UNIDO Industrial Statistics Database Relevance and Applicability ESDS-PPdoc-London-nov2005 ESDS International Data Conference November 2005, London, UK Tetsuo YAMADA UNIDO

Poverty reduction is the single most important UN MDG. For poverty reduction, macro economic growth is the single most important necessary condition. As indicated in the famous S-shaped growth path, the manufacturing sector plays the leading role for growth in DCs (exceptions = LDCs) while the service sector does in ICs being supported by strong technology-based manufacturing sector. Industrial development is particularly important for economic prosperity because of its technological and high-value-adding nature and employment effect. Relevance of Intl Industrial Statistics (1)

However, in the era of economic globalization, not all manufacturing industries have high growth potential. Hence, researchers and policy makers seek potential sources of growth. Here, the notions of comparative advantage, competitiveness, productivity, structural change as such at the sub-sectoral level become relevant. Consequently, demand for internationally comparable data on detailed (or, structural) industrial statistics has been increasing more than ever for industrial-growth empirics. Relevance of Intl Industrial Statistics (2)

New data demand in conjunction with globalization relates to (all at a detailed level of ISIC): Productivity, competitiveness and international specialization. International integration of industry (e.g., production-cum- trade indicators, FDI-related indicators, ownership distribution). Fixed and human capitals. R & D. Relevance of Intl Industrial Statistics (3)

UNIDO assumes sole responsibility for compilation (in collaboration from OECD) and dissemination of worldwide data on the following key industrial statistics at the 3- and 4- digit levels of ISIC: Number of establishments Total employment Female employment Wage bill Output Value added Gross fixed capital formation (Production indexes) UNIDOs Global Industrial Statistics

To produce timely and reliable empirical research outputs, required data need to be: relevant accurate and coherent easily accessible comparable complete and current Quality Requirements for Industrial Statistics

identification and documentation of deviations from international standards detection of dubious/incoherent data correction of reporting errors data imputation/estimation to fill data gaps improvement of data dissemination services Data-Quality Assurance by UNIDO

NSOs reporting data in ISIC(Rev.3) NSOs Reporting data in ISIC(Rev.2) UN COMTRADE (SITC-Rev.1) Data improvement Conversion to 4-digit level of ISIC(Rev.2) INDSTAT (ISIC Rev.3) INDSTAT (ISIC Rev.2, 3-digit level) INDSTAT (ISIC Rev.2, 4-digit level) Data improvement UNIDO Databases Conversion to 3-digit level of ISIC(Rev.2) IDSB (ISIC Rev.2, 4-digit level) UN COMTRADE (SITC-Rev.3) Conversion to 4-digit level of ISIC(Rev.3) IDSB (ISIC Rev.3, 4-digit level)

Potential determinants of data quality and comparability: Registry of establishments/enterprises (size of non-registered/informal sector) Scope of the national industrial survey (survey cut-off point, geographical area, activity). Response rates and treatment of non-response Statistical concepts and definitions Industrial classification Methodology for data production Data Quality and Comparability

Employment: Employment data refer to employees or persons engaged; Different treatment of unpaid family workers, home workers and part-time employees including seasonal workers. Wages and salaries: Inclusion of payments to family workers and of employers' contributions to social security schemes; Exclusion of payments-in-kind. The numerical effects of these differences are probably of small consequence both within and between countries. Output and value added: The most important are the differences in concept (census or NA concept) valuation (in producers prices or factor values). These differences can be significant particularly for some industries depending on the relative amounts of, for instance, advertising costs or government subsidies received. Sources of Differences in Variable Definitions

valuation at producers prices, valuation in factor values and other valuations (depending on the treatment of indirect taxes and subsidies): Among 100 regularly reporting countries (incl. areas), 39 countries report data at producers prices, 18 at factor values and 43 in their variations. national accounting concept and industrial census concept (depending on the treatment of non-industrial services): Among 100 regularly reporting countries, approximately three quarters of the countries employ the census concept and the rest employ the national accounting concept Valuations and Concepts of value added

Only 110 countries have reported data for year(s) 1999 onward for at least one of the requested industrial statistics. Of these, 15 countries have reported data still in ISIC(Rev.2). Of the 110 countries, 60 % have reported data for Only a very few have reported data for Reported data are often incomplete in terms of 4-digit ISIC coverage as well as variable coverage. Due to lack of relevant metadata, quality and the extent of international comparability of reported data are often difficult to be judged. Data-reporting status as of 31/12/04 All these limit the usefulness of the reported data in empirical research on industry.

Regular implementation of industrial surveys based on standard methodology, survey scope and continuously updated registry of establishments. Periodical implementation of complete industrial censuses – results as a benchmark. Adoption of international standard industrial classifications and variable definitions. Compilation of industrial production indexes at least at the 3-dig. ISIC. Provision of user-friendly metadata to users to ensure proper use of the data. Quality assurance of data and improvement of the work efficiency. Solutions to improve the data quality by NSOs

To assure sound use of data, users of international data need to know the extent of incomparability (or deviation from international standards) of data. UNIDO attempt to re-describes reported metadata for the national data to explicit description with regard to the deviation from the related international standard. Available metadata are presented in two dissemination products: International Yearbook of Industrial Statistics (hardcopy); INDSTAT4 (CD- Rom). Metadata in Support of INDSTAT Data

Need of and problems relating to existing index numbers of industrial production a) No appropriate price deflators for MVA at sub-sectoral level exist in most countries. b) To measure real growth rates of sub-sectoral MVA, most countries employ Laspeyres quantity indexes (thus relevant to output and not to value added unless input-output ratio for the production of each product does not change over time). c) Fixed-weight indexes (thus no change in product composition of the industry and no change in quality of each product are assumed ). d) Chained Laspeyres quantity indexes have been produced in a few countries (still constant I-O ralation is assumed).

Particularly for several developing countries, major existing data problems relate to: Incomplete period coverage (incl. long reporting time lag) Incomplete variable coverage Deviations from ISIC(Rev.3) 4-digit categories (incl. ISIC category combination) Incomplete coverage of the manufacturing sector (e.g., due to outdated registry and sizable non-registered sector) Erratic fluctuations over time and under-estimation of data due to low and changing response rate together with non-adjustment of nonresponse Limited applicability of census value added when it is compared with NA statistics Lack of relevant deflators applicable to value added at subsectoral levels Inconsistency and incoherency of existing indexes of industrial production Summary - Major drawbacks of existing data

In response to the urgent need of more comparable and consistent industrial statistics, major revision of the currently available International Recommendations for Industrial Statistics and for Index Numbers of Industrial Production is under way jointly by UNSD and UNIDO.