© Walter Radermacher, President Federal Statistical Office, Germany
Statistisches Bundesamt
Capital Boundaries
CES seminarMEASURING CAPITAL – BEYOND THE TRADITIONAL MEASURESSession II: Capital boundaries in the revision of the Systemof National Accounts 1993
Walter RadermacherGeneva 12 June 2007
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Statistisches Bundesamt
© Walter Radermacher, President Federal Statistical Office, Germany
Papers
Capital Measurement in the Netherlands •M. de Haan, D. van den Bergen and M. van Rooijen-Horsten,
CBS-NL
The Capital Boundary in the 1993 SNA, Rev. 1 – Challenges for National Statistical Offices •P. Sollberger, Ph. Stauffer and R. Meier, SFO-CH
Capitalisation of research and development expenditure: points of view and experiences in the European Union •G. Gueye and F. Malherbe, Eurostat
An Integrated System of Capital Flow and Stock Statistics •P. Harper, ABS-AUS
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© Walter Radermacher, President Federal Statistical Office, Germany
Focus of the Papers
Capitalisation of R&D
Wealth & Productivity:
Integrated Capital Measurement
NL x x
CH x
EU x
AUS x
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Statistisches Bundesamt
© Walter Radermacher, President Federal Statistical Office, Germany
The dictum:“The only statistics you can trust are those you falsified yourself“
Churchill’s authorship has not been proved to this day!
A slander campaign in the propaganda war?
Possible author:Churchill’s arch-enemyJoseph Goebbels
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© Walter Radermacher, President Federal Statistical Office, Germany
This is what Winston Churchill really said:
“You must look at the facts because they look at you!”
Speech in the British House of Commons, 7 May 1925
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© Walter Radermacher, President Federal Statistical Office, Germany
This is ascribed to Kennedy:
Statistics are like a bikini, what they reveal is suggestive, but what they conceal is vital.
Aaron Levenstein (1901-1986), economics professor in New York, is the real author
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© Walter Radermacher, President Federal Statistical Office, Germany
Goodhart‘s Law
Any observed statistical regularity will tend to collapse once pressure is placed upon it for control purposes (Charles Goodhart)
or more generally:
When a measure becomes a target, it ceases to be a good measure (Keith Hoskin)
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© Walter Radermacher, President Federal Statistical Office, Germany
“Good policy needs good statistics” (Tony Blair)
Quality of Statistics
Theoretical Consistency
Empirical Measurability
Political Relevance
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© Walter Radermacher, President Federal Statistical Office, Germany
Capital
Economic Assets
Entities functioning as a store of value over which ownership rights are enforced by institutional
units, individually or collectively, and from which economic benefits may be derived by their
owners by holding them or using them over a period of time
public goods and infrastructure resulting from an accumulation of knowledge
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© Walter Radermacher, President Federal Statistical Office, Germany
The Large Hadron Collider (LHC) - a particle accelerator at CERN near Geneva
Final works in these months to switch on in 2007 – 27 km circumference – not far away from here (literally under our feet)
Example for basic research that would be classified as freely available
Source: CERN
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© Walter Radermacher, President Federal Statistical Office, Germany
LandWater
AirNature
Humanbeing
SkillsKnowledge
Abilities Creativity
BiodiversityMineral
resources
SAY
Interaction
Land Capital Labour
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Statistisches Bundesamt
© Walter Radermacher, President Federal Statistical Office, Germany
Mineralexploration
Buildings and
structures
Machineryand
equipment
Cultivated assets
Entertainment, literary or
artistic originals
Computersoftware
Intangible fixed assetsTangible fixed assets
InventoriesFixed
assets
Valuables
Precious metalsAntiques
Intangiblenonproduced assets
Patented entitiesLeases
Produced assetsNonproduced assets
Tangiblenonproduced assets
LandSubsoil assets
Research and
Development
SNA
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Land Capital LabourNonfinancial Assets
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© Walter Radermacher, President Federal Statistical Office, Germany
What is Software?
What is R&D?
Identification problem
Human capital
Non-scientific innovations
Marketing assets (brands…)
Organisation and management
…
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© Walter Radermacher, President Federal Statistical Office, Germany
Identification, Valuation, Depreciation: Difficulties
Identification and Classification of the product Valuation of the gross fixed capital formation (GFCF) of
different types of R&D - imputations like capital services of the stock of current knowledge
Estimation of mortality tables and expected service lives on an objective basis
Availability of long series of GFCF as precondition of the perpetual inventory method
Availability of deflators – price indices for never standardised R&D services
Valuation of a specific contribution of R&D to production, (based on the accumulation of knowledge)
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© Walter Radermacher, President Federal Statistical Office, Germany
Future Work
Investigate via satellite accounts
Bridging R&D statistics to national accounts Imputation of yearly (and quarterly) SNA data without yearly
R&D surveys Deflators and long time series Service lives and mortality/retirement function …
Satellite accounts should be applied to examine the effects of different solutions of the identification problem (e.g. public goods)
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© Walter Radermacher, President Federal Statistical Office, Germany
Measuring wealth and productivity The concept of capital services
Accumulation (investment)
Accumulation (investment)
Gross stockTradit.: Capacity
Potential
An integrated system of capital flow and stock statistics
Retirements
Net stock
WealthDepreciation
Accumulation (investment)
Productive stock
+ Return to Capital
Capital services
SNA
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© Walter Radermacher, President Federal Statistical Office, Germany
Questions to the authorsNetherlands:
Delineation of knowledge capital creation by R&D and the creation of human capital and other forms of “intangibles” – conceptual level and implementation in practice?
Netherlands and Australia:
How do you see the interdependence of capital services for non-market producers and the valuation of R&D according to non-market production?Proposal for the further treatment of technical issues – a new forum, new project, new revision or what else?
Switzerland:
Reliability of the national accounts data including R&D from your first estimates for political purposes?Impact on level and growth rate of GDP?
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Statistisches Bundesamt
© Walter Radermacher, President Federal Statistical Office, Germany
Questions to the authors (2)
Eurostat:
Ideas for the work of the Eurostat Task Force on the development of satellite accounts for R&D in the light of the OECD Task Force working in parallel?
Is the quality of primary statistics on R&D appropriate? Do national R&D-figures adequately reflect the shift in economy towards globalised ways of production and towards a higher importance of service industries?
Australia:
To what extent is the concept of capital services necessary for the analysis of productivity? How far does it help to show the productivity effects of “intangibles” better than now?
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© Walter Radermacher, President Federal Statistical Office, Germany
Questions for the general discussionR&D – difficult to measure in any caseRough estimate or no estimate at all? Very rough estimates may mislead users
vs.Rejection of estimation may damage the macroeconomic quality of the accounts
Should national accounts data be based on statistically measurable variables, focused on observable market transactions rather than imputations?
Extension of the capital boundary Switching over to net domestic product for international comparisons?
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