[ 05 ] Institutional Sectors Paul McCarthy National Accounts Workshop Washington - DC, October 25-26, 2010
Institutional units An institutional unit is an economic entity capable, in its own right, of owning goods or assets incurring liabilities taking economic decisions and engaging in economic activities Must have a complete set of accounts Institutional units required for all accounts establishment versus enterprise Grouped into institutional sectors 2
Enterprise An enterprise is an institutional unit in its capacity as a producer of goods and services Could be: corporation (including quasi-corporation) non-profit institution unincorporated enterprise Comprises one or more establishments 3
Establishment An enterprise or part of an enterprise that is: situated in a single location with only a single (non-ancillary) productive activity, or principal productive activity plus small-scale secondary activities 4
Establishment (continued) Units for measuring more homogeneous productive activity situated at a single location Basis for analysis of production supply and use (input-output) Grouped into industries based on being engaged in the same kind of activity UN s International Standard Industrial Classification of all Economic Activities (ISIC, Rev. 4) 5
Institutional sectors Institutional units are grouped into institutional sectors Idea is to group units on the basis of them having similar influences affecting their economic behaviour The main institutional sectors are financial corporations non-financial corporations general government households non-profit institutions serving households (NPISHs) 6
Legal entities Corporations created for the purpose of producing goods and services for the market may be a source of profit or other financial gain to their owner collectively owned by shareholders who have the authority to appoint directors responsible for the general management 7
Financial corporations sector All institutional units principally engaged in financial intermediation or closely related activities. Provide financial services by incurring liabilities and acquiring financial assets Providing services related to financial intermediation (auxiliary services) 8
Financial corporations sub-sectors Central bank Depository corporations Insurance companies and pension funds Other financial intermediaries Financial auxiliaries 9
Non-financial corporations sector Corporations and quasi-corporations whose principal activity is the production of market goods and non-financial services Market NPIs e.g. some employer associations 10
Non-financial corporations sub-sectors Public non-financial corporations National private non-financial corporations Foreign controlled corporations 11
General government units Unique kind of legal entities that have legislative, judicial or executive authority over other institutional units within a given area Main functions are provision of non-market goods and/or services for collective and individual consumption redistribution of income and wealth 12
General government sector Units of central, state, and local government Social security funds Non-market NPIs controlled and mainly financed by government units Public corporations and quasi-corporations are excluded classified to the appropriate part of corporations 13
General government sub-sectors Two alternatives First central government state local social security Second central government (including social security) state (including social security if applicable) local (including social security if applicable) 14
Public sector Composition: general government (1) public non-financial corporations (2) Public non-financial sector (3) [= (1)+(2)] public financial corporations (4) Public sector (5) [=(1)+(2)+(4)] 15
Households Resident households include individuals or groups who live together pool resources supply labour or capital consume produce But not necessarily all of the above 16
Quasi-corporations Unincorporated enterprises that behave as corporations owned by government owned by households owned by non-residents De facto relationship is as a shareholder in a corporation Keeps a complete set of accounts or would be able to compile a complete set of accounts, if required 17
Market and non-market prodcuers Market producers Major part of output is market output may have secondary output for own final use Producers for own final use: major output is for own final use may have secondary market output Other non-market producers: major part of output is provided free or at prices that are not economically significant may have secondary market output may have secondary output for own final use 18
NPIs Non-profit institutions (NPIs) in a legal sense: producers of goods and services but cannot be a source of income or profit to those who own or control them Financed by membership fees property income on investments grants and donations government transfers sales at market prices 19
Sectors for NPIs Market NPIs selling in the market or serving business produce at economically significant prices classified to one of the corporate sectors Non-market NPIs controlled and mainly financed by government classified to the general government sector All other non-market NPIs charities, trade unions, political parties, churches classified as NPISHs 20
Activity Principal activity is largest source of value added Secondary activity other source of value added output must be suitable for delivery outside the producer unit Ancillary activity supporting activity internal to the enterprise commonly found as inputs into almost any kind of productive activity 21
Ancillary activity Typical ancillary activities administration units engaged in keeping records communication hiring, training, managing and paying employees computer support sales offices transportation and storage units repairs and servicing units security units 22
Treatment of ancillary activity Units conducting ancillary activities are not regarded as separate producers of goods and services, even if located separately Their output is not explicitly recognised and recorded separately in the system 23