1. Institutional units according to ESA 2010
THE CONTRACTOR IS ACTING UNDER A FRAMEWORK CONTRACT CONCLUDED WITH THE COMMISSION

2. Overview Limits of the national economy Institutional units
Institutional sectors
Criteria for classification
Market and non-market output

3. Limits of the national economy
The national economy is defined in terms of resident 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.
An institutional unit is 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)

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

5. 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-resident (included).

6. Institutional units ESA 2010: Units and sectors Institutional unit:
- smallest centre of economic decision making
Institutional units are allocated to institutional sectors
Institutional sectors:
– Non-financial corporations S.11
– Financial corporations S.12
– General government S.13
– Households S.14
– Non-profit institutions serving households S.15
– Rest of the world S.2

7. Institutional units Non-financial corporations S.11
Non-financial corporations consist of institutional units which are independent legal entities and market producers, and whose principal activity is the production of goods and non-financial services (including quasi-corporations).

8. Institutional units Financial corporations S.12
Financial corporations consist of institutional units which are independent legal entities and market producers, and whose principal activity is the production of financial services (including quasi-corporations).
(a) central bank (S.121);
(b) deposit-taking corporations except the central bank (S.122);
(c) money market funds (MMFs) (S.123);
(d) non-MMF investment funds (S.124);
(e) other financial intermediaries, except insurance corporations and pension funds (S.125);
(f) financial auxiliaries (S.126);
(g) captive financial institutions and money lenders (S.127);
(h) insurance corporations (S.128); and
(i) pension funds (S.129).

9. Institutional units General government S.13
General government consists of institutional units which are non-market producers whose output is intended for individual
and collective consumption, and are financed by compulsory payments made by units belonging to other sectors, and institutional units principally engaged in the redistribution of national income and wealth.
(a) central government (excluding social security funds) (S.1311);
(b) state government (excluding social security funds) (S.1312);
(c) local government (excluding social security funds) (S.1313);
(d) social security funds (S.1314).

10. Institutional units Households S.14
Households consist of individuals or groups of individuals as consumers and as entrepreneurs producing market goods and
non-financial and financial services (market producers)
provided that the production of goods and services is not by separate entities treated as quasi-corporations. It also includes individuals or groups of individuals as producers of goods and nonfinancial services for exclusively own final use

11. Institutional units Non-profit institutions serving households S.15
Non-profit institutions serving households (NPISHs) consist of non-profit institutions which are separate legal entities, which serve households and which are private non-market producers.

12. Institutional units Rest of the world S.2
Rest of the world consists of non-resident units insofar as they are engaged in transactions with resident institutional units, or have other economic links with resident units.

13. Institutional units Defining an institutional unit
Uniformity of behaviour within a sector
– Market and Non-market output
– Financial and non-financial activity
– Government activity
Elementary decision making centre with ‘autonomy of decision’
– Take their own decisions
– Own goods and assets
– Incur liabilities and enter into contracts
Can complete a set of accounts.

14. Institutional units Institutional units: exceptions include:
Households
Notional resident units
Holding companies
Quasi corporations

15. Criteria for classification
To classify, the following questions should be asked:
Does it have autonomy of decision making?
Does/can it produce accounts?
Does it produce market output?
– And if so:
If it doesn’t have autonomy; and
Has a different behaviour from its ‘parent’.
It can be deemed to have autonomy to enable it to be captured separately

16. Quasi-corporation Legally dependent
Behaves like corporation (produces ‘market output’)
Complete set of accounts

17. Allocation of units to sectors

18. Thank you for your attention
CONTRACTOR IS ACTING UNDER A FRAMEWORK CONTRACT CONCLUDED WITH THE COMMISSION