1. GOODS FOR PROCESSING The treatment of goods sent abroad for processing
Agenda item 3
Issue paper 4
GOODS FOR PROCESSING
The treatment of goods sent abroad for processing
in the context of the Input-Output framework
Michel Girard
Presented by Art Ridgeway
Director General, System of National Accounts
May 11, 2009

2. Overview Paper is update of paper presented last year
Incorporates comments from last year
Adds illustrative examples
Industry and commodity dimensions before and after standards change
Impact of evolving organization of production
Looks further at measurement challenges

3. Example 1 Industry account - current standard
Contractor
(Country B)
Principal
(Country A)
Gross output
Goods (manufacturing)
160
100
Services (wholesaling) 80
Intermediate inputs
Goods for processing
All other goods 20 50
Processing fees services 60
All other services 10
Value added 30

4. Example 1 Industry account - new standard
Contractor
(Country B)
Principal
(Country A)
Gross Output:
Goods
: 260
Services 60 20
Intermediate inputs
Goods for processing
All other goods
50+100: 150
Processing fees services
All other services 10
Value added 30 50

5. Commodity account - current standard
Country B
Supply
Use
Production
Imports
Intermediate inputs
Exports
Inventories
Other final demand
Before
Goods for processing
100
Goods Processed
160
Processing fees NA
After 60

6. Commodity account - new standard
Country A
Supply
Use
Production
Imports
Intermediate inputs
Exports
Inventories
Other final demand
Before
Goods for processing
100
Goods Processed
160 X Y Z
Processing fees 60
After

7. Impact of new standards
Will alter our view of the economy's structure
Trade in goods and services
Structure of industries
Output ratios
Productivity?
Communication with users will be essential

8. Mixing traditional producers with contractors
Industry
Period
Traditional producer #1 t #2
Traditional producers
t+1
Contractor type
Total
Gross output
125 75
200
100 50
150
Intermediate inputs 78 47
62.5
12.5
Value added 28
37.5
IO coefficient
62.4%
62.7%
62.5%
50.0%

9. Mix of Organizations Affecting Data
Realigning production by some producers can significantly alter the perception of an industry
May see firms reclassified to other industries changing the perception of both industries
Will change the results of analysis using I-O models under new presentation
Focus on industries or commodities
E.g. tax analysis may be better served with this commodity presentation

10. Data Collection Issues
Trade Data – as the IMF paper notes only 61 countries report currently on processing
Sample surveys – mix of organizational types within an industry raises stratification issues
Do register identify them separately
What size criteria is being used
Turnover
Employment
Are survey questions clear for respondents on these issues

11. Questions