5204.0.55.008 - Information Paper: The Non-Observed Economy and Australia's GDP, 2012
ARCHIVED ISSUE Released at 11:30 AM (CANBERRA TIME) 12/09/2013 First Issue
|Page tools: Print Page Print All|
THE NOE AND THE PRODUCTION BOUNDARY
2.2 The 2008 SNA paragraphs 6.39 – 6.45 discuss the NOE:
6.40 Certain activities may clearly fall within the production boundary of the SNA and also be quite legal (provided certain standards or regulations are complied with) but deliberately concealed from public authorities for the following kinds of reasons:
6.41 Because certain kinds of producers try to conceal their activities from public authorities, it does not follow that they are not included in national accounts in practice. Many countries have had considerable success in compiling estimates of production that cover the non–observed economy as well as the ordinary economy. In some industries, such as agriculture or construction, it may be possible by using various kinds of surveys and the commodity flow method to make satisfactory estimates of the total output of the industry without being able to identify or measure that part of it that is not observed. Because the non–observed economy may account for a significant part of the total economy of some countries, it is particularly important to try to make estimates of total production that include it, even if it cannot always be separately identified as such.
6.42 There may be no clear borderline between the non–observed economy and illegal production. For example, production that does not comply with certain safety, health or other standards could be described as illegal. Similarly, the evasion of taxes is itself usually a criminal offence. However, it is not necessary for the purposes of the SNA to try to fix the precise borderline between non–observed and illegal production as both are included within the production boundary in any case. It follows that transactions on unofficial markets that exist in parallel with official markets (for example, for foreign exchange or goods subject to official price controls) must also be included in the accounts, whether or not such markets are actually legal or illegal.
6.43 There are two kinds of illegal production:
6.44 Examples of activities that may be illegal but productive in an economic sense include the manufacture and distribution of narcotics, illegal transportation in the form of smuggling of goods and of people, and services such as prostitution.
6.45 Both kinds of illegal production are included within the production boundary of the SNA provided they are genuine production processes whose outputs consist of goods or services for which there is an effective market demand. The units that purchase smuggled goods, for example, may not be involved in any kind of illegal activities and may not even be aware that the other party to the transaction is behaving illegally. Transactions in which illegal goods or services are bought and sold need to be recorded not simply to obtain comprehensive measures of production and consumption but also to prevent errors appearing elsewhere.
2.3 The NOE has been referred to by many terms such as, 'non–observed', 'informal', 'parallel', 'concealed', 'unmeasured', 'unrecorded', 'untaxed', 'cash' and 'black'. There is no common understanding on whether these terms all mean the same thing, and if not, what relationship they have to one another.
2.4 Some studies, for instance, include illegal activity while others exclude it. Moreover, the definition often varies depending on the chosen method of measurement. Some measures relate to activities not captured in the national accounts, while others relate more to income or transactions not reported to the tax authorities. The remainder of the paper discusses each of the five components of the NOE as listed in Table 1.
These documents will be presented in a new window.