Chapter II: LITERATURE REVIEW
2.1. National Accounting in Economic Development
National accounts and cyclical indicators development for
past, present and future economic development are based mainly on the data
containing in the economic core of the 1993 SNA, which deal with analysis of
production, income, and saving. It includes aggregates SUT data and also
Integrated Economic Account (IEA) data for the mains sectors of the SNA
covering the production, income, and use of income and capital accounts.
The indicators analysis focuses, however on assessing
development in the past, and SNA model within SUT extends this analysis, by
using relation between development and corresponding data in the past as a
means of projecting the development and data to the future, in this, for
socio-economic indicators ,indicators ratios are used as basis for projecting
past development to the future.
Projection of future development
Selection and compilation of indicators measuring past trends
Macro-account design and compilation
Statistics and statistical development
Policy analysis formulation
[c] [h] [g]
[a] [c] [f]
[b] [d]
Source: UNITED NATION; 2002; Use of Macro-accounts in policy
analysis; pp 63-64
The above diagram shows how indicators and macro-accounts
could play a central role in statistical development and policy formulation
.The arrows in diagram represent the interaction between the deferent elements.
Thus, policy formulation could be based on the use of indicators measuring past
and present trends [a], and may also take into account future developments that
are based on alternative values of indicators in the future [b]. The use of
indicators in projection is reflected in direct link with the indicators
measuring past trends [c].
In order to define statistical development that would support
policy formulation, links are needed to translate policy formulation into
indicators [d], indicators into the design and compilation of macro-accounts
[e] and macro-accounts into statistical development [f]; the derivation of
values of indicators are represented by reverse links between statistics and
the compilation of Marco-accounts [g], and between the macro-accounts data and
the derivation of indicators values [h].
The diagram shows also the three uses of indicators in
Assessment [a], Compilation [g], and projection [c] interact with one
another.
2.1.1. Definition and nature of SNA information for economic
development
The SNA is a comprehensive, consistent and
flexible set of macroeconomic accounts intended to meet the needs of government
and private sectors analyst, policymakers and decision takers.
The SNA provides information not only about economic
activities, but also about the levels of an economy's productive asset and the
wealth of its inhabitants at particular point of time and also includes links
between national economy and the rest of the world.
This information is drawn in a comprehensive accounting
framework within which economic data can be compiled and presented in a format
that is designed for purposes of economic analysis .In practice the accounts
are compiled for succession of time periods, thus providing a continuing flow
of information that is indispensable for monitoring, analysis, and evaluation
of the performance of an economy over time.
National accounts are estimated by economic activities which
are classified according to the International Standard Industrial
Classification (ISIC) of all activities and this is used alongside the United
National Central Product Classification (CPC) that is linked to the Harmonized
System (HS) used for classifying international trade
All these, are adopted to Rwanda`s development level keeping
their framework as much as possible (KAREN Wilson 2004, pp 1-24).
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