Input-output framework is an integral part of the European System of Accounts (ESA 2010) and fully consistent with the world-wide System of National Accounts (SNA 2008) of the United Nations Organization (UN).
The European System of National and Regional Accounts (ESA 2010) is the newest internationally compatible EU accounting framework for a systematic and detailed description of an economy. The ESA 2010 was implemented by EU Member States in September 2014.
More on this topic: http://ec.europa.eu/eurostat/web/products-manuals-and-guidelines/-/KS-02-13-269
Supply and use tables provide the detailed description of transactions with goods and services realized in the year. They show resources (output, import, net taxes on products) and uses (intermediate consumption, final consumption, gross capital formation and export) of goods and services.
Compilation and dissemination of tables is done 3 years after the reference years (t+3) in line with transmission programme of data (ESA 2010) requirements. Supply and use tables at current and constant prices (PYP) are compiled annually and the input-output tables are compiled on a five-year basis (for reference years ending 0 and 5).
The compilation of the SUT components is done at the most detailed level possible and aggregated at 89 industries according Nomenclature of the Economic Activities (NACE Rev. 2) and 90 products according the Nomenclature of Products by Activity (CPA 2008) level that the tables are balanced.
The main process for the input-output framework is the compilation and balancing of supply and use tables (SUT) at current prices.
The balancing of supply and use table is a very important process. After a detailed processing for each product, all the supply of a country must equal to uses. In many cases this is difficult to be reached since the first step of using data sources, for this reason the analysis are done at product level.
Before we look at product discrepancies, is analyzed the statistical discrepancies between two different approaches of GDP estimation. In the supply and use framework this discrepancies are eliminated and therefore is required to be achieved this macroeconomic balance.
In cases where the discrepancies between the supply and use are greater than 5%, is used an automatic balancing based on the distribution of the existing discrepancies ratios. When the discrepancies are between 5% and 10%, it can be relied on manual analysis and balancing of the discrepancies. If discrepancies are greater than 10% the situation requires adjustment of the primary data sources. It is necessary to check the data sources to better understand what has inflicted the discrepancies.
It may be necessary for a revaluation of different component of the supply or use table, which would lead to a circular cycle of evaluations. This cycle will be continuous until all the discrepancies arrive within acceptable intervals enabling a full consistency between different approaches of GDP estimation.
Transformation of supply and use tables to symmetric input-output tables
Transformation of supply and use table (SUT) at basic prices into symmetric input-output tables (SIOT) consists on removing secondary output from the output matrix and respective inputs from the intermediate consumption matrix reaching to homogeneous branches. There are 4 possibilities depending on whether the secondary output moves to a different industry (left/right) or to a different product (up/down) and whether the input structure is used from the point of origin or from the point of destination. These possibilities lead to the following 4 approaches:
- Product x Product
- Industry technology assumption (Each industry has its own specific way of production, irrespective of its product mix)
- Product technology assumption (Each product is produced in its own specific way, irrespective of the industry where it is produced)
- Industry x Industry
- Assumption of fixed product sales structures (Each product has its own specific sales structure, irrespective of the industry where it is produced)
- Assumption of fixed industry sales structures (Each industry has its own specific sales structure, irrespective of its product mix)
Classifications are essential for the production, compilation and dissemination of statistics. The statistical classification are updated continuously to better reflect the economic, technological and structural changes in the economy and to enable comparison and data connection at European level and in general, in the world as part of an integrated system.
Classifications used in National Accounts are:
- Nomenclatures of economic activities Rev. 2 (NACE Rev. 2)
- Nomenclature of products (CPA 2008);
To calculate SUT it is used the information provided by various statistical and administrative sources. The data used may come from INSTAT`s statistics producers or other various national institutions such as Ministries, Departments of the General Taxation and Customs, the National Registration Center, Bank of Albania, Financial Supervisory Authority, the National Agency of Natural Resources and others. By comparing these sources with each other, we are able to have a better view of the economy which is comprehensive, consistent, coherent and fully integrated.
Statistical sources include data obtained from records and surveys on various economic units or households, among which we may mention: the Register of Enterprises; Structure Survey; Retail Trade Survey; Household Budget Survey; Price Statistics Survey, Statistics agriculture and the environment, etc.
Administrative resources include administrative data collected by other institutions for various purposes, among which we may mention: the Annual Financial Statements; Value added tax (VAT); Balance of Payments; Public administration fiscal statistics; foreign trade statistics; Sales and purchases; etc.
(More on this topic:
IPA 2014 PP1 - SUT Compilation part D