Methodology and ESA 2010 Introduction

Introduction SNA finished in 2008 Europe starts update of ESA 95 to ESA 2010 Authors on contract, and Eurostat staff, updated the ESA 95 text, or wrote new chapters e.g. Rest of the World

Introduction A Eurostat Review Group was set up, consisting of members of Financial Accounts Working Group (FAWG), and National Accounts Working Group (NAWG) ECB and OECD attended meetings

Introduction An overall editor was appointed in 2008 The manual was complete in draft end 2009 It became part of a European regulation in June 2013 Transmission programme on ESA 2010 basis in September 2014

Introduction To help NSIs, three implementation guides 1. Changes ESA 95 to ESA 2010 2. Goods sent abroad for processing 3. Capitalisation of R&D

Capitalisation of R&D Research and development is capital formation Change that has biggest effect on level of GNI Not easy! Measured through sum of costs approach

Goods sent abroad for processing Big change – from gross recording of the flow of goods for processing to a net basis Previously goods sent abroad and returned after processing = trade in goods, even if no change of ownership.

Goods sent abroad for processing Now, follow strict change of ownership principle. Only record processing fee – manufacturing services on physical inputs owned by others. Goods flows = supplementary items.

Goods sent abroad for processing If the change is also applied internally in the domestic economy, there will be reclassification of flow of goods to the delivery of a service only, with no associated movement of goods Difficulties – International Trade in Goods will retain gross flows The net flow will not necessarily equal the service provided