About the data
Definitions
Data sources
Government policymakers and statisticians—facing the tasks of mobilizing resources and strengthening different sectors—have tended to focus on the growth of output. Perhaps for this reason, and because production data are easier to collect than expenditure data, many countries continue to generate their primary estimate of GDP and underlying national accounts using the production approach. And many countries either do not estimate the separate components of national expenditure or, if they do, derive the main aggregates indirectly using GDP (output) as the control total.
Expenditures from GDP comprise private consumption, general government consumption, gross domestic fixed capital formation (private and public investment), changes in inventories, and exports (minus imports) of goods and services. Conventionally, such expenditures are recorded in purchasers’ prices and therefore include net indirect taxes.
Private consumption is the market price or purchasers’ price value of all goods and services purchased or received as income in kind by households and nonprofit institutions and, sometimes, unincorporated enterprises. It excludes purchases of dwellings but includes imputed rent for owner-occupied dwellings. Private consumption is often estimated as a residual, by subtracting from GDP all other known expenditures. The resulting aggregate may incorporate fairly large discrepancies. Even when private consumption is calculated separately, the household surveys on which the estimates are based tend to be one-year studies and limited in coverage. Consequently, they rapidly become outdated and must be supplemented by a variety of price- and quantity-based statistical procedures. Complicating the issue is that in many developing countries the distinction between cash outlays for personal business and those for household use may be blurred.
Gross domestic investment consists of outlays on additions to the fixed assets of the economy plus net changes in the level of inventories. In general, expenditures on national defense and security are regarded as part of general government consumption. Under the new 1993 U.N. System of National Accounts (SNA) guidelines, however, capital outlays on defense establishments used by the general public, such as schools and hospitals, and on certain types of private housing for family use are included in gross domestic investment.
Investment data may be estimated from direct surveys of enterprises and administrative records or based on the commodity flow method using data from trade and construction activities. While the quality of public fixed investment data depends on the quality of government accounting systems (which tend to be weak in developing countries), measures of private fixed investment, particularly capital outlays by small, unincorporated enterprises, are usually very unreliable. Estimates of changes in stocks are rarely complete but usually include the most important activities or commodities. In some countries these estimates are derived as a composite residual along with aggregate private consumption. Adjustments should be made to the value of the stock change for holding gains due to price changes. In highly inflationary economies this element can be substantial.
Exports and imports are compiled from customs data and from balance of payments data obtained from central banks. While the data on exports and imports from the payments side provide reasonably reliable records of cross-border transactions, even these data may not adhere strictly to the appropriate valuation and timing definitions of the balance of payments or, more important, correspond with the change-of-ownership criterion. With increasing globalization of international business, this issue has assumed greater significance. Neither customs nor balance of payments data capture the illegal transactions that take place in many countries. Legal but unreported shuttle trade—goods carried by travelers across borders—may further distort trade statistics.
For further discussion of the problems of building and maintaining national accounts see Srinivasan (1994), Heston (1994), and Ruggles (1994). And for the classic analysis of the reliability of foreign trade and national income statistics see Morgenstern (1963).
• Private consumption is the market value of all goods and services, including durable products (such as cars, washing machines, and home computers) purchased or received as income in kind by households and nonprofit institutions. It excludes purchases of dwellings but includes imputed rent for owner-occupied dwellings. In practice, it may include any statistical discrepancy in the use of resources.
• General government consumption includes all current expenditures for purchases of goods and services by all levels of government, excluding most government enterprises. It also includes capital expenditure on national defense and security.
• Gross domestic investment consists of outlays on additions to the fixed assets of the economy plus net changes in the level of inventories. Fixed assets cover land improvements (fences, ditches, drains, and so on); plant, machinery, and equipment purchases; and the construction of roads, railways, and the like, including commercial and industrial buildings, offices, schools, hospitals, and private residential dwellings.
• Exports and imports of goods and services represent the value of all goods and other market services provided to the world. Included is the value of merchandise, freight, insurance, travel, and other nonfactor services. Factor and property income (formerly called factor services), such as investment income, interest, and labor income, is excluded. Transfer payments are excluded from the calculation of GDP.
• Gross domestic savings are calculated as the difference between GDP and total consumption.
National accounts data for developing countries are collected from national statistical organizations and central banks by visiting and resident World Bank missions. Data for industrial countries come from OECD data files. For information on the OECD national accounts series see OECD, National Accounts, 1960–1994, volumes 1 and 2. The complete national accounts time series is available on the World Development Indicators CD-ROM.