1. GDP and INFORMAL SECTOR in Mongolia
DEMBEREL Ayush
Director, Statistical Research Department
LKHAGVAJARGAL Baasantseren
Senior Officer, Macro Economic Statistics Department
National Statistical Office, Mongolia

2. Contents Gross Domestic Product Informal Sector Some issues/concerns
Scope and Coverage
Data and Indicators
Informal Sector
Conducted surveys
Some issues/concerns

3. Gross Domestic Products
What is the GDP?
GDP (production) is the market value of all final goods and services produced within a country during a given time period.
GDP (income) is sum of compensation of employees, consumption of fixed capital, net taxes on product and net operating surplus or mixed income.
GDP (expenditure) approach is the value of final consumption expenditure, gross capital formation and net exports of goods and services.

4. Gross Domestic Products
Total Output
GDP (value added + net tax)
Intermediate Consumption
GDP, production approach
GDP approaches
Wage
Profit
Net tax
Capital consumption
GDP, income approach
Statistical changes
Consumption
Capital consumption
Net Export
GDP, expenditure approach

5. Gross Domestic Products
Production approach:
GDP, by sectors, yearly, current and constant 2005 prices
GDP, by sectors, quarterly, constant 2005 price
GDP, by aimags and sectors, current price
GDP, by type of owner and sectors, current price
Expenditure approach: GDP, yearly, current price
Income approach: GDP, yearly, current price
WB Atlas approach, GDP per capita, US dollar

6. Gross Domestic Products Classifications and frame
International Standard Industrial Classification (ISIC)
Classification of Individual Consumption of Purpose (COICOP)
Classification of Function of Government (COFOG)
Harmonized systems (HS)
Business Register
Classifications and frame

7. Gross Domestic Products
Methods of data collection:
Census (Livestock)
Fully Covered Survey for large and medium sized enterprises (Industry, construction, transportation and communication etc)
Sample survey (industry, whole and retail trade and restaurant etc)
Data sources:
Annual balance sheet of enterprises
Result of sample survey
Administrative statistical information

8. Gross Domestic Products
GDP estimation
Year
Quarter
Production approach: GDP, current and constant 2005 prices
Expenditure approach: GDP, current price -
Income approach: GDP, current price
Aimag GDP, current price
GDP per capita (WB approach)

9. Gross Domestic Products

10. Gross Domestic Products

11. Gross Domestic Products

12. Gross Domestic Products

13. INFORMAL SECTOR Definitions for Non-observed economy:
“Activities which should be included in GDP but are not
covered in statistical surveys or administrative records used
in National Account compilation”
Non-observed economy handbook of OECD (2002)
Total economy
Non market and Statistical
Shadow economy
Official economy
Non-observed economy

14. INFORMAL SECTOR Shadow economy is called as follows: Shadow economy
Non observed economy
Hidden economy
Irregular economy
Unofficial economy
Parallel economy

15. INFORMAL SECTOR Non-observed economy consists of 5 subgroups1:
Underground
Illegal Shadow Economy
Informal
Do-It-Yourself
Statistical
1 – OECD (2002), Measuring the Non-Observed Economy, a hand book

16. 5(1) of the 15th ICLS Resolution
INFORMAL SECTOR
5(1) of the 15th ICLS Resolution
“The informal sector may be broadly characterized as consisting of
units engaged in the production of goods or services with the
primary objective of generating employment and incomes to the
persons concerned. These units typically operate at a low level of
organization, with little or no division between labor and capital
as factors of production and on a small scale. Labor relations –
where they exist – are based mostly on casual employment, kinship
or personal and social relations rather than contractual
arrangements with formal guarantees.”

17. INFORMAL SECTOR
The Methods of Estimating the Size of the Shadow Economy
Direct
1. Sample survey
2. Other source (tax auditing…)
Indirect
1. SNA approaches (Discrepancy between expenditure and income measurements of GDP and IOT )
2. Labour method

18. INFORMAL SECTOR 3. Monetary method a. Transaction method
b. Currency method
4. Physical input method
a. Kaufman-Kaliberda method
b. Lacko method
5. MIMIC method

19. Informal Sector and Informal Employment
Conductor
Year
Results, % of GDP
Survey units 1
James H. Anderson
1997
5 %
770 units 2
Bill Bikales,
Chimed Khurelbaatar
1999
13 %
4042 units 3
NSO of Mongolia
10.5 %
1000 units 4
Establishment census
2006
8 % - 5
Informal Sector and Informal Employment
1558 households
Conducted Surveys in Mongolia

20. 2. The Mongolian Informal
INFORMAL SECTOR
Period: 1999
Sample technique: three-stage stratified cluster
Variables: average revenue per month, purchases of goods for resale per week, various purchased services and employment
Survey frame: “economic units under single ownership engaged in one kind of economic activity at a fixed place of business” – a total of units, and for taxi service (16320 vehicles)
Sample size: 6 regions for 17 activities, 4042 economic entities or 9.7 percent of the population of 41602
Survey result: total value added of 117,255.3 mln.tog and total employment workers.
2. The Mongolian Informal
Sector 1999, Bill Bikales

21. 3. “Informal Sector Survey, 2003”, NSO
Period:
Sample technique: sample survey by region
Variables: revenue, operating expenses and number of employees
Survey frame: for trade sector: “patent” business – a total of units; for transportation: procedure similar to to 1999 survey, and number of vehicles for taxi service (28000 vehicles)
Sample size: all regions, for trade 700 units (of 21496), for transportation 300 units of the population of 28000
3. “Informal Sector Survey, 2003”, NSO

22. 4. “Enterprise Census, 2006”, NSO
INFORMAL SECTOR
Period: 2006
Sample technique: census
Variables: gross income, number of employed workers
Survey frame: unincorporated businesses “with indeterminate income” under the taxation legislation (patents)
Survey result: according to the result of this census VA of informal sector was about 8 percent of GDP.
4. “Enterprise Census, 2006”, NSO

23. 5. Informal Sector and Informal Employment
With the support of UNESCAP, Informal employment data is collected, using and informal employment module in Labor Force Survey in two phases:
- In phase 1: Informal employment data is collected, using Labor Force Survey.
- In phase 2: Informal sector enterprise data is collected .
Out of 7008 households selected in the Labour Force Survey, 1558 households that met criteria has used for HUEM Survey.
Survey period: Data covers the period from July 2007 to June 2008.
5. Informal Sector and Informal Employment

24. INFORMAL SECTOR
Before 2006 we estimated VA of informal sector only in retail trade, restaurants (cafeteria) and transport sectors. For estimation of informal sector we used result of “Informal sector survey” which conducted on 1998/1999. Survey result shows output and intermediate consumption of unincorporated enterprises.
In 2006, NSO provide “Enterprises census” which also collect data on unincorporated enterprices.

25. INFORMAL SECTOR
In 2007, the share of informal sector to the GDP was about 7.5 percent.
NSO is not finish yet the compiling of GDP for 2008.
In Mongolia indirect methods are used for
Time series data
Compare with other countries’ informal economy
Compare with other indirect methods’ results
Two reports are published about indirect methods of NOE (informal economy)

26. SOME ISSUES/CONCERNS
In the future, it is possible to conduct this survey as a module of LFS in every 3 years, estimations can be made based on LFS survey results. In order to conduct the survey, a financial assistance from international organization will be needed.
Apply the estimation of informal sector by some model approaches (MIMIC method)

27. Thank you for your attention
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