Method of Determining Some Indicators Reflecting Economic Growth

JM Keynes' general theory in the 1930s explained the phenomenon of the world economic crisis and changed the concept of economists at that time when they used the concept of national income as the only way to evaluate a country's economy.

In the early 1950s, the need for international comparisons required the establishment of a national accounting system according to international standards. In 1953, the League of Nations (the predecessor of the United Nations) based on the report of Richard Stone - the head of the research team at Cambridge University to build the first SNA. This was the first version of the SNA, also known as SNA 1953.

After ten years of applying the 1953 SNA, the United Nations statistical agency comprehensively incorporated economic theories, revised and published the 1968 version of the SNA. This version was also revised by Richard Stone himself, the head of the Cambridge team. A very important addition of this version was to put the IO Table at the center of the system.

In the next ten years, the world economy developed rapidly, and it was necessary to continue to unify the concepts and definitions of socio-economic indicators between the United Nations Statistical Organization and other organizations such as the World Bank, IMF, European Statistical Commission (EUROSTAT), the Organization for European Cooperation and Development (OECD), the World Trade Organization (WTO), UNWTO, etc. Members of these organizations and the world's leading economic experts held a joint workshop and the SNA 1993 was born.

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The changes in both quality and quantity of all economic activities worldwide require national accounting to continue to change to suit the socio-economic development situation. The United Nations Statistics Division has conducted research, updated, supplemented and the SNA 2008 version is the most recent version that has been published and applied uniformly worldwide.

SNA is a statistical system that serves the need to comprehensively analyze all economic activities in an economy at the macro level. It is an advanced socio-economic information system applied in most countries in the world. SNA includes a system of accounts and statistical tables with closely linked relationships to describe and analyze basic economic phenomena from production, consumption to asset accumulation of the economy. SNA also reflects the process of generating income from production; distributing income among production factors; using income for final consumption and transferring income between sectors in the economy and the outside. SNA includes a set of appropriate and flexible macroeconomic accounts, built on the

internationally recognized concepts, definitions, and accounting rules.

On that basis, SNA reflects the economic structure, development trends in terms of level and efficiency of total production, reflects the relationships between sectors, important coefficients of the country's social reproduction process in each specific period such as: Between production and final consumption, production and asset accumulation, between domestic and foreign production, ...

The system of national accounts is considered the most comprehensive economic picture describing the production, distribution, exchange and use of products of a country in a certain period. Therefore, SNA is a general model of the economy applied in economic analysis, analysis of the impact of policies on production and business results, planning and economic forecasting at the macro level.

According to SNA, economic growth is the increase in quantity of indicators reflecting the results of production activities of the entire economy in a certain period, often reflected by an increase in GDP. The thesis applies the theory of economic growth according to the SNA methodology to serve statistical research to evaluate the overall impact of tourism activities on economic growth in Vietnam.

1.2.2. Method of determining some indicators reflecting economic growth

Currently, most countries in the world calculate and announce economic growth according to the increase in the quantity of GDP. GDP growth is expressed in relative numbers called GDP growth rate. To calculate GDP and GDP growth rate, it is necessary to determine and calculate the following indicators: GO, intermediate costs (IC), VA. In SNA, these are the basic indicators calculated for each industry and for the entire economy.

According to the method of determining some indicators reflecting economic growth of SNA2008 mentioned in the scientific research topic "Research to complete and computerize the Process of synthesizing indicators of production value and added value applied to the Central and local levels" by author Nguyen Thi Huong (2012), this subsection selects, presents the concept and method of calculating the indicators GO, IC and VA as follows:

1.2.2.1. Concept and method of calculating production value index

a. Concept

Production value is the total value of material products and services produced by

Production establishments of all economic sectors create in a certain period (quarter or year). GO is only calculated for products produced by production establishments for other units, not for products circulated internally in production stages at production establishments of the unit (except for the agricultural sector). Revenue from price differences is not included in GO, but production subsidies are included in GO. The double counting of GO depends on the level of production specialization and the level of detail of the economic sub-sector.

Production value is calculated at basic prices and producer prices (abbreviated as production prices ).

The basic price is the amount a producer receives from a buyer for selling a unit of a physical product or service produced, minus any product taxes and plus any production subsidies received by the producer. The basic price does not include transportation costs, which are invoiced separately by the producer.

The basic price does not include any taxes on the product, which the producer receives from the buyer and pays to the government. The basic price includes production subsidies (product subsidies and other production subsidies) that the producer receives from the government to lower the selling price to the buyer.

The base price measures the amount of money the producer receives, so it is the closest price relevant to the producer's decisions.

The production price is the amount received by the producer for selling a unit of the physical product or service produced minus the deductible value added tax (VAT) paid by the buyer. The production price does not include transportation costs, which the producer records separately on the invoice.

Neither the manufacturer's price nor the basic price includes VAT, or similar tax, on the goods sold.

Unlike the basic price, the producer price includes product taxes other than VAT and excludes product subsidies (subsidies received per unit of output). (The producer price is the price excluding VAT that the buyer must pay.)

The relationship between GO at producer price and at basic price is expressed by the following formula :

GO at production cost

GO by price

= +

basic

Product tax

(excluding VAT)

Product allowance

The GO calculation method is built in accordance with the economic characteristics, production techniques and production activities of each economic sector. Below is the GO calculation method based on basic prices that is mainly applied in most countries in the world.

b. Calculation method

The method of calculating GO at basic prices is suitable for the main industry groups in the economy including:

b1. Calculate directly from product output

The GO of the agricultural and mining industries is calculated directly from product output as follows:

In there:

- GO: Is production value

- Q i : Is the output of product i

- P i: Is the average unit production price of product i (here, the unit price does not include product tax but includes production subsidy)

- n: Is the number of products

- i: Is the i-th product

b2. Calculated from sales revenue

Industries that easily collect information on sales revenue include processing and manufacturing industries and service industries (except wholesale and retail; banking and insurance activities; real estate business activities). GO is calculated from revenue as follows:

GO at base price

Net revenue

= sales and supply

service level

Subsidy

+ production

(if any)

End-of-period minus beginning-of-period difference

+ finished goods inventory, goods on consignment, unfinished products

Here net sales and service revenue does not include product tax.

b3. Method of calculating from sales

This calculation applies to wholesale and retail; real estate business activities.

movables.

GO base price =

Sales revenue

Cost of goods sold

transfer sale

Production allowance

Product (if any)

Here sales revenue does not include product tax.

b4. Method of calculating from production cost factors

GO at base price

Total cost

manufacture

Operating profit

business

This is a calculation method that applies to most industries. However, to apply this calculation method, it is necessary to have information about the costs of production and business activities and profits.

b5. Separate calculation method for specific production and business activities: activities

banking and insurance

+ For banking activities

GO at base price

In there:

GO underground service translation

GO translate

= +

undercover

Ownership income

= -

receivable

GO straight service

Total interest payable

The value of productionO straight service equals the straight service fee.

+ For insurance activities

GO basic price

Fee

insurance

Compensation

+ -

insurance

Attend

room fee

Income

invest

1.2.2.2. Concept and method of calculating added value index

a. Concept

Value added (VA) is the new value of goods and services created from the production process in an economic sector.

b. Calculation method

General formula for calculating VA according to production method:

VA = GO – IC

Intermediate costs (IC) are a component of GO, including all costs of material products and services for production that are accounted for in product cost. IC must be the result of production produced by industries or imported from abroad. IC is always calculated at the usage price, meaning it includes transportation costs and other types of costs.

Other costs paid by the manufacturing unit to bring raw materials, fuels, etc. into production. IC includes material costs and service costs:

- Material costs include: Main and auxiliary raw materials; fuel, gas; costs of small production tools, cheap and perishable materials; costs of other material products.

- Service costs include: Transportation; post; insurance; banking services; legal services; advertising services; other service costs.

In theory, the IC index is calculated by summing all the input costs for the above production. However, in practice, this index is usually estimated by multiplying (x) GO by the IC coefficient compared to GO of the survey year.

IC is always charged at usage price.

GO is calculated at basic price or production price. The price at which GO is calculated is the price at which VA is calculated.

Value added at basic prices is calculated as GO at basic prices minus (-) intermediate consumption at user prices.

VA at basic prices, including: All types of subsidies (product subsidies and other production subsidies) but excluding all types of product taxes.

The components of VA at basic price include:

(1) Employees' income includes salaries, wages (including in-kind payments); social insurance, health insurance, union fees and other support expenses for employees included in production costs (excluding amounts from funds set aside after the unit's production results).

(2) Other production taxes are taxes levied on the production process of production and business units . Other production taxes include: Business license tax, environmental tax, resource tax, etc. and fees considered as taxes (registration fees, fees related to production and business, etc.).

(3) Fixed asset depreciation is the amount of fixed asset depreciation (TSCD)

at the unit allocated to production and business costs.

(4) Surplus Value or Mixed Income

(4.1) Surplus value includes net income from business activities, interest paid on bank loans, and property insurance expenses.

(4.2) Mixed income only appears in the case of individual business households.

because in practice it is difficult to separate the wages and salaries of the household head and the household workers from the surplus value.

VA is also calculated using the income method by directly adding the above components.

1.2.2.3. Concept and method of calculating gross domestic product index

a. Concept

Gross domestic product (GDP) is a synthetic economic indicator reflecting the new value of goods and services created by the entire economy in a certain period of time (month, quarter, 6 months, 9 months, year).

GDP is always measured at consumer prices.

b. Calculation method

GDP is calculated using three methods: the production method, the income method, and the expenditure method.

According to the production method , GDP is calculated from the sum of VA at basic prices of all economic sectors as follows:

GDP =

Total VA according to

base price +

All types

product tax

All types of product subsidies

Here product taxes and product subsidies include both import duties and import subsidies.

According to the income method : GDP is equal to the total income generated from factors participating in the production process such as: Labor, capital, land, machinery. According to this method, GDP includes 4 factors: Income of workers from production (in cash and in kind), production tax (after deducting product subsidies), depreciation of fixed assets used in production and production surplus or mixed income. The formula for calculating GDP is as follows:

GDP =

Workers' income

verb +

manufacture

Production tax

(minus product allowance)

Fixed Asset Depreciation

used in production

Surplus or

income

mixed

According to the method used : GDP is the sum of 3 factors: Final consumption of households and the state; accumulation of assets (fixed, current and rare) and the difference between export and import of goods and services. The formula for calculating GDP is as follows:

GDP =

Consumption

Final

Accumulate assets

Import-export difference

export of goods and services

1.2.2.4. Concept and method of calculating growth rate of gross domestic product

a. Concept

GDP growth rate is the percentage increase in GDP in the following period compared to the previous period. GDP growth rate is usually calculated from GDP at comparable prices (base year prices) of the reporting year compared to the year before the reporting year.

Nowadays, when referring to economic growth rate, it is often associated with GDP growth rate and some related synthetic economic indicators.

b. Calculation method

- The GDP growth rate of the reporting year compared to the previous year is calculated at comparable prices (base year prices) according to the following formula:

In there:

dGDP =

GDP n GDP n-1

x 100 - 100

d GDP - GDP growth rate of the reporting year compared to the year before the reporting year (%) GDP n - Gross domestic product of the reporting year at comparable prices;

GDP n-1 - Gross domestic product of the year prior to the reporting year at constant prices;

GDP n

GDP 0

- Calculate the average GDP growth rate over time (many years). Formula for calculating the average GDP growth rate over time:

In there:

dGDP (

 1) x 100

d GDP - Average GDP growth rate over the period from the base year to year n;

GDP n - Gross domestic product at constant prices of the last year (year n) of