1. Высшая школа экономики, Москва, 2013 Methodological problems with transformation of Russian Input-Output Accounts from Soviet classifications into International Classifications of Products and Activities Edward Baranov, Igor Kim, Elena Staritsyna, (NRU HSE), Liubov Strizhkova, Svetlana Kashirskaya, (IMA) Presentation at XIV International Scientific Conference on Economic and Social Development National Research University Higher School of Economics (HSE) April 2-5, 2013

2. Высшая школа экономики, Москва, 2013 Status of Development of IO accounts in Russia For 1995 Russian Federal State Statistical Service (Rosstat) developed benchmark Symmetric and Supply tables at two levels of aggregation – with 110 and 22 groups of industries in Soviet classifications of industry (OKONH) and products (OKP) (not published) For 1996-2003 Rosstat developed annual IO Accounts at the level of 22-24 industries on the base of benchmark symmetric tables for 1995 Since 2004 developments of IO accounts had not been carried out due to transition of Russian statistics to the use of the OKVED (All-Russian classifier of activities) and OKPD (All-Russian classifier of Products by Activity) classifications, harmonized with the NACE rev.1/CPA The first Russian benchmark IO accounts for 2011 that are harmonized with NACE rev.1/CPA will appear at the end of 2015. 2

3. Высшая школа экономики, Москва, 2013 What are purposes of the IO accounts based on international classifications Analysis of prospects for the Russian economy Participations of Russia in international projects, based on the information of IO accounts time series, for example, WORLD KLEMS project Production based estimates of constant price value- added using double deflation procedure Note: The IO accounts of the Russian economy are presented in nine tables – Supply table, Use tables at basic and purchasers’ prices, domestic and imported Use tables at basic prices, transport and trade margins tables, net taxes on products tables and product-by- product input-output table at basic prices. 3

4. Высшая школа экономики, Москва, 2013 Research goals Development of the methodology for transformation of IO accounts based on Soviet classifications according to the OKVED/OKPD classifications and construction of IO accounts for 2003 Development of the methodology for construction of time series of IO accounts of 2004-2010 at current and constant prices on the basis of transformed IO accounts for 2003 Construction of time series of IO accounts based on OKVED/OKPD classifications at current and constant prices for 2004 and subsequent years. Why 2003 Last full set of IO accounts based on OKONH/OKP First disaggregated data of production accounts based on OKVED. 4

5. Высшая школа экономики, Москва, 2013 5 Researches performed Methodology for transformation of IO accounts based on Soviet classifications for 2003 according to the OKVED/OKPD classifications (HSE)  Baranov E., Kim I., Staritsyna E. (2011) Methodological questions on the reconstruction of IO accounts for the Russian Federation in 2003 and subsequent years in accordance with the structure of OKVED/OKPD // The Question of statistics. 2011. № 12. С. 3-8.  Baranov E.F., Kim I.A., Staritsyna E.A. (2011) Estimation of Russian constant-price input-output tables according to NACE rev. 1/CPA. 19th International Input-Output Conference. 2011.  Baranov E.F., Kim I.A., Staritsyna E.A. (2012) Features of Russian Input-Output Accounts Reconstruction in NACE rev.1/CPA. 20th International Input-Output Conference. 2012. Construction of IO accounts based on OKVED/OKPD classifications at 42 activities and products levels for 2003 (HSE and IMA) Construction of IO accounts based on OKVED/OKPD classifications at current prices for 2007-2011 (IMA).

6. Высшая школа экономики, Москва, 2013 Information base IO accounts for 24 groups of industries and products based on Soviet classifications Production accounts for 69 activities for 2003 (at the level of disaggregation appropriated for the data used in KLEMS) Administrative data from Rosstat:  Use table at purchasers’ prices at disaggregated nomenclatures based on Soviet classifications for 2003  Supply table за 2003 г. at disaggregated nomenclatures based on OKVED classifications for 2003  detailed data on the production of products in the detailed OKP and OKPD classifications Exports and imports data in the detailed nomenclature for 2003 from Federal Customs Service. 6

7. Высшая школа экономики, Москва, 2013 Priorities of this research Transformation of Use table at purchasers’ prices for 2003 according to OKVED Construction of detailed Use tables based on OKVED/OKPD classifications:  Use table of domestic production at basic prices  Use table of imports at basic prices  table of transport margins  table of trade margins  table of net taxes on products Reconciliation between these tables and Use table at purchasers’ prices. 7

8. Высшая школа экономики, Москва, 2013 Methodological problems Published IO accounts for 2003 does not take into account more recent changes in the methodology (for example, the treatment of financial intermediation services indirectly measured (FISIM)) Decomposition of Use table at purchasers’ prices based on OKONH/OKP classifications into five components is only at the aggregate level 8

9. Высшая школа экономики, Москва, 2013 Methodological problems (continued) For each of the five tables (Use table of domestic production, etc.) it is necessary to have correspondence tables between old and new classifications. It is not possible to do due to the lack of information Our correspondence table is made on the data of domestic production at basic prices Estimates of output, intermediate consumption and value added of production account for 2003 do not match the same estimates from transformed Use table (the same situation with components of GDP by expenditure). 9

10. Examples of inconsistencies between indicators transformed from OKONH and data from production account in OKVED, million rubl. Co- de ActivitiesOutput at basic pricesIntermediate consumption Trans- formed from OKONH Produc- tion account in OKVED Diffe- rences Trans- formed from OKONH Production account in OKVED Diffe- rences 11 Extraction of crude petroleum and natural gas; service activities incidental to oil and gas extraction, excluding surveying 11923111216462+24151 (2% from produc- tion account) 386404607157+220753 (36,4% from produc- tion account) G Wholesale and retail trade; repair of motor vehicles, motorcycles and personal and household goods 38426343602366-241268 (6,7% from produc- tion account) 12838111030145-253666 (24,6% from produc- tion account) 10

11. Высшая школа экономики, Москва, 2013 Methodology of transformation from OKONH/OKP into OKVED/OKPD, general framework National accounts Use table (ОKONH / OKP) at purchasers’ prices Use table (OKVED / OKPD) at purchasers’ prices (preliminary) control Use table (OKVED / OKPD) (preliminary) domestic import transport m. trade m. net taxes IO accounts in OKONH/OKP structure Use table (OKVED / OKPD) (adjusted) domestic import transport m. trade m. net taxes Customs statistics, Statistics of Bank of Russia and Ministry of Economic Development control step 3 step 2 step 1 step 4 Use table (OKVED / OKPD) at purchasers’ prices (adjusted) 11

12. Высшая школа экономики, Москва, 2013 Step 1 Transformation of Use table at purchasers’ prices using correspondence table OKONH/OKP to the OKVED/OKPD Identifying inconsistencies with output, intermediate consumption and value added in transformed Use table from corresponding data of production account in OKVED Expert inconsistency elimination by adjusting the elements of the corresponding column of the transformed table Formation of vectors of domestic output and imports at basic prices, transport and trade margins, net taxes on products. 12

13. Высшая школа экономики, Москва, 2013 Step 2 Dividing transformed Use table at purchasers’ prices into 5 components: splitting main flows of Quadrant I and all flows of Quadrant II in accordance with to the structure of closest analogs in the published Use tables in OKONH/OKP Splitting all remaining flows of Quadrant I in accordance with weighted-average structure of the sum of secondary flows in each row of these tables. 13

14. Высшая школа экономики, Москва, 2013 Step 3 Matching of the totals of each row in tables with the totals, obtained in step 1 Elimination inconsistencies in each row of each table by expert Balancing methods: adjustment of the largest flows, proportional adjustment all measures of row (note: the preferable way to resolve inbalances is simultaneous reduction of inconsistencies in columns and rows) Side effect: inconsistencies in the total columns of I Quadrant reappear. 14

15. Высшая школа экономики, Москва, 2013 Step 4 The final elimination of inconsistencies in the columns It is possible to use algorithmic procedures (for example, RAS) eliminating inconsistencies. 15

16. Высшая школа экономики, Москва, 2013 Construction of IO accounts for subsequent years on the basis of IO accounts for 2003 Using foreign experience and standard procedures of construction and balancing of time series For each year, development of two IO accounts at current prices and prices of previous year Determination of the sequence of calculations (from the Use at purchasers’ prices to its 5 components or vice versa). 16

17. Высшая школа экономики, Москва, 2013 Thank you for your attention!