Transcript A Framework for Monitoring Economic Development

A Framework for Monitoring
Economic Development:
Datasets of Interest
Rob Edwards
Inter-regional Adviser, United Nations Statistics Division
International Forum on Monitoring National Development: Issues and Challenges
27-29 September 2011, Beijing, China
Session Outline
 What is “economic growth”?
 Measures of GDP
 Reformulation of the drivers of GDP growth
 Relevant datasets
 The challenge
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What is “economic growth”? (1)
 This presentation follows on from discussions of
comparative advantage and factor endowments
in the context of the theory of growth identification
and facilitation
 It is in this context that I am defining “economic
growth” as the growth in total GDP (nominal and
volume) and in GDP per capita
 Also of interest are the drivers of economic
growth and the changing industry composition of
the economy
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What is “economic growth”? (2)
 Stiglitz, Sen and Fitoussi argue that GDP can
only be the starting point for assessing economic
performance and social progress
 We need to keep in mind that:
• some incomes generated from production are
payable overseas
• changes in the terms of trade can have significant
impacts on national disposable income
• GDP is a “gross” concept --- we need to allow for
depreciation ( and, ideally, for depletion of natural
resources used up in production)
• there are many other dimensions to social progress
beyond economic growth considerations, e.g. health,
education, security and opportunity
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Measures of GDP
 Expenditure approach
 Production approach
 Income approach
 Key point --- supply/use tables and/or inputoutput analyses are extremely useful in
reconciling the various measures
 The availability of supply/use and/or input-output
tables will also position the NSO to be able to
inform on many other dimensions of economic
and environmental issues of concern
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Expenditure-based GDP
 Final consumption expenditures of households,
general government and non-profit institutions
serving households
 Gross capital formation of all institutional sectors
(includes changes in inventories)
 Exports of goods and services less imports of
goods and services
Typically presented in nominal and volume terms
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Production-based GDP
For all industries --Value of output
Less Intermediate consumption
Plus Taxes less subsidies on products
Typically presented in nominal and volume
terms
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Income-based GDP
Compensation of employees
Plus Gross operating surplus
Plus Gross mixed income
Plus taxes less subsidies on products
Typically presented in nominal terms only
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Drivers of GDP (1)
GDP in volume terms can be thought of in terms of the
following identity:
GDP(V) = E*LP
Where ---
E = average number of persons employed over the
period
LP = labor productivity, derived as GDP(V) divided by
average number of persons employed over the period
Put another way, GDP growth results from employment
growth and increasing labor productivity
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Drivers of GDP (2)
 The persons employed and the labor productivity
represent some of the “endowments” that a country has
at any given point in time
 The persons employed have a combination of skills,
knowledge and experience (quantity and quality
dimension)
 Economy-wide labor productivity is a function of the
labor productivity within individual industries, and the
compositional mix of industries (both change over time)
 The underlying sources of increases in labor productivity
are the accumulation of skills in the labor force, effective
deployment of supportive capital stock, and
technological progress
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Drivers of GDP (3)
 The theory of growth identification and
facilitation focuses on identifying opportunities
for economies to grow by:
• identifying industries that are in line with a country’s
latent comparative advantage, based on finding
comparator countries with similar factor endowments
whose per capita GDP is up to 3 times the level of the
country; and
• targeting through industry-specific measures binding
constraints to faster growth and employment creation
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Datasets of Interest (1)
 If official statistics are to inform on growth
identification and facilitation as described above,
some key datasets are needed :
• GDP (preferably all three measures) and its
components
• Price deflators so that volume measures can be
compiled (output and input prices)
• Industry decomposition of GDP (including the informal
sector, which is of interest in its own right)
• Highly desirable --- supply/use and/or input-output
tables
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Datasets of Interest (2)
 Population
 Persons employed by industry
 Labor productivity by industry
 Commodity production by industry
 Exports and imports by industry
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Datasets of Interest (3)
 Catalysts for productivity change:
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Capital stock and capital services by industry
Labor inputs by industry
Labor and capital price indexes
Industry characteristics (number of
businesses, entries and exits, firm size,
domestic/foreign owned, etc)
• R and D, innovation
• Inwards and outwards foreign direct
investment by industry
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Datasets of Interest (4)
 Labour supply data, including:
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•
•
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Persons employed/unemployed
Age structure
Skills/education levels
Health status
Wages (Note: If wage-price inflation is to be
avoided, wage growth must be supported by
productivity improvements)
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Datasets of Interest (5)
 Other “endowments” of the economy:
• Natural resource base of the economy
• “Hard” infrastructure (transportation,
information and communication, water and
sanitation)
• “Soft” infrastructure (social cohesion,
inequality, institutional capacity, business
environment)
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Datasets of Interest (6)
 Relevant government finance statistics to
monitor government industry and other
interventions
--- data classified by purpose needed
 Household survey data so that the welfare
outcomes of macro-level developments can be
monitored
 As appropriate, regional data may be needed for
some of the datasets identified above
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The Challenge
 The datasets identified above comprise a
rich array of statistics
 For many developing countries of interest
the datasets may well not be available, or
not be available in the detail desired
 We have a big challenge ahead
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Thank You
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