MEASURMENT OF NON-OBSERVED ECONOMY IN THE NATIONAL ACCOUNTS OF UKRAINE

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MEASURMENT OF NON-OBSERVED ECONOMY IN THE
NATIONAL ACCOUNTS OF UKRAINE
Agenda item 6d
MOSKVIN Aleksey Alekseyevich Deputy Director of
Macroeconomic statistics
Workshop on the Implementation of the 2008 SNA,
Kiev, 29 November 2 December 2011
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Classification of non-observed economy
Measurement of non-observed economy Manual
OECD, IMF, ILO, CIS-STAT 2002.
Non-observed economy Non-observed economy Non-observed economy Non-observed economy Non-observed economy Non-observed economy Non-observed economy Non-observed economy
Underground Underground Underground Underground Underground Informal Illegal Other
Statistical reasons Statistical reasons Statistical reasons Economic reasons Economic reasons Informal Illegal Other
Non-response Not in the lists Liquidation Mis-reporting Not regis-tered Informal Illegal Other
?1 ?2 ?3 ?4 ?5 ?6 ?7 ?8
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Data Sources and Assessment MethodsCorporations

• Statistical Reasons ?1, ?2, ?3
• Structural business statistics data on reasons
  for not reporting to surveys
• ?1 not reporting (delays in reporting) 0.01
  of output
• ?2 not founded at address (but were active and
  had sales) 0.8 of output
• ?3 bankruptcy, liquidation, suspension of
  operations (but were active and had sales) 0.3
  of output

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Data Sources and Assessment MethodsCorporations

• ?4 Misreporting
• 1. Structural business statistics data on output
  per one employed
• Output per one employed in small enterprises is
  48 of large and medium-size ones
• 2. Data of business activity surveys
• What is the level of underground production in
  your industry?
• 3. Data of labour statistics surveys
• Ratio of the recorded wage earners and unofficial
  employees (10.3 in total, in construction 43,
  in trade 19, in transport 16, agriculture
  13)
• 4. Total adjustment is 10.2 of NFC output

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Data Sources and Assessment Methods Households
?5 Non-Registration, ?6 Informal Sector, ?8
Production for Own Consumption and Tips

• Data Sources
• production by households (agriculture statistics)
• goods turnover of trade and turnover of
  individuals entrepreneurs in the restaurant
  industry, goods turnover of informal markets
  (trade statistics)
• individual housing construction (investment
  statistics estimate by administrative data
• on number of permits for construction)
• repair of housing (estimate by amount of
  purchases of construction materials)
• output estimate of goods and services by amount
  of purchases in the market and from
• citizens (households living conditions surveys)
• imputed rent (stratified estimate by living area
  and rent price data)
• education and health care services (estimate by
  number of students and surgeries)
• SUBSTRACT registered personal income of employers
  (National Tax Office)

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Data Sources and Assessment Methods Households
?5 Non-Registration, ?6 Informal Sector, T8
Production for Own Consumption and Tips

• Allocation by types
• Ratio of not-registered employees (?5
  non-registration) and self-employed, and
  entrepreneur's family members (?6 informal
  sector) according to labour statistics
• Agricultural production for own consumption, tips
  in transport, hotels and restaurants are included
  in ?8 type

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Non-Observed Economy by Industries
NACE 2001 2002 2003 2004 2005 2006 2007 2008 2009
Agriculture (A,B) 9.2 9.3 8.0 7.2 6.2 5.2 4.5 3.9 4.2
Industry (C,D,E) 2.6 3.3 3.0 3.7 4.1 3.8 4.7 3.7 3.5
Construction(F) 0.7 0.6 0.6 1.1 1.1 1.3 1.7 1.2 1.0
Trade (G,H) 2.3 2.8 3.5 3.5 3.3 3.6 2.7 4.0 4.6
Transport and communications (I) 0.3 0.6 0.6 1.4 1.0 1.1 0.3 0.5 0.6
Others (J- P) 1.0 1.1 1.5 2.0 2.3 2.3 1.6 1.8 2.7
Total in to GDP 16.3 17.7 17.2 18.9 18.1 17.3 15.5 15.1 16.7
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Non-Observed Economy by Industries
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Non-observed economy by type
  Statistical reasons Economic reasons Informal and other Total
  ?1, ?2, ?3 ?4, ?5 ?6, ?8 Total
2002 1,2 6,3 10,2 17,7
2003 1,3 7,3 8,6 17,2
2004 1,1 9,7 8,1 18,9
2005 0,6 8,9 8,5 18,1
2006 0,7 10,6 6,0 17,3
2007 0,9 9,7 5,0 15,5
2008 0,8 9,6 4,7 15,1
2009 0,8 10,7 5,1 16,7
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Non-observed economy by type
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?7 Illegal Activities

• Estimate of Illegal Activities by type
• prostitution
• drug production and distribution
• smuggled goods
• illegal alcohol production

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Illegal ActivityData Sources

• Ministry of Internal Affair (withdrawn drugs,
  thefts, penal sanctions for law violation)
• Customs Service (confiscated contraband property)
  
• Data from International Institutions (for
  example, WHO on consumption of alcohols, tobacco,
  drugs)
• Mass media and specialized research
• Statistical sources (production statistics,
  foreign trade statistics, surveys of household
  living conditions)
• Own assumptions (rate of drugs confiscation by
  type)
• Balances in kind and in value on the production
  and consumption of goods and services

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Illegal ActivityEstimated Transactions in the SNA

• output
• intermediate consumption
• GVA
• including compensation of employees
• household consumption
• exports and imports

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Prostitution

• Estimate of the number of employed and quantity
  of the services rendered (based on consumption)
• Stratification by price of services
• Estimate of the value of services
• Estimate of intermediate consumption
• Export is estimated using the number of residents
  abroad and the share of prostitutes in population
• Import is not assessed because of its minor
  importance

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Drug Production and Distribution

• Estimated number of users
• Stratification by types of drugs used
• Assessment of average consumption and prices
• Estimate of household expenditures
• Allocation of estimated consumption to domestics
  output, import and trade margin, estimate of
  intermediate consumption

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Smuggling

• Value of smuggled goods is estimated using the
  value of confiscated goods and own assumptions (
  of confiscated to total)
• Additional data from the Customs Service on the
  estimated illegal export of alcohol and tobacco,
  and import of drugs
• Output trade margin ( of value of smuggled
  goods)
• Intermediate consumption - of output
• Labour compensation - of valued added

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Illegal Alcohol Production

• Source data consumption of absolute alcohol
  according to WHO
• Supply and demand are balanced in kind and in
  value terms for 4 types of alcohol products
• Output import export household
  consumption
• The imbalances are allocated to
• - underreporting of data
• - production for own final use by
  households
• - illegal alcohol production
• - illegal import

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?????, ?? ???)

• ??????????? 0,3
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• ??????????? ??????? 0,7
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• ????? 2,2

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Promising Trends to Extend the Coverage of
Illegal Activity Assessment

• resale of stolen property
• unlicensed (illegal) medical practices
• poaching
• production and trade in unauthorized copies of
  artistic originals software, CDs and videos
• human trafficking
• money laundering

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Thank you !