An Integrated and Expanded Accounts for the New Digital Economy work in progress Ariel Coremberg www.arklems.org

Digital Economy Puzzle Context More Robots, less employment&productivity? Or the Neo Luddism + Protectionism biases of Public Policy and Public Opinion after Global Financial Collapse You can see the computer age everywhere but in the productivity statistics. Solow 1987 Digital Revolution IoT, 3D printing, Big Data, Robots Everywhere but in Real GDP.

Digital Economy Puzzle: TFP slowdown -Developed countries phenomena. -Hysteresis Effects of Global financial collapse of 08-09 -Transition: till organizational capital reallocates factors and output

AGENDA: HOW TO CAPTURE DIGITALIZATION AND ITS POTENTIAL Which Sectors Which Outputs, Inputs, Outcomes, Assets Which type of Employment: between but mainly within sectors ------------------------------------------------------- Value Creation, Productivity Scale & Market Power Cross Borders Activity + Global Value Added Chain

NEED OF INTEGRATED APPROACH WHICH PRODUCTS & SERVICES: DIG & NOT DIG WHICH ACTIVITY: INCLUDING SECONDARY & ANCILLARY UNITS FOR WHAT: PRODUCTION OR LEISURE WHO OWNS ≠ WHO PRODUCE / FOR HIRE VS IN HOUSE WHERE: GVC

An Integrated and Expanded Accounts for the New Digital Economy Supply and Demand Side focus on Activity For Hire & In House by Firms & households Satellite Account For Production, Productivity & Leisure: Welfare -Expand SNA frontier

Expanding SNA frontiers: Welfare & Sustainability Frontier (DIG KLEMS+N) Production Frontier: Peer to Peer activities. For hire + In house Activities by firms -reclassification In house by Households –Expand GDP frontier Leisure Activities (Non Market Production of services by households (beyond dwelling scies. Provided by owner occupiers houses-Schreyer-Diewert (2014)+Schreyer Jorgenson (2017)). ERASE FRONTIER BETWEEN HOURS WORKED VS LEISURE HOURS Assets Frontier: Durables + Intangibles + Natural Capital (Coremberg 2015)

An Integrated and Expanded Accounts for the New Digital Economy -GDP & BEYOND TOWARDS WELFARE -Integrated & Expanded Account: Jorgenson & Selznick (2015), Jorgenson Schreyer (2017) -Production by Activity + Productivity -Income Flows (full consumption) -Stock-Assets (durables+…..)

Which Sectors

Dwelling Services & Airbnb Services Uberization-Sharing Economy Peer to Peer Services What is new what is old Dwelling Services & Airbnb Services Business and Transportation Services + Uberization Distribution Services Financial Intermediation Services

ISIC Underlying Transactions Digital Example Potential Digitalization Reallocation & Value Creation Productivity G+I Trade & Distribution Services Amazon-Ebay- Alibaba Mercado Libre Retail Stores &Shoppings Centers More Hours: Working Time (for hire + in house by Firms and Households)   + Leisure Time H+K Dwelling Services AirbnB Trip Advisor Travel & Real Estate Agencies I Transportation Services Uber Taxi & Remises J Financial Intermediation Services Crypto Currencies On line Banking Crowd funding Traditional Banks I-Comunication&Information Free Apps Netflix Waze Spotify Facebook Instagram Whats up Skpe TV & Cable Network- CABLE CUTS. Free Assets Produced by House holds Linux Wikipedia & Other Free Share Software

THE CHALLENGE DEEP PROBLEM Not only measuring the Price of new goods but mainly: STEP BEFORE WE NEED TRANSACTION LEVEL DATA OF PEER TO PEER ECONOMY (NOT USUALLY IN OFFICIAL SURVEYS)

Potential of Digitalization: flows Measuring the Upper Bound of Own Activity which implicitly include digitalized activities

UBER BLOCK CHAIN FREE APPS Cars services Fuel Expenses How to capture Digitalization: Generalization of Cavallo, Coremberg, Serebrisky (2018) + Ahmad Schreyer Coremberg proposal Tracking Input Method compatible with replacement costs UBER Cars services Fuel Expenses BLOCK CHAIN Computer Servers Services FREE APPS Advertising Expenses

FREE APPS Ahmad-Schreyer (2016) Triangular Definition

Free apps There is no free lunch: free is not free, someone is paying Value of Free services= Value of Advertising Services Or Nakamura & Solovehcnick (2015). Time to spent less than 0,5% of GDP

Transportation Services Potential of Digitalization-vrg Uberization IADB Cavallo Coremberg Serebrisky (2018): Satellite Account of Infrastructure Services Measurement of Energy, Transportation & Communications Activities: for hire + in house (Firms+ Households) Transportation: Hire & Commuting, tourism, peer to peer (UBER) by households+ Internal Transportation of firms

Transport Activity by Provision Type Source: Coremberg, Cavallo &Serebrisky (2018)

In house transportation by Institutional Sector Source: Coremberg, Cavallo &Serebrisky (2018)

Share of Internal transport of companies of Total Transport Activity Source: Coremberg, Cavallo &Serebrisky (2018)

Potential of Uberization Share transport of households with own vehicles in GDP Source: Coremberg, Cavallo &Serebrisky (2018)

Potential digitalization of transportation of households by own vehicles: aggregate > 2% to official GDP: transportation activities by household vehicles-final consumption Uber & Carpool is a fraction of in house transportation by households

POTENTIAL DIGITALIZATION ALSO ATTAINS AGRICULTURE: for ex e-farming MANUFACTURING: for ex 3D printing USER SIDE

Potential of Digitalization: Stocks

G20 Complete System of National Accounts: not only GDP and Annual I-O Financial Accounts Wealth and Stocks Other Changes of Assets Volumes

How to capture Digitalization: Stocks Coremberg (2007,2012) generalization of Hall Method+CHS (2006) Market Value of Digital Firms= Present Value of Profits + Goodwill Goodwill: expectations of future profits of digital economy

Which Assets Coremberg (2016) &Coremberg& Nofal (2017)

EXPANDED KNOWLEDGE CAPITAL

Extended Accounting of Growth & Productivity

Extended GDP Growth Accounting 𝑝 𝑗 𝑉 𝑗 = 𝑖=1 𝑚 𝑟 𝑖,𝑗 𝐾 𝑖,𝑗 + ℎ=1 𝑛 𝑤 𝑖,𝑗 𝐿 𝑖,𝑗 𝐼 𝑘 = 𝐾 𝑘,𝑗 𝑘 𝑝 𝑗 𝑋 𝑉 𝑗 , with 𝐾 𝑗 𝑘 = 𝑖=1 𝑚 𝑟 𝑖,𝑗 𝑘 𝐾 𝑖,𝑗 𝑘 + ℎ=1 𝑛 𝑤 𝑖,𝑗 𝑘 𝐿 𝑖,𝑗 𝑘

Extended Accounting of Growth & Productivity 𝑉 = 𝜀 𝑘 𝐾 𝑘 + 𝜀 𝑛𝑘 𝐾 𝑛𝑘 + 𝜀 𝐿 𝐻 + 𝐴 𝜀 𝑘 = 𝐼 𝑘 + 𝛾 𝑘 𝐴 𝑀 = 𝐴 𝑉 + 𝛾 𝑘 𝐾 𝑘

Kk role Kk Q  Kk /H Q/H  Kk TFPM if 𝜀 𝑘 > 𝛼 𝑘

CONCLUSIONS Most of the New Digital Activities are included in the GDP Digital Economy expands SNA frontier between firms and households: households as producers From Durables to capital New knowledge assets as intangibles are not recognized as K by SNA08 Not all digital activities are captured by basic statistics Imputation methods are necessary to measure Effective and Potential Digitalization

CONCLUSIONS Every new In house activity by household for the market expands Production and GDP frontier: Transportation ( Uber) ≥ 2% In house by firms: Reclassification of activities Integration and Expanded Accounts to include Dig not only by supply side but mainly by demand as inputs