Exhaustiveness of National Accounts,

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Agenda item 6d
?? ??????? ???????????? ???????????? NATIONAL
STATISTICAL SERVICE OF RA

• Exhaustiveness of National Accounts,
• NOE and informal sector of Armenia

Workshop on Implementation of the 2008 SNA Kiev,
29 November - 2 December 2011
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Structure of presentation

• Brief overview of National Accounts in Armenia
• Exhaustiveness of NA, NOE in Armenias GDP
• Measuring the contribution of the informal sector
  (IS) to the total
• economy, Informal Sector Survey, ADB (RETA 6430)
• Presentation of IS GVA estimates/shares by
  industry.
• Which activities noted high contribution of
  informal sector (in proportion to total) GVA?
• The characteristics of these industries that
  could explain why IS contribution is high.
• Description of the IS labor productivities in
  each industry. Comparison with the labor
  productivity in the formal sector.
• Characteristics of informal sector enterprises.
• Implementation of Eurostat Tabular approach to
  Exhaustiveness
• of GDP

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BRIEF OVERVIEW OF NATIONAL ACCOUNTS IN ARMENIA
National accounts of Armenia are compiled in
accordance with the fundamental concepts,
categories, accounts conception of SNA 1993.
Simultaneously, the implementation of the ESA 95
continues. Since 1990 the ANNUAL accounts are
available Since 1992 the QUARTERLY accounts are
available GDP is compiled by three
methods -production (according to NACE -
Rev.1.1), annual and quarterly (current and
constant prices, sseasonally adjusted) -expenditu
re, annual and quarterly (current and constant
prices, seasonally adjusted) -income (only for
annual data, current prices)
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Exhaustiveness of NA, NOE in Armenias GDP
According to the conceptual framework of
Measuring the Non-Observed Economy Handbook,
ILO, IMF, CIS ISC, 2002 GDP includes an estimate
of Non-observed economy (NOE) since 1994. NOE
in Armenias GDP includes - underground
production, - deficiencies in the basic data
collection system - informal sector production
and - production of households for own final
use. Illegal production is out of GDP estimate.
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Exhaustiveness of NA, NOE in Armenias GDP
Estimations are based on following data sources
-employment data (formal employment reported by
companies) -labour force survey (total
employment received from households) -ILCS
-special one-off sample surveys
(construction, education, healthcare, trade,
NPISH) -other indirect methods Special round
of surveys focused on informal activities was
held during1997-1998 -small size enterprises -
labor force survey - survey of self-employed
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Exhaustiveness of NA, NOE in Armenias GDP by
industries,
2005 2006 2007 2008 2009
  GDP 27,3 27,4 26,3 25,0 24,8
A,B Agriculture 24,1 24,7 22,5 22,3 22,1
D Manufacturing 42,7 41,8 38,5 36,0 49,7
E Electricity 0,0 0,0 0,0 5,2 7,4
F Construction 36,3 38,0 41,4 38,4 36,3
G Trade 55,3 53,5 49,4 49,2 45,8
H Hotels and restaurants 5,5 17,0 8,0 6,4 21,1
I Transport 11,2 9,1 8,0 10,0 13,8
K Real estate, renting 20,5 16,9 17,2 13,9 11,5
M Education 6,5 7,0 7,4 7,0 7,0
N Health 56,0 50,9 49,9 31,6 44,7
O Other services 43,0 34,9 31,4 25,9 26,1
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Exhaustiveness of NA, NOE in Armenias GDP by
industries,
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MEASURING THE CONTRIBUTION OF THE INFORMAL SECTOR
(IS) TO THE TOTAL ECONOMY Informal Sector Survey,
ADB (RETA 6430)-2009

• IS According to the Delhi Group
• The Delhi Group (Expert Group on IS set up by
  UNSD) proposed the following criteria to identify
  the IS
• Legal organization (unincorporated enterprises)
• No complete set of accounts
• With at least some market output
• Employment size (less then 5)
• For statistical and SNA purposes, the IS is
  defined in terms of
• enterprise (producing unit). Thus, measuring its
  contribution
• to GDP is made more explicit. It is defined as
  part of
• household unincorporated enterprises and a
  subsector of the
• national accounts.

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MEASURING THE CONTRIBUTION OF THE INFORMAL SECTOR
(IS) TO THE TOTAL ECONOMY Informal Sector Survey,
ADB (RETA 6430)-2009
NSS RA applied mixed survey approach in 2009
through the ADB Regional Technical Assistance
(RETA) 6430 Measuring the Informal Sector. It
had two phases 1. Expanded Labor and Employment
module of the Integrated Living Conditions Survey
(ILCS), with additional questions -
identifying household unincorporated enterprises
with at least some market production
(HUEMs), - distinguishing informal
employment from formal employment, - the
extent of social protection mechanisms. 2. the
Informal Sector Survey, covered 624 PSUs. The
sampling frame constituted the list of HUEMs
identified in phase 1. A total of 548 HUEMs were
included in the ISS.
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MEASURING THE CONTRIBUTION OF THE INFORMAL SECTOR
(IS) TO THE TOTAL ECONOMY Informal Sector Survey,
ADB (RETA 6430)-2009
Structure of ISS Questionnaire in Armenia
Section A Organization of Business
Section B Employment and Compensation
Section C Production and Sale
Section D Expenditures on Raw Materials and Stock
Section E Capital Expenditures
Section F Credit Information
Section G Other Information
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MEASURING THE CONTRIBUTION OF THE INFORMAL SECTOR
(IS) TO THE TOTAL ECONOMY Informal Sector Survey,
ADB (RETA 6430)-2009
ISS Questionnaire Description NA components
Section B, Employment and Compensation gathers information on the incomes paid from the production and other components of GVA under the income approach Income approach compensation and operating surplus
Section C, Production, Inventory and Sale information include sales, revenues, inventories and own consumption of the enterprise from production, either in agriculture or non-agriculture enterprises. Production approach output
Section D, Expenditures on Raw Materials and Stock data gathered are on expenditures on inputs to production incurred by the enterprise, either in agriculture or non-agriculture enterprises. Production approach intermediate input
Section E, Capital Expenditures consists of items on the types and costs of fixed capital purchases / sold by the enterprise. other variables gross fixed capital formation
Change in inventories - gathers estimates of changes in inventories of output Other variables - Inventories
Activity fluctuations during last 12 months - records the sales trend of the business which can be utilized to approximate the annual level of production and verify degree of activities Annualization of GVA estimates
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Informal sector GVA by industries

Share in total GVA of industry, Share in informal sector total GVA
TOTAL GVA 11.2 100.0
A,B Agriculture, hunting and forestry, fishing 22.4 36.2
C Mining and quarrying 0.0 0.0
D Manufacturing 5.0 4.3
E Electricity, gas and water supply 0.0 0.0
F Construction 15.4 26.6
G Wholesale and retail trade, repairs, etc. 14.8 18.6
H Hotels and restaurants 0.0 0.0
I Transport, storage, and communications 3.7 2.9
J Financial intermediation 0.0 0.0
K Real estate, renting, and business activities 8.7 4.2
L Public administration and defense, social security 0.0 0.0
M Education 7.0 2.5
N Health and social work 4.9 1.8
O Other community, social and personal services 16.6 3.0
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Informal sector GVA by industries

• Trade
• average share in GDP 2002-2008 about 11.0,
• 2009 12.7, 2010 - 13.0
• influenced by large imports of goods, which
  comprised about 38-39 in GDP of recent years
• many informal small trade points (boutiques)
  mainly in rural areas
• Other community, social and personal services
• includes Recreational, cultural, sport, sewage
  and refuse disposal and other personal services,
• share in GDP is small 1.8 in 2009 and 2010
• informal production mainly in personal services
  like hairdressing

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Informal Sector GVA by urbanity in Armenia

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Agriculture and non-agriculture GVA in the Formal
and Informal sectors

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Labor productivity

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Type of premises where business activities are
conducted
Location Proportion ()
Farm or individual agriculture / subsidiary plot 84.25
Home or workplace of the client 4.34
Transport vehicle 2.60
At home with no special work space 2.25
Market, bazaar stall, trade fair 1.94
At home with work space inside / attached to the home 1.20
Street, pavement or highway with fixed post 1.11
No fixed location (e.g., mobile, door-to-door, street w/o fixed post 0.75
Construction site 0.59
Business premise with fixed location independent from home 0.38
Employer's home 0.21
Others 0.38

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Average Employment of IS Enterprises by Industry

Industry Workers Paid Workers
Agriculture, hunting and forestry, fishing 2.3 1.1
Manufacturing 1.9 1.0
Construction 1.2 1.1
Wholesale and Retail Trade 1.3 1.1
Transport and Communication 1.3 1.0
Real Estate, Renting 1.0 1.0
Education 1.0 1.0
Health and Social Work 1.0 1.0
Other Service Activities 1.25 1.1
Max of workers - 6, paid workers - 5 in
Agriculture.
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Reason for choosing the business activity

Reason
Family tradition 41.8
More stable returns than other products / services 12.2
It is the profession that I know 7.6
It gives better income / higher profits than other products or services 5.9
Others 32.5
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Source of Financing of IS enterprises

Source Proportion ()
Private bank 77.7
Private money lender / pawnshop 12.8
Relative / neighbor / friends 11.2
Cooperative 1.3
Employer / landlord 0.0
Others 16.1

• Reason for not availing of any loan to finance
  business activity
• High interest rate for loans 52.1,
• Burdensome requirements 30.8,
• Other source of income 16.7.

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Implementation of Eurostat Tabular approach to
Exhaustiveness of GDP

Current TWINNING project from January 2011 to
January 2013 with Statistics of Denmark as the
core partner includes also project component for
Exhaustiveness of GDP with aim to introduce
Eurostat Tabular approach to Exhaustiveness into
practice. Table 1A is already completed for all
industries and 7 types of non-exhaustiveness and
draft Table 2A is completed for one industry.
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?? ??????? ???????????? ???????????? NATIONAL
STATISTICAL SERVICE OF RA

THANK YOU!
Workshop on Implementation of the 2008 SNA Kiev,
29 November - 2 December 2011