Archive:Supply and use tables - An indispensable tool for producing reliable national accounts
This Statistics Explained article is outdated and has been archived - for recent articles on national accounts and GDP see here.
- Published in Sigma - The Bulletin of European Statistics, 2008/03
- By Johan Wullt, Eurostat
Measuring production in an economy is a daunting but essential task for any statistician wanting to calculate GDP. To capture this process, where input of labour, capital, goods and services are used to produce outputs of goods and services, you need a vast amount of information. For this reason statisticians and economists use a statistical and analytical framework called supply, use and input-output tables.
Maria Forgon at the Hungarian Central Statistical Office has 29 years’ experience in this field. Sigma asked her to unveil the secrets of these tables and make this complex statistical domain understandable for the layman.
Introduction
These tables are very useful tools for any statistician or economist working with national accounts. Supply and use tables serve primarily statistical purposes and provide an integrated framework for checking consistency and completeness of national accounts data. Input-output tables are used as a tool for economic, social or even environmental analysis,’ said Ms Forgon.
The input-output analysis, developed by the economist Wassily Leontief in the 1930s, describes inter-industry relations in an economy. It explains how different industries depend on each other and how they supply each other with input as well as use each other’s output.
The input-output framework actually consists of two different but related sets of tables: supply and use tables and the symmetric input-output tables that are derived from the supply and use tables.
‘The supply and use tables provide the main macroeconomic aggregates such as GDP, components of value added and output by industry, import, final consumption, gross capital formation and export,’ explained Ms Forgon.
The supply table describes the supply of goods and services, which are either produced in the domestic industry or imported. The use table shows where and how goods and services are used in the economy. They can be used either in intermediate consumption — meaning in the production of something else — or in final use, which in turn is divided into consumption, gross capital formation and export. Furthermore the use table shows the income generated in the production process.
A concrete example: the supply and use of cars
To make it concrete, imagine an economy with three industry sectors: agriculture, manufacturing and services, and for simplicity we follow only one product in our example: cars. These cars are either produced domestically or imported. That is a short description of the supply side.
The use table shows how the cars are used in the economy. Firstly there is intermediate consumption, which means that the cars are used in the production of another product. For example, when a car is transformed and sold as a camping car, then it has been used by the manufacturing industry.
Secondly there are different sorts of final use. When a car is sold to a consumer, then it has been used for final consumption. But when a car is sold to a catering firm or a farmer for professional use, it has been used as an investment. Finally the car can be exported to another country. The sum of all these different uses should equal the total supply for each product. Since supply and use are recorded in monetary terms it is required that both are valued in the same way, either in basic prices or at purchasers’ prices.
Statistical benefits of supply and use tables
Even though the mathematics applied in the input-output analysis is not simple, the data requirements are the real challenge. In our example we followed one product and three industries, but in reality each Member State supplies Eurostat with tables distinguishing 60 products and 60 industries. Behind this publication level there is a more detailed working level with thousands of products and hundreds of industries.
By comparing the individual supply and use of all these products and the different industries, inconsistencies are found that at a more aggregated level might have been netted out. The supply and use tables are therefore a very adequate method to calculate GDP and other aggregates.
‘Supply and use tables have several advantages. They increase the quality, which means they produce more reliable estimations and smaller revisions. They also increase transparency, by offering detailed information about the statistical production process. Hence they improve efficiency in the production of statistics. Therefore, it is recommended that supply and use tables are compiled as an integral part in the calculation of national accounts figures. Full integration is one of the strategic elements of the recent improvements in the Hungarian national accounts and has high priority,’ observed Ms Forgon.
In order to make GDP calculations more reliable, statisticians use three different methods. The problem is that these three methods often generate different results. In order to eliminate these differences and to find the most accurate result, statisticians often use supply and use tables.
‘Supply and use tables are a balancing framework that reconciles the three methods of GDP estimation that are used in national accounts — the production, income and expenditure approach — making sure you get the same results from every method.’
However, data used in these tables must be consistent; otherwise the result will not be reliable. To ensure consistency in real data can sometimes be a problem for statisticians working with national accounts. Data are collected from many different sources which do not necessarily apply the same definitions, classifications and concepts. For example, information concerning company production collected in business surveys is often not consistent with information on company turnover found in tax reports. But the Hungarian Central Statistical Office has found a solution to this problem.
‘Studying international examples, we have found that the best practice for solving this problem is to create an intermediate database that reconciles business survey and tax data. The database is used by statisticians working both with structural business statistics and with national accounts. It guarantees that statistics generated in these two domains are consistent,’ said Ms Forgon.
Analysing the economy with input-output tables
Supply and use tables are not only used for calculating and checking national accounts data, they also serve as a database from which data used in macroeconomic models and impact analysis can be derived. In this case the supply and use tables are rearranged in the form of symmetric input-output tables.
Basically four models involving different assumptions on technology and sales structure (market shares) can be used to turn the supply and use tables into symmetric input-output tables. They are either presented in the form of a product- by-product or industry-by-industry matrix.
‘For example, if you want to analyse the effect on the economy of an increase in the oil price, input-output tables are very useful. They show you the direct effect of the oil price increase on all industries that use oil as an input. They also show the indirect repercussions on sectors which only indirectly use oil in their products. For example, the food industry may not directly require any oil inputs, but it requires transport services where oil is intensively used. Therefore the food industry is indirectly affected by the price increase,’ explained Ms Forgon.
In order to further improve the statistical and analytical benefits of the input-output analysis, Ms Forgon and many other statisticians in Europe are currently busy implementing new classifications of both economic activities (NACE) and products (CPA) which will more closely reflect the structure of the European economies.
Further Eurostat information
Publications
- CO2 emissions induced by EU's final use of products are estimated to be 9 tonnes per capita - Statistics in focus 22/2011
Database
Supply, use and Input-output tables (naio), see:
- Supply, use and Input-output tables - EU aggregates (naio_agg)
- Tables at current prices - 60 branches (naio_agg_60)
- Tables at current prices - 6 branches (naio_agg_6)
- Supply, use and Input-output tables (product*product) - national data (naio_ckp)
Environmental accounts (env_acc), see:
- Monetary flow accounts (env_acm)
- Physical flow and hybrid accounts (env_acp)
Dedicated section
Methodology / Metadata
- Environmental accounts methodology
- Eurostat Manual of Supply, Use and Input-Output Tables
- ESA 95 Supply Use and Input-output tables' methodology
- Technical Documentation eeSUIOT project
See also
- GDP at regional level
- National accounts - an overview (background article)
- National accounts and GDP
- Supply and use tables - input-output analysis (background article)
- System of national accounts - new directions (background article)
- Update of the SNA 1993 and revision of ESA95 (background article)