Copyright 2010, The World Bank Group. All Rights Reserved. Introduction to the System of National Accounts (SNA) Lesson 8 Supply and Use Tables and Commodity Flow 1

Copyright 2010, The World Bank Group. All Rights Reserved. Supply and Use Tables In Lesson 1 we looked at a simplified Supply and Use Table (SUT). SUTs are a first step in producing an Input-Output table. SUTs are a means of ensuring that GDP(P) and GDP(E) are equal. «Commodity flow» is an SUT confined to a single good or service. 2

Copyright 2010, The World Bank Group. All Rights Reserved. Supply of goods and services Total supply at purchasers prices Domestic production (Basic Prices) Imports (C.i.f.) Transport Costs Trade Margins Product Taxes (minus subsidies) Food Clothing Shoes Furniture Cement Coal Radios I-phone. 3

Copyright 2010, The World Bank Group. All Rights Reserved. Use of goods and services Total uses at purchaser s prices Intermediate consumption Government consumption NPISH consumption Household consumption Capital formation Exports.... 4

Copyright 2010, The World Bank Group. All Rights Reserved. Worked examples for four commodities Poultry meat –Mainly for household consumption but some is also intermediate consumption Tobacco –In this example it is only for final consumption Motor cars –Vehicles are both capital and consumption goods Accountancy services –Intermediate and final consumption 5

Copyright 2010, The World Bank Group. All Rights Reserved. Poultry Domestic production (value at farm gate)6,500 Imports (c.i.f.)0 Taxes on poultry0 Subsidies on poultry0 Trade margins (on household consumption)130 Trade margins (on intermediate consumption)10 Transport charges65 Intermediate consumption (for pet food)1,000 Final consumption expenditure by householdsUnknown Gross fixed capital formation0 Change in inventories0 Exports45 6

Copyright 2010, The World Bank Group. All Rights Reserved. Commodity Flow calculation for Poultry Supply Domestic production (value at farm gate)6,500 plus Imports (c.i.f.)0 plus Taxes on poultry0 less Subsidies on poultry0 plus Trade margins (on household consumption)130 plus Trade margins (other)10 plus Transport charges65 equals Total supply6,705 Uses Intermediate consumption (for pet food)1,000 plus Household final consumption expenditureUnknown plus Government final consumption expenditure0 plus Gross fixed capital formation0 plus Change in inventories0 plus Exports45 equals Total known uses1,045 Residual calculation Total supply6,705 less Total known uses1,045 equals Final consumption expenditure by households5,660 7

Copyright 2010, The World Bank Group. All Rights Reserved. Tobacco Domestic production (basic prices)8,200 Imports (c.i.f.)1,200 Taxes on tobacco940 Subsidies on tobacco0 Trade margins (on household consumption)1,340 Transport charges300 Intermediate consumption0 Final consumption expenditure by households8,000 Gross fixed capital formation0 Change in inventories–10 Exports350 8

Copyright 2010, The World Bank Group. All Rights Reserved. Tobacco Supply Domestic production (basic prices)8,200 plus Imports (c.i.f.)1,200 plus Taxes on tobacco940 less Subsidies on tobacco0 plus Trade margins (on household consumption)1,340 plus Transport charges300 equals Total supply11,980 Uses Intermediate consumption0 plus Household final consumption expenditure8,000 plus Government final consumption expenditure0 plus Gross fixed capital formation0 plus Change in inventories–10 plus Exports350 equals Total uses8,340 Discrepancy Total supply11,980 less Total uses8,340 equals Discrepancy3,640 9

Copyright 2010, The World Bank Group. All Rights Reserved. Making Supply and Use Equal Appraise each estimate in turn. –How reliable is the source –How does this year’s estimate compare with last year’s? Identify the weakest link –Survey statisticians can help here. Decide whether to accept the resdidual estimate or the direct estimate. 10

Copyright 2010, The World Bank Group. All Rights Reserved. Motor cars Domestic production (basic prices)0 Imports (c.i.f.)955 Customs duties on cars30 Taxes on motor cars45 Trade margins (total)80 Transport charges60 Intermediate consumption0 Final consumption expenditure by householdsUnknown Gross fixed capital formation by government20 Gross fixed capital formation by businesses135 Change in inventories0 Exports0 11

Copyright 2010, The World Bank Group. All Rights Reserved. Motor cars Supply Domestic production (basic prices)0 plus Imports (c.i.f.)955 plus Taxes on motor cars75 less Subsidies on motor cars0 plus Trade margins (total)80 plus Transport charges60 equals Total supply (purchasers’ prices)1,170 Uses Intermediate consumption0 plus Household final consumption expenditureUnknown plus Government final consumption expenditure0 plus Gross fixed capital formation (government plus business)155 plus Change in inventories0 plus Exports0 equals Total known uses155 Residual calculation Total supply1,170 less Total known uses155 equals Final consumption expenditure by households1,015 12

Copyright 2010, The World Bank Group. All Rights Reserved. Second-hand Sales Sales between households –The value of the vehicles cancells out –But dealers margins increase household consumption expenditure Sales from government and enterprises to households –Negatve capital formation –Positive household consumption Exports –Negatve capital formation or household consumption 13

Copyright 2010, The World Bank Group. All Rights Reserved. Accounting services Domestic production (basic prices)200 Imports (c.i.f.)0 Customs duties0 Value added tax on sales to households3 Trade margins (total)0 Transport charges Total supply at purchasers’prices Intermediate consumption170 Final consumption expenditure by households23 Capital formation0 Change in inventories0 Exports10 14

Copyright 2010, The World Bank Group. All Rights Reserved. What have we learned? Supply and Use tables have 2 uses: –First step towards Input/Otput tables –Estimating consistent GDP Commodity flow is a partial application of the SUT to: –Estimate a missing value –Consistency check Applying commodity flow tables is challenging: –Assumptions are always needed. –Use all the information you can find. 15