1. Institutional units Martin Kellaway
National Accounts in Practice – Advanced course
Luxembourg, 3-12 October 2016
THE CONTRACTOR IS ACTING UNDER A FRAMEWORK CONTRACT CONCLUDED WITH THE COMMISSION

2. Contents
The national economy
Institutional units
Definition of units

3. Limits of national economy
The national economy is defined in terms of resident institutional units.
Resident units are known as resident units, irrespective of nationality, legal form or presence on the economic territory at the time they carry out a transaction.

4. Limits of national economy
An institutional unit is considered resident in a country when it has its centre of predominant economic interest in the economic territory of that country, over a sufficiently long period (one year of more)
May be different from the legal form used in statistical inquiries (e.g. enterprises, holding companies, government departments, households)

5. Limits of national economy
A country’s economic territory, ESA (2.05)
The area within the ‘governed’ borders
Including own embassies, military settlements abroad, its enclaves
Excluding foreign embassies, military settlements and EU
Excluding extraterritorial enclaves of others

6. Enclaves
Examples San Marino, Vatican, West Berlin; Alaska, Kaliningrad semi-enclaves
Map shows the Belgian exclaves of Baarle-Hertog in the Netherlands, which, in turn, has Dutch enclaves within it

7. Limits of national economy
Residency - special cases
Cross border workers (excluded)
Cross border seasonal workers (excluded)
Tourists (excluded)
Branch office (included)
Real estate – land and buildings - owned by non-residents (included)

8. Definition of an Institutional unit
An institutional unit is an economic entity characterised by decision making autonomy in the exercise of its principle function
It also has, or is possible to compile, a complete set of accounts
(ESA 2.12)

9. Definition of an Institutional unit
Entitled to own goods or assets in its own right
Able to take economic decisions and engage in economic activities
Able to incur liabilities on its own behalf and is accountable at law
(ESA 2.13)

10. Institutional units
Institutional unit is the smallest centre of economic decision making
Institutional units are allocated to institutional sectors

11. Institutional units Institutional units: exceptions include:
Households (fails the accounts test, but deemed to have autonomy)
Notional resident units
Head offices and holding companies (deemed a unit separate from its subsidiaries)
Quasi corporations (fail 2.12 tests but constructed as units)

12. Quasi-corporations Legally dependent
Behaves like corporation (produces mainly ‘market output’)
Can compile complete set of accounts
Although doesn’t have autonomy, it is deemed to do so, so that the market activity/behaviour can be separated from the household/government non-market part