accounts; the preface explicitly mentioned guiding countries in developing their systems of basic statistics. In discussing the uses of national accounts, the introduction stated that practical experience had shown that the accounts provided an excellent framework for appraising actual and proposed plans for economic statistics. The increased emphasis on this aspect (it had also been mentioned in the 1953 report) is understandable considering the international organizations’ concern with basic data development.
The 1968 SNA was seen as applicable to countries at every stage of economic and social development. However, the report provided a separate chapter to suggest ways in which developing countries might adapt the full system. The chapter was careful to note that its modified and supplementary presentations were not intended as international guidelines, but to suggest how the classifications and the tables and accounts might be adapted to the country.
The European System of Integrated Economic Accounts (ESA), prepared by the Statistical Office of the European Communities, represents another kind of adaptation of the 1968 SNA.18 That Statistical Office had participated in work on the 1968 SNA. The foreword to the ESA described it as the Community version of the SNA, differing from the SNA in that it provided additional information about production and finance, detail on the distribution and redistribution of income, and more precise and rigorous concepts and definitions. These characteristics were expected to lead to more complete and detailed knowledge about the economies of member countries and to improve the comparability of the statistics. Assessments to support the Communities’ organizations are based on a formula that includes gross national product.
Although the 1968 SNA extended national accounting substantially, the report noted that a number of topics remained for future discussion and research:
(a) In four fields work had been done: balance sheets; constant prices; statistics on the distribution of income, consumption and wealth; and elaboration of specific parts of the SNA by specialized agencies of the United Nations to provide links to such fields as agriculture, health and education (preparation of guidelines was listed as the next step for the first three);
(b) In two fields there had been general discussion but no work: regional accounting and human flows and stocks (a population matrix);
(c) In two other fields there had been little discussion: functional classification of inputs and the boundary between current and capital expenditure, including questions of extending the concept of capital expenditures to consumer durables, research and development, and education and health.19
The 1968 SNA provided a mix of conceptual and practical guidance. The accounts, it was said, were intended to delineate the basic features of the system. But the 1968 SNA went on to furnish practical guidance concerning the presentation of the main series of the system, including the periodicity and priority with which the accounts and tables might be used in presenting national accounting estimates. There were also short discussions of statistical discrepancies—the archetype practical problem—and of some major problems and techniques for showing estimates in constant prices. However, the extent of the practical guidance given in the 1968 SNA was limited, and supplemental manuals were planned.
Subsequently, several manuals came out about a decade after the 1968 SNA. These included the three that were listed as next steps in the research agenda: balance sheets; distribution of income, consumption and wealth; and constant prices.20
The 1993 SNA: the review and revision process
When the Statistical Commission approved the 1968 SNA, it requested a review and report on progress made by countries in applying the new system and difficulties encountered. By the early 1970s, about 120 countries and areas were reporting national account statistics to the United Nations for inclusion in the Yearbook, 40 more than a decade earlier.
In 1975, the United Nations undertook a review of country experience with the 1968 SNA. An early step was an inter-regional seminar in 1975 to review developing countries’ experiences. Several other regional meetings followed during the next five years. After considering a preliminary report on the findings of these meetings, the Statistical Commission in 1979 directed the convening of an expert group. That expert group met in 1980 to discuss the status of work on the SNA and its future direction in the light of country experience and the changing analytic priorities and statistical capabilities. Following another report to the Statistical Commission, incorporating the expert group’s views, the Commission asked that specific proposals be developed for short-term clarifications and updating of the SNA. The Commission emphasized the role of the SNA (as well as the MPS) as a point of reference in establishing standards for related statistics. National accounts, because of their comprehensiveness, ranked ahead of standards developed for particular fields of economic statistics.
An expert group meeting in 1982 recommended a review of the SNA designed to lead to a revision. The main objectives would be updating to fit new circumstances, clarification and simplification, and further harmonization with related statistical standards. The Statistical Commission, at its 1983 and 1985 sessions, accepted the expert group’s recommendations, although it noted the importance of maintaining continuity by avoiding major changes in definitions and classifications. It assigned a high priority to topics relevant to the implementation of the SNA in developing countries.
At the 1985 session, the Statistical Commission entrusted the Inter-Secretariat Working Group on National Accounts—consisting of Eurostat (more formally, the Statistical Office of the European Communities), the International Monetary Fund, the Organisation for Economic Co-operation and Development, the Statistical Division and regional commissions of the United Nations, and the World Bank—with planning the work programme and arranging for adequate participation of experts from national statistical offices and interested international organizations. The resulting cooperative effort was evidence of the increasing recognition of the SNA as the framework for statistical systems in both developing and developed countries and as the basis for international standards. This recognition increased the scope of the work to be done by an order of magnitude and thus made it especially desirable to share the burden and avoid conflicting and duplicative efforts.
From 1982 to 1985, topics for discussion were identified and studies on these topics prepared by the international organizations, consultants or national statistical offices. These studies were circulated for comment to experts on the specific topics and thereafter discussed at regional meetings in which national statistical offices were represented. Two main documents—on the organization of the review and on the conceptual framework of the revised SNA—were assembled by the Inter-Secretariat Working Group as background for the next stage.21
From 1986 to 1989, expert groups met to discuss a wide range of issues grouped into eight topics: SNA structure, prices and quantity comparisons, external sector, household sector, public sector, production accounts and input-output tables, financial flows and balances, and reconciliation of SNA and MPS. In 1989 an Expert Group on SNA Coordination was established to deal with outstanding issues and to review draft chapters of the revised SNA; it met six times. Approximately 50 experts, representing expertise—in national accounting and in different field specialties—from about 40 countries in all regions of the world participated in one or more of the total of 14 meetings (of five to 10 working days each).
A round of meetings sponsored by the United Nations regional commissions was held in 1990 to obtain views on the draft chapters, which had begun to be available in 1989. A paper prepared by the Inter-Secretariat Working Group was the main guide for discussion.22 A number of other meetings were held to discuss the draft chapters, especially in Europe. Accounting for the environment was of increasing interest in these later meetings, and it was the subject of a special conference of the International Association for Research in Income and Wealth.
A 582-page provisional draft of the revised SNA was available for the 1991 Statistical Commission.23 Further refinements and elaborations were incorporated into a revised set of draft chapters and annexes by the summer of 1992. That draft was the basis of discussion for an interregional seminar in October 1992. The same draft was presented to the 1993 Statistical Commission along with the report of the seminar, which concluded, “The participants thought that the revised SNA was a vast improvement over the 1968 predecessor”.24 As noted in the preface, the Statistical Commission unanimously recommended the adoption of the 1993 SNA, and the United Nations Economic and Social Council urged its use by member States and international organizations.
B. Looking ahead: the research agenda
The 1993 SNA, like its predecessors, represents a stage in the evolution of national accounting. To continue that evolution, further research will need to be carried out. Consensus must be reached on certain topics before they can be incorporated into international guidelines and standards. Although there is substantial agreement on the topics to be addressed, a research agenda has emerged along several lines during the final steps of the revision process.
In 1993, the Statistical Commission agreed that the highest immediate priority was to develop practical guidelines for the explicit allocation of financial intermediation service charges indirectly measured to specific users. The Commission addressed the related issues in detail and accepted a proposal by the Inter-Secretariat Working Group on National Accounts to provide a flexible treatment in the SNA. This treatment would recognize the desirability of allocating such charges fully while allowing flexible implementation in particular countries or groups of countries.
The Inter-Secretariat Working Group had also recommended that certain other topics be placed on the research agenda.25 The topics listed below were among those mentioned most often in the 1993 Statistical Commission:
(a) Cost of capital
The draft of the SNA completed in 1992 included imputations for rent on buildings owned and occupied by government and non-profit institutions serving households. However, this treatment presents certain conceptual and practical difficulties. For example, some have argued that the coverage of assets should be more extensive than the coverage of buildings if the concept of the cost of capital is to be used. These imputations were therefore deleted, and the topic was placed on the research agenda.
(b) Consumer subsidies
The 1992 draft maintained the treatment of subsidies found in the 1968 SNA. It has not been possible, despite considerable discussion, to agree on how to distinguish between payments to be treated as mainly benefiting consumers and those to be treated as mainly benefiting producers. Further research is needed, especially given the importance of the subsidies in some countries.
(c) Informal-formal distinction
The 1992 draft noted the difficulty in developing appropriate criteria to distinguish between informal and formal economic activities, a distinction that has been widely recognized as useful. The International Labour Organisation is the lead agency for this work, and the topic is on the national accounting research agenda to support continued collaboration with ILO in this field.
Three additional topics included in the 1993 SNA will require further research:
(a) Environmental accounting
The section of chapter XXI on environmental satellite accounts notes that it is presenting the state of the art, as of 1993, on the integration of economic and environmental accounting. However, the state of the art does not permit the introduction of environmentally adjusted aggregates in the central framework. The section is intended as a guide to countries wishing to design satellite accounts responsive to policy and analysis focused on environmentally sound and sustainable growth and development. It urges that cooperative research and methodological work by national accountants and environmentalists continue, a sentiment widely expressed in the reviews conducted in various forums.
Chapter XVIII (Functional classifications) notes that two of the classifications described—Classification of Individual Consumption by Purpose (COICOP) and Classification of Producers by Purpose (COPP)—are provisional. COPP, in particular, may need substantial revision. The Classification of the Functions of Government (COFOG) should be modified both to identify more precisely social transfers in kind and to identify more fully functions that are of increasing policy concern, such as repair and prevention of environmental damage.
(c) Matrix presentation
The annex to chapter II notes that the matrix presented there is provisional. Further work is needed to improve the matrix treatment of the accumulation accounts and balance sheets.
The interregional seminar, held jointly with the final expert group meeting in October 1992, devoted a session to updating and refining the SNA in the future. Many of the topics listed above were mentioned. Also cited were: scope of capital formation and stocks; output of services, including services produced within households; financial activities, including those associated with instruments such as derivatives; labour accounts; and regional accounts. The first topic includes two subtopics mentioned on the research agenda that emerged from the 1968 SNA. On one, research and development, substantial work was done during the review and revision toward treating relevant expenditures as capital formation. On the other, education and other aspects of human capital, not now treated as capital in the SNA, little progress has been made.
Finally, there is an interest in reviewing the purposes of the SNA. Two views have emerged on this question. One is that the national accounts are primarily an organizational scheme for economic statistics. The main value of the SNA, then, is in its consistent classifications and definitions and in its display of the interrelationships among the various parts of the economy. This view leads to an emphasis on the improvement of basic statistics, for the accounts will improve only as the basic statistics allow. A contrasting view is that the national accounts serve primarily to facilitate analysis of the economy and decision-making. The SNA, through its structure and definitions, not only determines the kind of analysis that can be carried out but also influences the way economic and social issues are considered. This view would lead to a review of the uses of national accounting, and research on this topic has also been suggested. The upcoming fiftieth anniversary of international guidelines and standards for national accounts might provide the occasion for a review of the purposes and uses of the SNA along these lines.
United Nations, Measurement of National Income and the Construction of Social Accounts, Studies and Reports on Statistical Methods, No. 7, Report of the Sub-Committee on National Income Statistics of the League of Nations Committee of Statistical Experts, with an appendix, “Definition and measurement of the national income and related totals”, by Richard Stone (Geneva: United Nations, 1947). The participants at the Sub-committee’s meeting were Richard Stone, Chairman (United Kingdom), H.P. Brown (Australia), J.B.D. Derksen (Netherlands), C.M. Isbister (Canada), George Jaszi (United States of America), Hildegarde Kneeland (Inter-American Statistical Institute), Raul Ortiz Mena (Mexico), Arne Skaug (Norway) and Julius Wyler (Switzerland).
Organisation for European Economic Co-operation, A Standardized System of National Accounts (Paris: Organisation for European Economic Co-operation, 1952). A second edition was published in 1958. The 1958 edition reflected experience with the 1952 text and interest in eliminating the differences between the United Nations and the OEEC systems of national accounts and in harmonizing those systems with the balance of payments. The 1958 and 1960 editions of the OEEC and the United Nations systems, respectively, were virtually identical.
United Nations, A System of National Accounts and Supporting Tables, Studies in Methods, Series F, No. 2 (United Nations publication, Sales No. 1952.XVII.4). The members of the Expert Group were Loreto M. Dominguez (Pan American Union) Kurt Hansen (Denmark), George Jaszi (United States of America), Moni Mohan Mukherjee (India) and Richard Stone (United Kingdom).
In addition, the United Nations Statistical Office prepared a somewhat consolidated and therefore simplified version of the accounting framework for the consideration of countries in which the scarcity of basic statistics precluded the use of the full system. This simplified system was consistent with the full 1953 SNA in terms of basic concepts, definitions and classification.
The 1968 SNA (paragraph 1.3) is more specific: “Although some work had been done in each of the fields mentioned, it was insufficient, except in the case of the national accounts expressed in current money terms, to provide an acceptable basis for international standards” [emphasis added].
United Nations, Yearbook of National Accounts Statistics (United Nations publication, Sales No. 58.XVII.3). This publication superseded Statistics of National Income and Expenditures, Statistical Papers, Series H, of which 10 issues were published. The Yearbook was renamed National Accounts Statistics: Main Aggqregates and Detailed Tables in 1982.
Abraham Aidenoff, on the staff of the United Nations Statistical Office, provided secretariat support throughout and drafted substantial parts of the three documents. The documents were “A System of National Accounts (proposals for the revision of SNA, 1952)” (E/CN.3/320) of 9 February 1965, which was submitted to the Statistical Commission at its thirteenth session; “Proposals for revising the SNA, 1952” (E/CN.3/345) of 28 June 1966, which was submitted to the Statistical Commission at its fourteenth session; and “Proposals for the revision of the SNA, 1952” (E/CN.3/356) of 14 August 1967, which was submitted to the Statistical Commission at its fifteenth session.
United Nations, A System of National Accounts, Studies in Methods, Series F, No. 2, Rev.3 (United Nations publication, Sales No. E.69.XVII.3). The Expert Group consisted of O. Aukrust (Norway), B. Ferrán (Venezuela), E. Hicks (International Monetary Fund), George Jaszi (United States of America), J.D. Mayer (France), M.D. McCarthy (Ireland), M. Mod (Hungary), C.A. Oomens (Netherlands), Richard Stone (United Kingdom) and S.G. Tiwari (India). Richard Stone served as Chairman for each of the expert group’s three meetings. In addition, representatives from the statistical services of the Organisation for Economic Co-operation and Development and the European Economic Community participated in the Group.
United Nations, Basic Principles of the System of Balances of the National Economy, Series F, No. 17, Rev.1 (United Nations publication, Sales No. E.89.XVII.3). The MPS became, beginning with the Yearbook for 1970, the standard for the national accounting statistics reported to the United Nations by countries with centrally planned economies.
Statistical Office of the European Communities, European System of Integrated Economic Accounts (Luxembourg: Statistical Office of the European Communities, 1970). Asecond edition was published in 1980.
United Nations, Provisional International Guidelines on the National and Sectoral Balance-Sheet and Reconciliation Accounts of the System of National Accounts, Statistical Papers, Series M, No. 60 (United Nations publication, Sales No. E.77.XVII.10). United Nations, Provisional Guidelines on Statistics of the Distribution of Income, Consumption and Accumulation of Households, Statistical Papers, Series M, No. 61 (United Nations publication, Sales No. E.77.XVII.11). United Nations, Manual on National Accounts at Constant Prices, Statistical Papers, Series M, No. 64 (United Nations publication, Sales No. E.79.XVII.5).
“Organization of the SNA review” (ESA/STAT/AC.28/2), 17 March 1986, and “Conceptual framework of the revised SNA” (ESA/STAT/AC.28/3), 9 February 1986. Both papers include extensive bibliographies mentioning reports of meetings and topical papers.
Report of the Inter-Secretariat Working Group on National Accounts on the revision of the SNA (E/CN.3/1993/4), 30 December 1992, and its recommendations on specific issues concerning the revised SNA (E/CN.3/1993/4/Add.1 and 2).
The goal of this publication is to describe the SNA as a conceptual system. This conceptual system is meant to be applicable to economies around the world. The publication therefore recognizes differing conditions and institutional arrangements that may be found in developed and developing countries and in newly emerging market economies. Further, it attempts to present the rationale for the treatments applied so that national accountants can, by extension, decide on treatments for new developments and new institutional arrangements in the future.
The publication does not attempt to provide guidance on how to make estimates, on the priority with which different accounts should be implemented, or on the frequency and format of their presentation. Instead, both practical guidance and specialized guidance are to be given in supplementary manuals and compilation guides that will receive increased attention now that the conceptual system is in place. Several manuals and guides are already in preparation. Publication of the handbook Integrated Environmental and Economic Accounting is expected in 1993. Work on the handbook on the application of the SNA in countries in transition has high priority in view of the urgent need for guidance to countries that previously had used the System of Balances of the National Economy. Preliminary discussions have taken place on a handbook dealing with application of the SNA in countries with high rates of inflation. The International Monetary Fund is developing its compilation guides in parallel with its conceptual manuals. The first of these is expected in 1993 to accompany the fifth edition of the Balance of Payments Manual.
The 21 chapters in this publication are in five groups. They are organized, first of all, to reinforce the structure of the SNA - for simplicity, called the System. Secondly, they are organized in recognition of the fact that not all chapters will be read by the same individuals or used in the same way. Some chapters, it can be expected, will even be used by the same individual in different ways at different times.
The chapters in group I provide information about the 1993 SNA designed to be of interest not only to national accountants but also to others, such as analysts who use national accounts statistics, economic journalists, statisticians in fields other than national accounts and government officials who make decisions that will affect resources available for the development of statistics. Chapter I describes the main features of the sequence of accounts in the System, its institutional sectors, and its concepts and classifications; the uses of national accounts; the harmonization between different statistical systems; the links with business accounting and with economic theory; and the roles the aggregates can and cannot serve. Chapter II gives a picture of the central framework of the SNA. As an overview it is selective in order not to be overwhelming, but references are made to the appropriate chapters that follow. It first sets out the elements that make up the skeleton of the system: institutional units and sectors; transactions and other flows; assets and liabilities; activities, establishments and products; and purposes. Next it summarizes the accounting rules. The chapter then describes the accounting structure within which flows and stocks, using these tools, are entered. The chapter introduces the several degrees of flexibility that are available to the user of the System.
Group II chapters deal with the basic “tools” with which national accountants work to construct a system of accounts. Chapter III, on flows, stocks and accounting rules, defines the nature of the entries in the System and explains the rules of accounting that underlie the ways those entries are made. The discussion is a general one; definitions of specific stocks and flows and specific applications of the accounting rules appear in later chapters. Chapter IV describes institutional units and the five institutional sectors into which the resident institutional units are grouped. Chapter V describes establishments and the industries, following the International Standard Industrial Classification, into which they are grouped.
Group III chapters are built around the accounts and tables of the central framework. Chapters VI through IX cover the current accounts of the full sequence of accounts for institutional units and sectors - the production account, the primary distribution of income account, the secondary distribution of income account, and the use of income account. Chapters X through XII cover the accumulation accounts—the capital account, the financial account, the other changes in volume of assets account, and the revaluation account. Chapter XIII covers the balance sheets of the full sequence of accounts for institutional units and sectors. Chapter XIV, on the rest of the world account, covers the transactions and other flows, and resulting stock of assets and liabilities, between resident institutional units and non-resident units in respect of all kinds of economic activity. Chapter XV covers the set of supply and use tables and input-output tables that provide a more detailed basis for analysing industries and products through a breakdown of the production account, generation of income account, and goods and services account.
Group IV chapters are about measures associated with stocks and flows that are entered into the accounts and tables described. Chapter XVI describes a set of interdependent measures that make it possible to carry out analyses of inflation and economic growth. It is mainly concerned with compiling price and volume measures for flows of goods and services, but it also examines the measurement of income in real terms—that is, income adjusted for changes in purchasing power—for the total economy. Chapter XVII discusses population, which is needed to express product and consumption expenditure in per capita terms, and labour inputs, which are needed to examine productivity.
Group V chapters deal with elaborations, applications and uses of complementary or alternative concepts. Chapter XVIII describes the classifications for certain transactions in products by producers and for three institutional sectors—households, general government and non-profit institutions serving households—that identify the “purposes” or “objectives” of the transactions.
Three other chapters in group V highlight the flexibility of the System. The central framework is consistent and integrated. However, its presentation in this manual does not imply any order of priority or frequency of compilation, nor does the accounting structure described imply that results are necessarily to be presented in this way. Chapter XIX, on the application of the integrated framework to various circumstances and needs, shows how the emphases may be varied by, for example, using the System’s classifications and accounts at various levels of detail, by using different valuations, by rearranging the results and by introducing additional elements. The chapter provides recommendations for the treatment of multiple exchange rates and a parallel treatment of interest under significant inflation. Chapter XX, on social accounting matrices, illustrates the exploitation of flexibility to highlight special interests and social concerns such as poverty, featuring the display of interconnections, disaggregation of the household sector, and linkage of income generation and consumption. Chapter XXI describes how the System may be expanded for selected areas of concern by using classification schemes and concepts that are complementary or alternative to the one in the central framework. It describes a framework that may be used for functionally oriented satellite accounts, such as for tourism or social concerns such as health or education. It presents, as an example of satellite accounts that give more emphasis to alternative concepts, a framework in which natural resources are treated as capital and their using up is treated as the depletion or degradation of capital.
Several of the chapters have one or more annexes. These typically elaborate an aspect or a treatment specific to the chapter. For example, an annex to chapter II shows how the System can be presented in diagrammatic, equation and matrix form; an annex to chapter XII provides an example of how to calculate holding gains.
In addition, five of the annexes at the end of the manual pull together in one place significant information that draws upon several chapters. Annex I first describes the general features of the 1993 SNA that changed or received greater emphasis while retaining the basic theoretical framework of the 1968 SNA. Next, the annex mentions the specific changes, grouped into nine sections and with cross-references to the appropriate chapters and tables. This annex, together with the history of national accounting up through the 1968 SNA presented in the previous section, will help readers, especially those familiar with earlier systems, who wish to focus on the changes incorporated into the 1993 SNA.
Annex II lays out the relationship between the rest of the world account and the balance of payments accounts. Harmonization has been attained between the SNA and the balance of payments, as described in the fifth edition of the International Monetary Fund’s Balance of Payments Manual with respect to issues such as the delineation of resident units, valuation of transactions and of assets and liabilities, time of recording transactions, conversion procedures and the coverage of major aggregates. There are, however, differences in the level of detail. These reflect differences in analytical requirements, the relative quantitative significance in international transactions in respect of some items, and constraints imposed by the internal structure of the two systems. The annex focuses on the relationship between the aggregates and details in the SNA rest of the world accounts and corresponding items in the Manual by using a series of reconciliation tables.
Annexes III and IV show the treatment of two kinds of transactions—those related to financial intermediation services indirectly measured and those related to insurance, social insurance and pensions—that cut across several accounts.
Annex V provides the classifications and accounts. The classifications shown are for institutional sectors, transactions and other flows, and assets. The hierarchy of the classifications and the codes are systematically laid out. A complementary classification of transactions and other flows facilitates additional presentations and analysis. It shows a number of transactions in kind explicitly, the components of certain flows, such as output, and certain observed transactions that are split into components for use in the System. In addition, the functional classifications described in chapter XVIII are provided for convenience. The sequence of accounts for institutional sectors and the rest of the world are presented in full detail.
Several features of the volume are designed specifically to aid the reader. First, the table of contents is very detailed, reproducing the headings used in each chapter. Thus, the reader can use the table of contents to place a particular topic in context—for example, to identify a component as one of several within an aggregate. Second, the accounts and tables throughout the volume have numerical entries so that the reader can sum to an aggregate, trace the interrelationships and carry out other operations that reinforce understanding. These data, and the references to them in the text, are purely illustrative and do not correspond to actual data in any country. Finally, the list of acronyms and abbreviations and the index are especially useful in a technical publication of this size.