The 2007 Revision of ISIC and The 2007 Revision of ISIC and CPCCPC

A Concepts PaperA Concepts Paper

Jürgen SchwärzlerJürgen Schwärzler,,UN Statistics Division, Classifications SectionUN Statistics Division, Classifications Section

OverviewOverview• ISICISIC

• Purpose and criteriaPurpose and criteria• Statistical unitsStatistical units• Classification PrinciplesClassification Principles• Principle of grouping and Production Process PrinciplePrinciple of grouping and Production Process Principle• Activity-Product linkActivity-Product link• Hierarchical structure and country adaptationHierarchical structure and country adaptation

• CPCCPC• Purpose, scope and coveragePurpose, scope and coverage• Aggregation structure; links to other classificationsAggregation structure; links to other classifications

About the Revision ProcessAbout the Revision Process• Revision process initiated at the 30. session of the Revision process initiated at the 30. session of the

Statistical CommissionStatistical Commission• 5 year update cycle5 year update cycle, 10 year major revisions, 10 year major revisions

• Purpose:Purpose: • Adapt to economic/technological Adapt to economic/technological changeschanges• Data demandData demand• ComparabilityComparability and convergence of and convergence of

classifications systemsclassifications systems• Serve national and Serve national and international needsinternational needs• Allow Allow calculabilitycalculability of revisions of revisions

Revision scheduleRevision schedule• 20022002

• Statistical CommissionStatistical Commission endorsed ISIC 3.1 and CPC 1.1 endorsed ISIC 3.1 and CPC 1.1• Questionnaire: focus on ISIC principlesQuestionnaire: focus on ISIC principles• Workshop ASEANWorkshop ASEAN

• 20032003• Presented Concepts Paper to the Presented Concepts Paper to the Statistical CommissionStatistical Commission• Questionnaire: focus on top-structure of ISICQuestionnaire: focus on top-structure of ISIC• Workshops: ECLAC, ESCAP, ASEAN, AfristatWorkshops: ECLAC, ESCAP, ASEAN, Afristat

• 20042004• First draft of CPC (wait for input from IMF); elaborate detail of ISICFirst draft of CPC (wait for input from IMF); elaborate detail of ISIC• Country consultations? Workshops?Country consultations? Workshops?• Prepare final draft of ISIC, CPC for EG in 2004, SC in 2005Prepare final draft of ISIC, CPC for EG in 2004, SC in 2005

• 20052005 • Preparation for publication; available by 2006Preparation for publication; available by 2006

• 20072007 • ISIC and CPC will come into effectISIC and CPC will come into effect

Driving factorsDriving factors

• RelevanceRelevance – why is the change justified? – why is the change justified?• ComparabilityComparability – how does it affect the – how does it affect the

comparison with other Classifications?comparison with other Classifications?• ContinuityContinuity – how does it affect time series? – how does it affect time series?

methodologically sound classification, that methodologically sound classification, that unifies different national classifications, unifies different national classifications, without unnecessary changeswithout unnecessary changes

ISIC Scope and PurposeISIC Scope and Purpose• ““economic activities” = production of goods economic activities” = production of goods

and services of the CPC within the SNA and services of the CPC within the SNA boundaryboundary

• + services through licensing of intangible + services through licensing of intangible non-produced assets (e.g. patents, franchise, non-produced assets (e.g. patents, franchise, trademarks)trademarks)

• + household production for own use + household production for own use

• ? ? rental/leasing of household propertyrental/leasing of household property

• ? ? trust fundstrust funds

ISIC Scope and PurposeISIC Scope and Purpose

• i.e. all i.e. all economic economic functionsfunctions, whether they , whether they produce goods and services (SNA: produce goods and services (SNA: transactions) or nottransactions) or not• Transactions in goods and servicesTransactions in goods and services• Financial transactionsFinancial transactions• Distributive transactionsDistributive transactions

Statistical UnitsStatistical Units

• EnterprisesEnterprises• EstablishmentsEstablishments (1 location, 1 activity) (1 location, 1 activity)

• Smallest entity differs between countriesSmallest entity differs between countries• Names as well (kau, tau)Names as well (kau, tau)

• Ancillary activitiesAncillary activities as defined in the SNA, no as defined in the SNA, no changes anticipated, but dual coding changes anticipated, but dual coding recommendedrecommended

• Differences in NAICS!Differences in NAICS!

Classification PrinciplesClassification Principles

• Unit should have Unit should have 1 activity1 activity (theoretically) (theoretically)• Multiple, impartial activities:Multiple, impartial activities:

• Top-down principleTop-down principle• … … by value-addedby value-added• … … otherwise by a proxy: gross output, otherwise by a proxy: gross output,

sales, employmentsales, employment• Vertical integrationVertical integration: final product, value-: final product, value-

added?added?

Classification PrinciplesClassification Principles

Section Division Group Class Description Value-added 28 281 2812 Manuf. Containers of metal 7%

291 2915 Manuf. Lifting equipment 8% 2922 Manuf. Agricultural machinery 3% 2924 Manuf. Of machine-tools 21%

29 292

2925 Manuf. Mining machinery 8%

D

34 343 3430 Manuf. Parts for vehicles/engines 5% 511 5110 Wholesale on a fee or contract basis 7% G 51 515 5159 Wholesale of other machinery 28%

K 74 742 7421 Engineering activities/consultancy 13%

Classification PrinciplesClassification Principles

• Principles for Principles for groupinggrouping• InputInput• Process (technology)Process (technology)• Output (use)Output (use)

• NAICS uses production process principle NAICS uses production process principle (PPP), but not totally consistent(PPP), but not totally consistent

• 2002 Questionnaire: mixed approach 2002 Questionnaire: mixed approach favoredfavored

Classification PrinciplesClassification Principles

• Activity-Product link:Activity-Product link:• Exist “by nature”Exist “by nature”• Not always on a 1:1 basisNot always on a 1:1 basis• Provide that linkProvide that link• Very vague about 1:n links, quote:Very vague about 1:n links, quote:

““(…) In such cases where a 1:1 relation is not possible a more flexible (…) In such cases where a 1:1 relation is not possible a more flexible treatment should be developed.”treatment should be developed.”

Country adaptationCountry adaptation

• Recommendation should changeRecommendation should change(Currently) the Statistical Commission recommends:(Currently) the Statistical Commission recommends:

i)i) Adopting the system as a national standardAdopting the system as a national standard

ii)ii) or rearranging their national data in accordance or rearranging their national data in accordance to the system for purposes of international to the system for purposes of international comparabilitycomparability

• (In the future)(In the future) prescribe only a certain level prescribe only a certain level of detail, e.g. ISIC 3.1, two-digit levelof detail, e.g. ISIC 3.1, two-digit level

CPC – Conceptual IssuesCPC – Conceptual Issues• Purpose, scope and coveragePurpose, scope and coverage::

• Primarily designed to be used in statistical Primarily designed to be used in statistical programmes ORprogrammes OR

• Central linkCentral link to other existing product to other existing product classifications, filling gaps in uncovered areas, classifications, filling gaps in uncovered areas, etc. etc.

• Decision: What should be in the CPC?Decision: What should be in the CPC?• cover produced products + non-produced cover produced products + non-produced

assets (financial, non-financial) + by-assets (financial, non-financial) + by-products (+ used goods) – products (+ used goods) –

• (?) (?) in separate parts in separate parts • (?) (?) 1 publication1 publication

CPC - scopeCPC - scope

=CPC?

CPC – Conceptual IssuesCPC – Conceptual Issues

• Aggregation Structure - Aggregation Structure - optionsoptions::1.1. Industry of origin approachIndustry of origin approach

• (+) Increased ease of use for (+) Increased ease of use for different purposesdifferent purposes

• (+) SNA, Supply and Use tables(+) SNA, Supply and Use tables• (--) Should serve more functions that (--) Should serve more functions that

could need different aggregationcould need different aggregation• (--) Would tie CPC to ISIC(--) Would tie CPC to ISIC

CPC – Conceptual IssuesCPC – Conceptual Issues

• Aggregation Structure - Aggregation Structure - optionsoptions::

2.2. Demand-based approachDemand-based approach• Use COICOP, COPNI, COPP as Use COICOP, COPNI, COPP as

directions as well as the experience directions as well as the experience of the NAPCS development (done of the NAPCS development (done for services so far, no final results for services so far, no final results available)available)

Next steps - OptionsNext steps - Options

• Elaborate Elaborate demand baseddemand based and and industry of industry of origin basedorigin based structure simultaneously? structure simultaneously?

• With standardized aggregations for different With standardized aggregations for different purposes?purposes?

• Demand-based structure would require Demand-based structure would require more time and input from NAPCSmore time and input from NAPCS

• Eventually, 2007 could be too timelyEventually, 2007 could be too timely

QuestionnaireQuestionnaire

1.1. Value-added principle for Value-added principle for integrated integrated activitiesactivities??

2.2. Country adaptationCountry adaptation – top structure only? – top structure only?

3.3. Purpose and Purpose and scope of CPCscope of CPC??

4.4. Aggregation structure Aggregation structure of CPC – Industry of CPC – Industry of origin vs. demand based?of origin vs. demand based?

• Is aggregation structure of CPC used?Is aggregation structure of CPC used?

EndEnd

Thank you for your attention!Thank you for your attention!