Archive:Satellite accounts sharpen the focus
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- Published in Sigma - The Bulletin of European Statistics, 2008/03
Satellite accounts have nothing to do with rocket science, orbiting Earth or keeping track of the number of astronauts in the world. They are statistical tools, which are used by national accountants to analyse certain events, which cannot be identified or analysed through normal national accounts.
Introduction
National accounts have very good standard tables, concepts and classifications, which are internationally recognised and harmonised. They are very useful for macroeconomic policy issues, like economic growth, inflation, public finance, balance of payments and employment. However, they can be insufficient when you want to highlight specific economic phenomena,’ said Frits Bos, private consultant in national accounting and economist at the Netherlands Bureau for Economic Policy Analysis.
Satellite accounts exist for many different areas, among which are accounts on tourism, agriculture, health, transport, education, and research and development but perhaps the most well-known example are the environmental accounts (see also article on Environmental accounts).
‘Satellite accounts and tables can meet more specific data needs by providing more detail, rearranging concepts from the standard framework or by providing supplementary information. For some purposes, it may also be necessary to deviate from some of the standard national accounting concepts to improve the link with economic, theoretical, administrative or policy concepts.’
‘Satellite accounts are compiled by combining the standard national accounts statistics with all kinds of statistics and administrative data on a specific area. A major value added of satellite accounts is therefore that they link such data on specific policy issues to macroeconomic issues, like economic growth and public finance,’ explained Mr Bos.
The first experiments with satellite accounts and tables date back to work by the French statistical office during the mid-1970s, but the area has since matured and satellite accounts are now broadly accepted. In fact, both the system of national accounts (SNA) 2008 and the revised European system of national accounts (ESA) will include new chapters on satellite accounts drafted by Mr Bos.
‘In ESA95 the broad concepts of satellite accounts were mentioned, but in the revised version we go more into detail. We provide examples and tables to make it more concrete and useable and we mention some of the problems you can encounter when compiling satellite accounts.’
Pioneer work at Statistics Netherlands
Statistics Netherlands is one of the frontrunners when it comes to the development of satellite accounts. Mr Bos said that one of the reasons for the advanced agenda was the importance the Dutch government has attributed to national accounts for policy planning since the beginning of the 1950s.
The Dutch Statistical Office is, for example, known for its pioneer work on environmental accounts. At the end of the 1980s, Statistics Netherlands ‘invented’ the national accounting matrix including environmental accounts (Namea), which is a system that creates links between national accounts and environmental statistics. Namea shows the relationship between a number of important economic indicators, for example gross domestic product, consumption and trade balance and a range of environment pressures. The system is now commonly used in the EU.
‘Statistics Netherlands and its users consider both national and satellite accounts important and therefore we have been able to do a lot of research in this area,’ remarked Mark de Haan, national accounts expert at Statistics Netherlands.
‘The environmental accounts are still our flagship accounts. They are well established and mature. Today Statistics Netherlands is involved on the international arena, where I chair the London Group on Environment Accounts, which brings together a number of international experts. The group’s task is to provide input for the updating of the environmental accounts equivalent of the SNA: the system of integrated environmental and economic accounting (SEEA),’ he said.
In total 23 issues, such as how to measure the depletion of natural resources or the value of fish stocks, will be updated in the revised SEEA. By the end of 2009 the outcome of these discussions will be reported to the United Nations Committee of Experts on Environment Accounts and later on adopted by the United Nations Statistical Commission. The first volume of the revised SEEA is expected to be released in 2012.
In-depth analysis in many areas
Apart from the environmental accounts, Statistics Netherlands has established the social accounting matrix, which permits further analysis of the labour market and of households: their composition, sources of income, consumption expenditure patterns, etc.
‘Simply put, social accounts provide data on social dimensions of the economic system. Compared with the standard national accounts, they add information on how income is distributed among the various types of households and how this household income is subsequently spent or saved,’ explained Mr de Haan.
The knowledge economy is also under scrutiny through special accounts. In these accounts you can follow how investment in knowledge and new innovation affects productivity. Also information and communication technologies are made visible and the accounts can be used to see their role in productivity.
In the knowledge satellite accounts, special attention is given to research and development. In fact information on R & D may in the future become part of the ESA mother accounts.
‘Today R & D is recorded as a cost (intermediate consumption) in national accounts. However, R & D gives benefits to the company in the future and is therefore more like an investment (capital formation) which will pay off a few years down the line and add to production growth. As a consequence R & D expenditures also have to be depreciated, just like investments in machinery. This means that determining the lives of knowledge requires special attention,’ said Mr de Haan.
For the past two years Statistics Netherlands has also provided tourism accounts, which bring together all information on tourist activities: data on transport, hotels, restaurants, entertainment parks. The data are also compiled to provide an overview of the supply and use of goods and services for various types of tourism and their importance for value added, domestic employment, trade balance, government finance and business income.
Analysing productivity in detail
A major use of national accounts is to describe, monitor and analyse productivity growth.
‘It is essential to understand changes in industry structure and to make policies which stimulate productivity growth, while also taking into account other policy considerations, such as environmental issues and equality,’ Mr Bos pointed out.
The national accounts provide a solid basis for constructing the so-called growth accounts for measuring productivity at industry branch and macro level. However, Statistics Netherlands — like many countries — is setting up special productivity accounts to better measure and analyse growth and productivity. These accounts are developed in parallel with the Klems growth and productivity accounts.
‘Our work on productivity is evolving. The first data were published in 2007. Now we are looking into extending our capital accounts beyond the fixed assets by including estimates for inventories, land and mineral reserves. We will also extend our labour accounts by providing more detailed data on compensation of employees and hours worked subcategorising the active labour force by different age groups (as a proxy of work experience) and various levels of educational attainment. One may expect the upgrading of our labour force to be an important source of economic growth which needs to be measured as such,’ said Mr de Haan.
An ageing society and human capital on the horizon
Statistical research at Statistics Netherlands will also focus on the area of the ageing society. This is a subject which is getting more and more attention, as the links between ageing, healthcare and social exclusion are major issues for European policymakers.
‘I can also imagine we will work on human capital in the future. Most economists will regard expenditure on education as one of the most crucial investment categories in knowledge-based economies. Although there are good reasons, the international system of national accounts does not consider education expenditure as capital formation. Satellite accounts are an excellent way to experiment with the possibilities of accounting for human capital,’ commented Mr de Haan.
It is clear that satellite accounts are here to stay and that they are constantly developing — both maturing as well as expanding to new areas. Both the revised European system of accounts and SNA 2008 will include new chapters on the subject and will provide better tools for policymakers.