Actual collective consumption: Actual collective consumption is government final consumption less government expenditure on individual consumption.
Actual individual consumption: Actual individual consumption is the sum of final individual consumption and government expenditure on individual consumption.
Balance of current account: Balance of current account is the aggregate of the balance of trade, balance of services, and transfers.
Balance of payments: Balance of payments is the aggregate of current account balance, capital account, and statistical discrepancies.
Balance of services: Balance of services is the difference between receipts from services supplied and payments for services received.
Balance of trade: Balance of trade is the difference between the value of exports and the value of imports.
Centre of economic interest: An institutional unit is said to have a centre of economic interest within a country when there exists some location- dwelling, place of production, or other premises- within the economic territory of the country on, or from, which it engages, and intends to continue to engage in economic activities and transactions on a significant scale, either indefinitely or over a finite but long period of time.
Collective services: Most goods can be privately owned and are individual in the sense used here. On the other hand, certain kinds of services can be provided collectively to the community as a whole. The characteristics of these collective services may be summarized as follows:
(a) Collective services can be delivered simultaneously to every member of the community or of a particular section of the community, such as those in a particular region;
(b) The use of such services is usually passive and does not require the explicit agreement or active participation of all the individuals concerned;
(c) The provision of a collective service to one household does not reduce the amount available to others in the same community. There is no rivalry in acquisition.
The collective services provided by government consist mostly of the provision of security and defence, the maintenance of law and order, legislation and regulation, the maintenance of public health, the protection of the environment, research and development, etc.
Consumption of fixed capital: It may be defined as the decline, during the accounting period, in the current value of the stock of fixed assets owned and used by a producer as a result of physical deterioration, normal obsolescence, or normal accidental damage. Consumption of fixed capital is a cost of production and is not an intermediate consumption. It excludes the value of fixed assets destroyed by acts of war or exceptional events such as major natural disasters which occur very infrequently.
Economic production: Economic production could be defined as an activity carried out under the control and responsibility of an institutional unit that uses inputs of labor, capital, and goods and services to produce outputs of goods or services.
Economic territory of a country: The economic territory of a country consists of the geographic territory administered by a government within which persons, goods, and capital circulate freely; it includes:
(a) the airspace, territorial waters, and continental shelf lying in international waters over which the country enjoys exclusive rights or over which it has, or claims to have, jurisdiction in respect of the right to fish or to exploit fuels or minerals below the sea bed;
(b) territorial enclaves in the rest of the world used by the government which owns or rents them for diplomatic, military, scientific or other purposes- embassies, consulates, military bases, scientific stations, information or immigration offices, aid agencies, etc.,- with the formal political agreement of the government of the country in which they are physically located;
(c) any free zones, or bonded warehouses or factories operated by offshore enterprises under customs control.
Final consumption expenditure of non-profit institutions serving households: Similar to government final consumption expenditure, it relates to the value of their output less their receipts from the sale of goods and services. Output of the institutions, equaling the value of services rendered by them, is the sum of items constituting their production expenditure.
Final consumption of government: Final consumption of government, which involves a wide range of goods and services, may be divided into two groups:
(a) Production expenditure of non-market output: It is production expenditure of goods and services produced by government and supplied to households free, or at prices that are not economically significant.
(b) Production expenditure of goods and services produced by market producers: The government may purchase goods or services to supply them to households free. In this concern, the government involvement is restricted to pay for goods and services and distribute them between households as non-cash transfers. So, the government units do not engage in any further processing of such goods and services and their expenditure is treated as final consumption.
Final demand: Final demand may be described as the aggregate of household final consumption expenditure, final consumption expenditure of non-profit institutions serving households, general government final consumption, gross fixed capital formation, changes in inventories, and exports.
Functional classifications: In the System, it is recommended that detailed
tables of household and government final consumption expenditures be presented in “functional” classifications in addition to ISIC classification. Functional classifications are proposed in the System for classifying certain transactions of producers and of three institutional sectors - namely households, general government and non-profit institutions serving households. They are described as “functional” classifications because they identify the “functions”- in the sense of “purposes” or “objectives”- for which these groups of transactors engage in certain transactions. In this chapter of the Yearbook the following two classifications have been used:
-Classification of individual consumption by purpose (COICOP), for classification of household final consumption expenditures and household actual final consumption expenditures.
-Classification of the functions of government (COFOG), for classification of government final consumption expenditures and government actual final consumption expenditures.
General government: Government units may be described as unique kinds of legal entities established by political processes which have legislative, judicial or executive authority over other institutional units within a given area. Viewed as institutional units, the principal functions of government are to assume responsibility for the provision of goods and services to the community or to individual households and to finance their provision out of taxation or other incomes; to redistribute income and wealth by means of transfers; and to engage in non-market production. In this case, the government is a producer that itself uses its majority of products.
The extent to which government units decide to engage in production themselves rather than purchase the goods or services from market producers is largely a matter of political choice.
Generation of income account: The generation of income account records, from the point of view of producers, distributive transactions which are directly linked to the process of production. The resources at the total economy level consist of GDP/NDP; its uses include compensation of employees, and taxes on production and imports less subsidies, as far as they are included in the valuation of output. The balancing item is operating surplus/mixed income.
Goods: Goods are physical objects for which a demand exists, over which ownership rights can be established and whose ownership can be transferred from one institutional unit to another by engaging in transactions on markets.
Goods and services account: Goods and services account is a major transaction account provided in the central framework of the System. This account shows the total resources (output and imports) and uses of goods and services (intermediate consumption, final consumption, changes in inventories, gross fixed capital formation, and exports). The part of taxes on products (less subsidies), that is not included in the value of output is recorded in the total economy account resources, but is not included in any specific sector or industry account. An important feature of the goods and services account is that it is balanced globally - that is, there is a balance between all uses and all resources- but not for each kind of transaction.
Gross Domestic Product (GDP): GDP is the final output of economic activities of all resident producing units in a country during a certain period of time. There are three ways for computing GDP; the output approach, the income approach, and the expenditure approach.
Gross fixed capital formation: Gross fixed capital formation is measured by the total value of a producer’s acquisitions, less disposals, of fixed assets during the accounting period plus certain additions to the value of non-produced assets realized by the productive activity of institutional units. Fixed assets are tangible or intangible assets produced as outputs from processes of production that are themselves used repeatedly or continuously in other processes of production for more than one year.
Household final consumption expenditure: Consists of expenditure incurred by resident households on consumption goods or services within or outside the economic territory.
Imports and exports: Export of goods and services consist of sales,
barter, or gifts or grants of goods and services from resident to non-residents, and imports of goods and services consist of sales, barter, or gifts or grants of goods and services to resident from non-residents.
Individual goods and services: Individual goods and services have the following characteristics:
(a) It must be possible to observe and record the acquisition of good or service by an individual household or member thereof and also the time at which it took place;
(b) The household must have agreed to the provision of the good or service and take whatever action is necessary to make it possible- for example, by attending a school or clinic;
(c) The good or service must be such that its acquisition by one household or person, or possibly by a small, restricted group of persons, precludes its acquisition by other households or persons.
Input-output table: These tables depict the structure of the whole production system of the country during a certain period of time, usually one year
Institutional unit: An economic entity that is capable, in its own right, of owning assets, incurring liabilities and engaging in economic activities and in transactions with other entities, and is capable of compiling a complete set of accounts, including a balance sheet of assets and liabilities of its own.
Institutional units are classified in five groups:
1. Financial corporations
2. Non-financial corporations
3. Government
4. Non-profit institutions serving households (NPISHs)
5. Households
Intermediate consumption: Intermediate consumption consists of the value of the goods and services consumed as inputs by a process of production, excluding fixed assets.
Inventories: Inventories consist of stocks of output that are still held by the units that produced them prior to their being further processed, sold, delivered to other units or used in other ways; and stocks of products acquired from other units that are intended to be used for intermediate consumption or for resale without further processing. The value of changes in inventories recorded in the capital account is equal to the value of the inventories acquired by an enterprise less the value of the inventories disposed of during the accounting period.
National income: National income is the sum of incomes allocated to institutional sectors.
Net export of goods and services: Net export of goods and services is the difference between total export and total import.
Net income from abroad: Net income from abroad is the difference between incomes receivable from non-resident labor and capitals and incomes payable to non-resident labor and capitals.
Non-profit institutions serving households (NPISHs): Entities which are principally engaged in the production of non-market goods and services for households.
Output: Output consists of those goods or services that are produced within an establishment that become available for use outside the establishment. The part of work-in-progress goods and services completed at the end of an accounting period is calculated in the output of the establishment. Goods and services produced in a certain accounting period and consumed in other production processes of the establishment within the same period are not accounted for as part of the establishment’s output. There are three types of output: market output, output produced for own final use and own-account capital formation and other non-market outputs.
Production account: The production account is designed to emphasize value added as one of main balancing items in the System. Consequently, it does not cover all transactions linked with the production process, but only the result of production (output) and the using up of goods and services when producing this output (intermediate consumption). Intermediate consumption does not cover the progressive wear and tear of fixed capital.
Thus the production account shows only output as resources and intermediate consumption as uses; the balancing item is value added, which is measured both gross and net. At the level of the total economy, this quantity refers to GDP and NDP, which equals the value, added of industries and basic prices in addition to net taxes on product (taxes less subsidies on imports) or the value added of industries at producer’s price plus net taxes on imports.
Regional accounts: A collection of statistical data which comprehensively and purposefully makes possible quantitative and structured study of a certain region's economic activities during a certain span of time-usually 1 year. Regional accounts play the same role for a given region as national accounts play for the total country. Theoretically, regional accounts, just like national accounts, follow the latest revision of the system of national accounts SNA 93. However, the change of geographical level from national to regional poses some special differences.
Region: Is a part of a country which when added to the rest of regions without any overlap, results in the national economy.
Regional realm: In regional accounts, the country’s total economic realm is divided into a number of regions and a supraregion.
Resident institutional unit: An institutional unit is resident in a country when it has a centre of economic interest in the economic territory of that country.
Services: Services are heterogeneous outputs produced to order. They are not separate entities over which ownership rights can be established. They cannot be traded separately from their production and by the time their production is completed they must have been provided to the consumers.
Similar to taxes, there are two kinds of subsidies :
Subsidies:
Subsidies are current unrequited payments that government units, including non-resident government units, make to enterprises on the levels of their production activities or the quantities or values of the goods or services which they produce, sell or import. They are receivable by resident producers or importers.
Similar to taxes, there are two kinds of subsidies
Subsidies on products: A subsidy on a product is a subsidy payable per unit of a good or service. The subsidy may be a specific amount of money per unit of quantity of a good or service, or it may be calculated ad valorem as a specified percentage of the price per unit.
Other subsidies on production: These consist of subsidies, except subsidies on products, which resident enterprises may receive as a consequence of engaging in production.
Supply table: The supply table gives information about the resources of goods and services. In SNA 93, for pedagogical reasons, its layout is arranged in the same way as in the representative table, i.e., showing products in rows and industries in columns. In the rows, the various types of products are presented according to CPC classification groups. Additional rows for two adjustment items are required, one for the c.i. f./f. o. b. adjustment on imports and one for direct purchases abroad by residents. Therefore, in the columns, three different sets of information are set out:
(a) Output of industries is according to products produced. Industries and products are classified according to ISIC and CPC respectively.
(b) Imports, broken down into goods and services respectively;
(c) Adjustment items, i.e., one additional column for trade and transport margins and one each for taxes less subsidies on products plus one additional column for the c.i.f./f.o.b. adjustment.
Supraregion: Includes those parts of a country’s economic realm which are attributable to none of the regions. It takes in:
a) Continental shelf waters and the part of international waters on which the country has exclusive rights and which are used by resident units.
b) The country’s political realm in other parts of the world rented or owned for political, military, scientific or other purposes under political agreements. Embassies, consulates and military bases are some examples.
Taxes: Taxes are compulsory and unrequited payment, in cash or in kind, made by institutional units to government units. They are described as unrequited because the government provides nothing in return to the individual unit making the payment, although governments may use the funds raised in taxes to provide goods or services to other units, either individually or collectively, or to the community as a whole. There are two kinds of taxes:
Taxes on income, wealth, etc.: Taxes on income, wealth, etc. correspond to “direct taxes” as traditionally understood and used in the former SNA. They consist of taxes on income of individuals, taxes on incomes of corporations, taxes on wealth, etc.
Taxes on production and imports: They consist of taxes payable on goods and services when they are produced, delivered, sold, transferred or otherwise disposed of by their producers. They correspond to “indirect taxes” as traditionally understood.
Taxes on products: A tax on a product is a tax that is payable per unit of some good or service, either as a specified amount of money per unit of quantity or as a specified percentage of the price per unit or value of the good or service transacted.The types of taxes on products are as follows:
- A value added type tax (VAT)
is a tax on goods and services collected in stages by enterprises but which is ultimately charged in full to the final purchasers. This type of tax is not applicable in Iran.
- Taxes and duties on imports
Taxes on imports consist of taxes on goods and services that become payable at the moment when those goods cross the national or customs frontiers of the economic territory or when those services are delivered by non-resident producers to resident institutional units.
- Export taxes
Export taxes consist of taxes on goods or services that become payable when the goods leave the economic territory or when the services are delivered to non-residents.
- Taxes on products further include taxes on services provided to non-resident units.
Generally, taxes on products, excluding VAT, import and export taxes, consist of taxes on goods and services that become payable as a result of the production, sale, transfer, leasing or delivery of those goods or services.
- Other taxes on production:
These consist of all taxes, except taxes on products that enterprises incur as a result of engaging in production. Such taxes do not include any taxes on the profits or other income received by the enterprise and are payable irrespective of the profitability of the production. They may be payable on the land, fixed assets or labor employed in the production process or on certain activities or transactions.
The production boundary in the SNA: The production boundary in the System is more restricted than the general production boundary. For reasons, it excludes all production of services for own final consumption within households.
The use table: The use table gives information on the uses of goods and services, and also on cost structures of the industries. The table is composed of three below quadrants:
(a) The intermediate use quadrant(I);
(b) The final use quadrant (II);
(c) The uses of value added quadrant(III).
The fourth quadrant is blank.
The intermediate use quadrant (I) shows intermediate consumption at purchasers' prices by industries in the columns and by products in the rows. The total row shows intermediate consumption by industries at purchasers' prices.
The final use quadrant (II) shows exports, final consumption expenditure and gross capital formation at purchasers' prices, each classified by products on the rows. The final consumption expenditures include household final consumption; not-profit institute serving households and government; and gross capital formation covers gross fixed capital formation and change in stocks. The total column shows total final use of each cited issues at purchases' prices.
The uses of value added quadrant(III) shows those production costs of producers other than intermediate consumption, or costs relating to value added are the following:
(a) Compensation of employees;
(b) Taxes less subsidies on production and imports broken down into taxes less subsidies on products and other taxes less subsidies on production;
(c) Consumption of fixed capital;
(d) Net mixed income and net operating surplus.
It is possible to find GDP directly in the use table, as sum of value added of industries from one side and sum of final demands from the other side.
In the value added quadrant, there are three separate rows providing additional information out of Matrix- not considered part of it. But rather as conveniently located there. The information is: gross fixed capital formation, stocks of fixed assets, and labour inputs (usually hours worked).
When required information is available and if necessary, some breakdowns of the main headings such as exports, final consumption and gross capital formation can be introduced in the final use quadrant as follows:
(a) Exports, broken down into goods and services.
(b) Government final consumption expenditure: collective consumption expenditure and individual consumption expenditure;
(c) Gross capital formation: gross fixed capital formation, changes in inventories and acquisitions less disposals of valuables.
Total demand: Total demand could be defined as sum of final demand and intermediate demand.
Total supply: Total supply is the aggregate of total output, import of goods and services, and net taxes on imports.
Value added: Value added is the additional value created by a process of production. Gross value added is defined as the value of output less the value of intermediate consumption. Net value added is defined as the value of output less the values of both intermediate consumption and consumption of fixed capital.