Copyright 2010, The World Bank Group. All Rights Reserved. Business registration, part 2 Administrative and statistical business registers 1 Business statistics and registers

Copyright 2010, The World Bank Group. All Rights Reserved. Enterprises An institutional unit in its capacity as a producer of goods and services is known as an enterprise An enterprise is an economic actor with autonomy in respect of financial and investment decision-making, and allocating resources for the production of goods and services – It may be engaged in one or more productive activities – The enterprise is the level of statistical unit at which all information is maintained relating to its transactions, including financial and balance-sheet accounts 2

Copyright 2010, The World Bank Group. All Rights Reserved. Establishments An establishment is defined as an enterprise or part of an enterprise that is situated in a single location and with one single productive activity The International Standard Classification of All Economic Activities (ISIC) is designed for grouping units with similar activities Establishments with the same principal activity are industries Industries may be heterogeneous when enterprises have secondary activities that are different from their principal activities An establishment may have one or more secondary activities – If a secondary activity is important, the unit involved is a local unit In the case of most small and medium-sized businesses, the enterprise and the establishment are identical 3

Copyright 2010, The World Bank Group. All Rights Reserved. Other statistical units The concept of the establishment combines activity and location When precision in activity and location is not required other types of units may be constructed for statistical purposes:  Kind-of-activity units are enterprise or part of enterprises engaged in only one kind of activity, regardless of location  Local units are enterprises or part of enterprises active at or from one location, regardless of kind of activity  Units of homogeneous production are analytical units used for input- output analysis; they perform only a single productive activity, regardless of location The enterprise group is a statistical unit used in situations where its constituent enterprises cannot provide the required financial information 4

Copyright 2010, The World Bank Group. All Rights Reserved. Profiling large and complex entities In large and complex entities, the units of production are grouped hierarchically Management of the financial affairs of the business usually occurs at a higher organizational level than management of production The accounting systems of businesses usually reflect this management structure Accounts are maintained for the corresponding level of management responsibility 5

Copyright 2010, The World Bank Group. All Rights Reserved. Profiling large and complex entities The legal structure of complex enterprises may not correspond with the management and accounting structure For defining the ‘statistical structure’ profiling is needed Profiling leads to the delineation of statistical units that may not coincide with the legal structure 6

Copyright 2010, The World Bank Group. All Rights Reserved. Classification of economic activities Statistical units can be classified in a categorical system of economic activities The activity classification used is normally the ISIC or a national or regional variant thereof In the CBR all statistical units used to describe the production process are classified according to activity If units carry out more than one activity, they are classified according to their main activity 7

Copyright 2010, The World Bank Group. All Rights Reserved. Structure of CBR The statistical units in the CBR get a unique identification code Relations with parent and sister enterprises should also be stored in the CBR Information about relationships is normally acquired from the parent company Ideally all actors in the economy must be registered The CBR should also store size information as a stratification variable 8

Copyright 2010, The World Bank Group. All Rights Reserved. Place of the CBR in the NSO The CBR provides the sampling frame for sample surveys It is also the basis for grossing up results to produce population estimates CBR should be the frame for all enterprise surveys Stand-alone registers for each individual survey lead to uncoordinated statistics The CBR should be managed by one single dedicated organizational unit within the NSO 9

Copyright 2010, The World Bank Group. All Rights Reserved. Data sources for CBR It is important to use all available sources of information to establish a comprehensive and up-to-date CBR In nearly all countries administrative sources exist Administrative registrations of businesses may not provide sufficient information Proper statistical units must be formed Relationships between units must be identified and stored The transformation of administrative information into statistical units is a stepwise process 10

Copyright 2010, The World Bank Group. All Rights Reserved. Administrative data sources Administrative data sources vary from country to country Common examples include business registration systems, VAT tax systems, payroll tax systems, unemployment insurance administration systems etc. Careful review to determine their completeness, suitability and accuracy is needed The administrative data sources usually provide a list of legal entities Typically, they do not provide a list of enterprises broken down into establishments classified by activity 11

Copyright 2010, The World Bank Group. All Rights Reserved. CBR updating strategy A set of instruments to update the register must be developed Optimal procedures depend on how information is received from administrative sources CBR staff have an important role to play Supposedly new units must be checked against existing units Special attention must be paid on update-information that may have a strong impact on statistical outcomes 12

Copyright 2010, The World Bank Group. All Rights Reserved. CBR updating strategy Profiling large units must take place regularly Feedback information from CBR-based statistical surveys must continuously be used Economic censuses or partial sector-oriented censuses are recommended Sample-based GBR-specific surveys should be carried out yearly 13

Copyright 2010, The World Bank Group. All Rights Reserved. Economic census One way of establishing a CBR is by implementing an economic census Repeated economic censuses can contribute to maintenance of the CBR An economic census provides the most comprehensive set of small-area data for establishing the frame of the universe of businesses However, economic censuses are so resource intensive that they can only be organized infrequently An economic census is not the proper instrument for keeping the CBR up to date 14

Copyright 2010, The World Bank Group. All Rights Reserved. Formal and informal sector In most developing countries only a small number of entities are registered This can be seen as the ‘formal sector’ Unregistered entities are the informal sector This definition makes the informal sector very big Other criteria to delineate the informal sector may be small size (>5 workers) or having no accounts Some of these units may be registered or even pay fees to local authorities 15