The figures for the years under review show that Non-Financial Corporations are key players in the economy, having a share of 60 per cent of Gross Value Added in 2007. On the other hand, the economic weight of Non-Profit Institutions Serving Households (NPISH) is relatively limited.
This National Statistics Office release has two main objectives: first, it explains the concepts underlying sector accounts, based on the methodology of the European System of Accounts (ESA95); second, it presents macroeconomic developments in the light of GDP data for the period 2004 – 2007.
Typology of institutional sectors
The basic economic unit in National Accounts is known as the institutional unit. It is an elementary, economic decision-making centre characterised by uniformity of behaviour and autonomy in the exercise of its principal function. Institutional units are grouped into sectors based on principal activity and function, economic behaviour and objectives.
The distinction of sectors within National Accounts makes it possible to measure the role of key contributors in the economy: their production, income and use of income, investments and net worth. The accounts for sectors record all the activities, whether principal or secondary, of the institutional units covered.
The resident institutional units that make up the total economy are grouped into the following five mutually exclusive institutional sectors:
(i) Non-financial corporations (S.11)
(ii) Financial corporations (S.12)
(iii) General government (S.13)
(iv) Households (S.14)
(v) Non-profit institutions serving households (S.15)
Corporations (financial and non-financial) are institutional units created for the purpose of producing goods or services for the market. Government units organise and finance the provision of non-market goods and services to households and the community at large and, therefore, incur final consumption expenditure. They may also engage in non-market production themselves and are also concerned with the distribution and redistribution of income and wealth through taxation and other transfers.
Households are primarily consumer units, but can engage in any kind of economic activity. They not only supply labour to enterprises but may also operate their own producer units in the form of unincorporated enterprises. Nonprofit institutions serving households (NPISHs) are institutional units created for the purpose of producing or distributing goods or services, and not for generating any income or profit.
The role of sector accounts in economic analysis
Macroeconomic developments, such as economic growth and inflation, are driven by the actions of the individual economic units in an economy. Grouping economic units with similar behaviour into institutional sectors facilitates the understanding of how an economy functions and how they all inter-relate. For the purpose of this Release, the production account and the generation of income account have been worked out by institutional sector, using annual data. The standard sector accounts tables as disseminated by Eurostat are also included.
The production account shows the transactions relating to the production process. Resources refer to output and taxes less subsidies on products, and uses refer to intermediate consumption. The balancing item of the production account is value added. The sum of Gross Value Added over all domestic sectors, plus taxes less subsidies on products, is equal to the Gross Domestic Product (GDP) of the economy as a whole, at market prices.
The generation of income account shows how the proceeds of this accrue to various income categories, such as the compensation of employees. The balancing item consists of mixed income, which accrues to self-employed households, and gross operating surplus, which mainly accrues to corporations.