Construction Value Added CARICOM REGIONAL WORKSHOP ON INTERNATIONAL TRADE IN SERVICES STATISTICS November 21-25, 2016 St. John’s, Antigua and Barbuda Construction Value Added Economic Accounting Division

Outline Estimation of Value Added How is this related to International Trade in Services?

Estimation Procedure- General Overview Product Groups: Building Construction, Civil Engineering, Building Installation The estimate for the Construction industry is calculated using the Commodity Flow Method. The commodity flow approach uses the flow of locally produced and imported goods Gross Output (Work in-progress) - Intermediate Consumption= Value Added The estimate is derived by using the local as well as the imported commodities used in the construction of buildings, bridges and roads and the installation of machinery & equipment.

Background I Data Source: Financial Statements Development Bank of Jamaica, Jamaica Mortgage Master Builders Association of Jamaica Quantity Surveyors Ministry of Housing, Water, Transport and Works Statistical Institute of Jamaica – Administrative Statistics Division – External Trade Unit Economic Accounting Division - Sales from Production Worksheet – Manufacture, Mining & Quarrying, Agriculture and Business Services Administrative Options: Newspaper, VAT Database

Background III Local Commodity Flow This is compiled using data on local production obtained from the production approach. Imported Commodity Flow For national accounts purposes, the Harmonized Commodity Description and Coding System (HS) used in the foreign trade statistics in respect of imports and exports of merchandise is converted to the Standard International Trade Classification (SITC), Rev. 4. cont’d

Background IV Imported Commodity Flow cont’d All imported goods (classified by SITC) are assigned an end-use, based on whether they are used as - consumer goods - raw material or - capital goods. Account is taken of any item having more than one end use. This end use assignment is based on the United Nation’s Classification by Broad Economic Categories (BEC). The process of assigning end use classification involved a working committee which included representatives from the Customs Department. The estimation process takes account of only those goods classified as capital goods. It is estimated by type of capital goods and not by industry.

Background III Disaggregation of Capital Goods Construction Buildings Other Structures Transport equipment Motor Cars Trucks and Buses Other Transport Equipment Other Machinery & Equipment Agricultural Machinery & Equipment Industrial Machinery & Equipment Other machinery & Equipment Other Capital Goods & Intangible Fixed Assets

Estimation Process For each type of capital construction good, allocations are made to: - capital and - maintenance This is added to get Construction Gross Output Distribution and installation margins are applied to the allocated values for capital and maintenance

How is this related to International Trade in Services? Mode 3 – commercial presence or FATS Some of the variables needed for the compilation of the FATS (Foreign Affiliates Trade in Services) table are derived from the estimation of Value added Priority variables -sales turnover and/or output -employment -value added -exports and imports of goods and services -number of enterprises Long-term variables -assets -compensation of employees -net worth -net operating surplus -gross fixed capital formation -taxes on income -research and development expenditure -purchases of goods and services

Economic Accounting Division The End Economic Accounting Division