NATIONAL ACCOUNTING: CHARACTERISTICS, IMPORTANCE AND ANALYSIS - DUDAS - 2025

The national accounting is a record that takes on the accounts of all economic activities of a country. In this way, the entire economic flow of the country can be controlled and measured both among its internal economic actors and with external actors, giving us an image of the economy and its development over time.

This record will allow us to know various data. For example, how the income from the country itself is distributed among the different economic agents (workers, public administration, companies and owners of capital), how they use this income, what they consume, what they save or what they invest.

The results of this accounting are reflected in various synthesizing figures. The most important are the Gross and Net Domestic Product (GDP and PIN) and the Gross, Net and Available National Income (GNI, GNI and GNI).

characteristics

The main characteristics of the national accounts are the following:

It serves to know the state of the economy

Thanks to the national accounts, all the economic activity of a country is registered, in order to be able to judge it later.

It is an instrument of economic policy

These data are essential to be able to carry out economic policies that are adapted to the country's situation. If this accounting did not exist, there would be no way of knowing the state of the economy in that area, so that economic policies could not be implemented effectively.

From it, the Domestic Product and the National Income are obtained

The results of this accounting are synthesized in different ratios to measure the economy of the countries. The most important are GDP, PIN and Gross, Net and Available National Income.

Importance

National accounting is essential when measuring the economic activity of a region. As in any company, a very meticulous record must be kept of all the transactions carried out over a period of time.

In this way, the different levels of income, investment, consumption, imports and exports, savings, etc., can be measured from one period to another. Thanks to national accounting data such as the following can be known:

- The national production of a country or region.

- The spending of families, companies and the government.

- Imports and exports.

- The income of all economic agents.

Main accounts

The presentation of national accounting data may vary from country to country. However, the accounts are always grouped into these three groups: current accounts (production, income and use of income accounts), accumulation accounts (capital, financial, other changes in the volume of assets and revaluation accounts) and the accounting balances.

Current accounts

Production account

Registers the value of all national final products and the goods and services used to produce them. The book balance is the added value.

Income account

It reflects the primary and secondary income streams, both generated by production (for example, wages and salaries) and by distributive income flows (for example, the redistributive effects of government taxes and payments of certain social benefits). The countable balance is called disposable income.

Income utilization account

It shows how disposable income is consumed or saved. The balance of this account is savings.

Accumulation accounts

Capital account

Registers the result of transactions of non-financial assets and financing, in the form of savings and capital transfers. The accounting balance of this account is called a loan or a net debt, depending on whether it is positive or negative.

Financial account

Records financial instrument transactions. This mode shows the country's net loan or debt.

Account of other changes in the volume of assets

This account shows the exceptionalities that cause the volume of assets or liabilities to vary. Acquisitions of financial assets and net incurrence of liabilities are recorded in the financial accounts.

Revaluation account

It reflects the total variation in value, caused by variations in the prices of the different assets or liabilities.

Balances

A balance sheet is defined as an accounting statement, carried out at a certain point in time, of the values ​​of assets and liabilities that an economic agent has.

Assets are placed on its left side, while liabilities and net worth are placed on the right side.

Analysis

Without further analysis, all the data provided by the national accounts would be useless. To achieve a successful subsequent analysis, there are several macroeconomic aggregates that help us understand and synthesize the situation of the specific country.

Gross Domestic Product (GDP)

GDP can be obtained in two different ways. According to the first, GDP is equal to the value of production minus intermediate consumption plus taxes, less subsidies, of products not yet included in the production account.

The second way to obtain GDP would be by adding consumption, plus gross capital formation, plus exports, and minus imports.

Net Domestic Product (PIN)

While GDP is a reliable and important calculation in measuring the aggregate economy, it is not the best way to measure income. This is because it counts on consumption from production (production costs and capital stock depreciations).

By subtracting this consumption, we obtain the PIN, a more reliable magnitude when measuring total income.

Gross and Net National Income (RNB and RNN)

The Gross National Income (GNI) results from adding to the GDP the income from abroad (through wages collected, property income collected, taxes received and subsidies) and subtracting the expenses sent abroad (through wages paid, property income paid, taxes sent and grants).

As in the case of the PIN, the GNI is more accurate when measuring income if we subtract the consumption of fixed capital, which would give us the GNI.

National Available Income (RND)

The RND results from adding the current transfers received abroad to the RNN and subtracting the current transfers paid abroad.

References

1. United Nations, The System of National Accounts and National Accounts Data.
2. Australian Bureau of Statistics, Concepts, Sources and Methods, Chap. 4, "Economic concepts and the national accounts", "Production", "The production boundary"
3. Coyle, Diane. "Warfare and the Invention of GDP". The Globalist. Retrieved August 1, 2015
4. GDP (Official Exchange Rate) (PDF). World Bank.
5. National Accounts ». Central Bureau of Statistics.