National accounting in underdeveloped countries with special reference to Thailand
Creators: name: Panitpakdi, Prot
Publisher: name: The Australian National University
Year: 1966
Subjects: subject: Income
subject: Income Thailand
subject: Developing countries

description: Prom the "beginning in the welfare use of national income estimates, national income and expenditure accounts have increasingly come to "be used as an aid to the study of past performance of the economy, short-term economic analysis and forecasting, and long-term economic planning and policy formulation. The introduction into underdeveloped countries of simple national income estimation or more complicated national accounting technique has met with a number of conceptual and statistical difficulties. The first conceptual problem is concerned with the meaningfulness of the national income concept in primitive areas where the mobility of conmodities and factors of production is limited, resulting in an imperfect national price system. It can be argued, however, that this imperfection is a matter of degree and does not in most underdeveloped countries invalidate the task of estimating national income. The next problem is that of subsistence production and its valuation. This raises two further questions. The first is where to draw the boundary of production. For a number of reasons, it seems desirable to exclude rural, as well as urban, household services. The treatment of the rest of subsistence output will in practice be dictated mainly "by the availability of data. The question of imputation is a complex one and involves such problems as the propriety of using any market price at all for valuing nonmarketed output, and the choice of the appropriate market price to use. It has also been contended that Keynesian conceptual distinctions between production, consumption, saving, and investment do not apply to non-specialised agricultural economies. The main answer to this argument is that the validity of conventional concepts depends largely on the extent and effectiveness of the linkage between the monetary sector and the (partly) subsistence sector in each underdeveloped economy. Statistical problems of national accounting in underdeveloped countries centre on the scarcity of reliable basic data and the shortage of skilled statisticians and national accountants. Some difficulties in obtaining reliable data seem also to be inherent in the nature of underdevelopment itself. The spread of national accounting practice in underdeveloped areas is due mainly to the efforts of U.N. and a few other international agencies. The usefulness of national accounts in these areas is impaired by the imperfection of estimates available. It has been argued also that an aggregative analysis, as opposed to a commodity or sectoral analysis, is not suitable to the need of an underdeveloped primary producing economy. The validity of this argument may he admitted with the qualification that an integrated national accounts system is always worth aiming at, if only to provide a useful general background for economic analysis and forecasting. Further, some form of disaggregation of the system seems to he required for purposes of hoth short and long-term planning. The cost of a national accounts project depends on how much is to he done, which in turn depends on the availability of data and the need for national accounts statistics in the country concerned. In Thailand, the place of the National Income Office in the government hierarchy is such that its successful operation is dependent upon its ability to maintain a close working relationship, not only among its own three divisions, hut also with other government departments, particular the National Statistical Office. The work of NIO is at present concentrated on the estimation, in some details, of gross domestic product, private and government consumption expenditure, and gross domestic capital formation. No attempt has been made to prepare an integrated national accounts system on a regular basis although available data seem to be sufficient for the purpose. A detailed examination of the present sources of data and methods of national accounts estimation in Thailand reveals a serious weakness in statistics concerning the manufacturing, wholesale and retail trade, and services sectors. A few other industries e. g. construction, private transport, and fishery also need more reliable benchmark data. Evidences indicate that the official estimate of gross domestic fixed capital formation is probably overvalued and that of gross domestic product is undervalued, resulting in a high investment ratio. It is also likely that private consumption expenditure is underestimated. NIO has regularly accompanied its publication of national accounts estimates by an analysis of past performance of the economy. Projections of gross domestic product and capital formation are also made by the National Economic Development Board as part of the six-year economic development plan. Owing to the fragmentary nature of estimates available, however, these analyses and projections cannot give an integrated picture of the structure of the economy and its operations. It is considered that at least for two main reasons it is desirable for Thailand to possess a more disaggregative form of national accounts than that presented by the U.N. standard system. The first reason is the increasing importance and complexity of the secondary and tertiary Sectors which indicate the growing need, for purposes of short-term commodity analysis, for data on inter-industry and intersectoral relationship within the economy. The second is the help that a disaggregative system of accounts can give to the government's long-term development planning. A sectoral-cum-national accounts system is therefore proposed as a long-term project for Thailand, taking into account the availability of data and the need for national accounts statistics in the country. The proposed system is then illustrated with a set of figures based as far as possible on actual data. The aim of the illustration is twofold, namely to demonstrate the feasibility of the system and to indicate the extent to which it can be drawn up from data currently available. The illustration appears to confirm the feasibility of the system although limitations of data in certain fields seem to rule out any attempt, at least in the near future, to disaggregate the production sector thoroughly. An examination of recent budgets of the Thai Government and the National Statistical Office, together with the existing NSO Ten Year Statistical Improvement Programme, suggests that additional costs of statistical enquiries required to fill in the major gaps in information are well within the financial capability of the government. At some future time when more data are forthcoming to complete the full system proposed, the matrix form of presentation will be more preferable to the accounting form and will also facilitate analysis with the aid of the computer.