The non-observed economy comprises production activities that are illegal, underground, informal, or otherwise missed by the statistical system. Unless efforts are made to deal with such activities, economic indicators are under estimated. This can be a serious issue, particularly in transition and emerging economies.

Given the miscellany of possible approaches, there is a need to identify and promote international best practice. This is the aim of the Handbook for Measurement of the Non-Observed Economy.

TABLE OF CONTENTS:

Foreword and Acknowledgements ........................................................... 3
Abbreviations and Acronyms .................................................................................. 7
Chapter 1. Introduction................................................................... 9
Chapter 2. Conceptual Framework .......................................................... 17
Chapter 3. Notions of the Non-Observed Economy ................................. 35
Chapter 4. Assessment of National Accounts............................................... 49
Chapter 5. National Accounts Methods to Achieve Exhaustiveness ............................ 67
Chapter 6. Assessment and Improvement of Data Collection Programme ................... 95
Chapter 7. Implementation Strategy ....................................................... 123
Chapter 8. Underground Production .............................................. 137
Chapter 9. Illegal Production............................................................. 149
Chapter 10. Informal Sector Production ........................................................ 159
Chapter 11. Household Production for Own Final Use........................................ 177
Chapter 12. Macro-model Methods .................................. 185

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FOREWORD AND ACKNOWLEDGEMENTS:

Complete coverage of economic production is a vital aspect of the quality of the national accounts. This exhaustiveness is hard to achieve because of the difficulties in accounting for certain types of productive activities. Activities that are missing from the basic data used to compile the national accounts because they are underground, illegal, informal, household production for own final use, or due to deficiencies in the basic data collection system are referred to as non-observed. They are said to comprise the non-observed economy (NOE), and including them in the national accounts is referred to as measurement of the NOE.

Given the wide range of possible approaches to NOE measurement, there is a need to identify and promote international best practice. This is the aim of the Handbook. It presents a systematic strategy for achieving exhaustive estimates of gross domestic product that is consistent with international standards and, in particular, with the 1993 System of National Accounts.

The Handbook was put together by a team drawn from national and international statistical organisations. The principal contributors were Adriaan Bloem, Manlio Calzaroni, Jacques Charmes, Michael Colledge (editor), Ralf Hussmanns, Youri Ivanov, Brugt Kazemier, Andrei Kosarev, Ronald Luttikhuizen, Sabina Ronconi, Manik Shrestha, Seppo Varjonen, Peter van de Ven and Denis Ward.

Derek Blades provided detailed comments on all chapters. Helpful advice and comments were also received from Misha Belkindas, Peter Harper, Anne Harrison, Ralf Hein, Victor Holovko, Olga Ivanova, Irina Masakova, Paul McCarthy, Brian Newson, Vitezslav Ondrus, Gerhard Reinecke, Silke Stapel, Alexander Surinov and Jiri Vopravil.

Particular thanks are due to the Italian National Statistical Institute (Istat), the Russian Federation State Statistical Committee, and Statistics Netherlands for their active support of this project.

Enrico Giovannini
Chief Statistician and Director of the Statistics Directorate
Organisation for Economic Co-operation and Development

Carol S. Carson
Director
Statistics Department
International Monetary Fund

Abimbola Sylvester Young
Director
Bureau of Statistics
International Labour Organisation

Mikhail Korolev
Chairman
Interstate Statistical Committee of the Commonwealth of Independent States

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ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT

Pursuant to Article 1 of the Convention signed in Paris on 14th December 1960, and which came into force on 30th September 1961, the Organisation for Economic Co-operation and Development (OECD) shall promote policies designed:

– to achieve the highest sustainable economic growth and employment and a rising standard of living in Member countries, while maintaining financial stability, and thus to contribute to the development of the world economy;

– to contribute to sound economic expansion in Member as well as non-member countries in the process of economic development; and

– to contribute to the expansion of world trade on a multilateral, non-discriminatory basis in accordance with international obligations.

The original Member countries of the OECD are Austria, Belgium, Canada, Denmark, France, Germany, Greece, Iceland, Ireland, Italy, Luxembourg, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, Turkey, the United Kingdom and the United States.

The following countries became Members subsequently through accession at the dates indicated hereafter: Japan (28th April 1964), Finland (28th January 1969), Australia (7th June 1971), New Zealand (29th May 1973), Mexico (18th May 1994), the Czech Republic (21st December 1995), Hungary (7th May 1996), Poland (22nd November 1996), Korea (12th December 1996) and the Slovak Republic (14th December 2000). The Commission of the European Communities takes part in the work of the OECD (Article 13 of the OECD Convention).

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