The national product is the result of the functioning of the country’s economy, the activities of its economic entities. The process of creation and movement of the national product can be represented in the form of closed flows of goods, services and money moving between economic entities, within a single national economic cycle, given in the second chapter (see Fig. 2.1.). Analysis of the movement of these counter flows shows that the flow of money includes two streams – income and expenditure, each of which is equal to the total value of goods and services produced in society. Therefore, by measuring the flow of cash income or expenditures , it is possible to determine the value of goods and services produced in the country, i.e. to calculate the national product.
Thus, the national product in natural-material form is the totality of all goods and services created in a given country for a certain period of time (usually for a year), and in monetary form – the total value of these goods and services. It is the most important indicator of the state of the country’s economy, reflecting its economic potential, the standard of living of the population, the effectiveness of methods of economic and social policy.
The national product is measured using statistical indicators that provide information on the volumes, structure, dynamics and trends in the development of the country’s economy. The first attempts to measure the national product were made a long time ago. These include the economic tables of F. Quesnay and his followers – physiocrats. In the classical school, and later in Marxist political economy, mathematical models and schemes were used for this purpose. They mainly reflected the processes and proportions of distribution and redistribution of the national product and national income from the point of view of the theory of reproduction. With the development of Keynesianism, which was based on a comprehensive, macroeconomic analysis of the economy, a system of quantitative estimates of the volume of the national product developed.
Currently, there are various methods for determining the volume of the national product. In the USSR, this indicator was calculated on the basis of the balance of the national economy, based on the labor theory of value and the idea of material production as the only source of national income. The balance sheet did not properly reflect and in fact did not take into account entire blocks of the national economy: the service sector; state finances, monetary system. In addition, this method of calculating the national product was significantly different from the international one. A similar approach to determining the volume of the national product was also characteristic of other countries with a planned-regulated economy, using the Marxist theory of reproduction and the theory of labor value. Therefore, the national product in these countries was calculated as the sum of goods and services produced only in the branches of material production.
In most developed and developing countries, a national product is the sum of goods and services produced in all sectors of the economy. It is calculated from the System of National Accounts (SNA), which represents the interlinkages of economic development indicators at the macro level. The SNA is a way of ordering the collection, description and linking by statistics of information on economic transactions performed by economic entities in the process of social reproduction.
The main purpose of using the SNA is to describe macroeconomic indicators characterizing the results and proportions of a country’s economic development in order to provide a comprehensive analysis of the process of creating a national product and national income. The system of national accounts originated in the 30s of the twentieth century and was formed by the age of 49-50 in the most developed countries and is now used in 150 countries of the world. This system is based on the teachings of the English economist J. S. Miller. M. Keynes on economic turnover. The immediate creator of the SNA is a student of Keynes, Professor of Cambridge University Richard Stone.
The reason for the emergence of the SNA was the need of governments for macroeconomic information necessary for economic analysis, the development of economic policy directions, and decision-making aimed at regulating the market economy. However, the established SNA in individual countries differed significantly from country to country, as they were formed on the basis of established national statistical ones and therefore came into conflict with objective information needs in the process of comparing the economic indicators of different countries. As a result, difficulties arose in making economic and political decisions at the international and national levels, as well as in the formation and use of the budgets of international organizations. In order to overcome the problems that have arisen, the UN Statistical Commission, having summarized the experience of the development of countries, has developed as an international standard a unified methodology for compiling the SNA. In 1993, the same commission approved a new, revised system of national accounts, which most countries of the world considered necessary to implement in the coming years.
The SNA studies and records the process of creation, distribution and redistribution of national product and national income in a country. With its help, it is possible to determine macroeconomic indicators of the state of the economy for different periods of time in order to determine the degree of achievement of the goals of the national economy on the basis of this information, to develop an economic policy, to conduct a comparative analysis of the economic potentials of different countries.
A feature of the SNA is its comprehensive nature. Firstly, it takes into account the activities of all participants in the process of production of material goods and the provision of services: government bodies, the army, persons of a free profession, hired servants, etc. Secondly, the SNA contains indicators that summarize all economic operations, stages of the production process, its assets and liabilities.
The SNA examines transactions between actors in the national economy. The economic entities (agents) of the national economy here include economic units that perform economic operations with material or financial assets. Economic agents are grouped into 6 sectors:
1) non-financial enterprises – production firms and enterprises that produce goods and provide services (except financial ones). This sector includes state-owned enterprises, private companies, cooperatives, joint-stock companies and other firms that produce products or provide services. In addition, this includes artisans, independent workers (private doctors, lawyers, etc.), entrepreneurs;
2) financial institutions and organizations – commercial banks, insurance companies, pension funds and other legal entities engaged in intermediary activities in the field of finance between savers and investors, accumulating temporarily free capital of households and legal entities and providing them with loans;
3) state institutions providing services that are not the object of purchase and sale:
public administration bodies (parliament, government, courts, ministries, departments); state financial and credit organizations (national bank, state financial companies, tax inspectorates, etc.); other government agencies;
4) private non-profit organizations serving households. The main feature of such organizations is that their activities are not funded or controlled by the state. These include various public foundations, parties, trade unions, associations, religious organizations;
5) households. This group includes households themselves and persons performing economic operations to ensure their livelihoods (soldiers, prisoners, etc.);
6) abroad (the rest of the world) – all economic agents abroad that carry out operations with entities within the country.
When analysing sectors, it is necessary to point out the special nature of the relationship between them through economic transactions. An operation in the SNA is an economic action by mutual agreement between institutional units (entities) for the purpose of creating, transferring, exchanging, transforming or eliminating economic value. A distinction is made between operations between institutional units and operations within institutional units. The latter include the construction of a residential building, the production of a car, the baking of bread, the issuance of a loan by the bank.
According to the nature of implementation, economic transactions are divided into:
a) operations carried out on a compensatory basis, i.e. when the flow of goods and services has a counter to it – monetary;
b) transfers that have a one-way orientation. Examples are taxes, fines, rent, interest, etc. If the classification of economic transactions is based on another criterion – the nature of the relationship of economic entities, then three main groups of operations can be distinguished:
with material goods and services. These operations cover the economic processes of production, distribution and exchange of material goods and services (production, import, investment, etc.). They are reflected in the accounts of production, consumption and capital formation in the form of such indicators as production, consumption, gross capital investments, etc .; on the distribution of income between sectors (wages, dividends, etc.); financial transactions (with securities, currency, changes in monetary assets and liabilities).
The modern SNA consists of three interrelated blocks. The first makes it possible to compare investments and savings, to quantify the creation, distribution and final use of national income. The second is designed to analyze the creation and distribution of the product between industries, displayed in the tables “inputs – output” by V. Leontiev. The third block is the fund flow accounts and reflects the movement of financial assets in the form of purchases and sales in the money market.
It should be noted that the SNA is based on the principles of equilibrium theory and balance sheets. Equilibrium theory is based on the following postulates:
the basis of life is the market economy; economic activity is carried out in conditions of perfect competition, and prices are set depending on the ratio of supply and demand; the main purpose of production is to maximize profits; the consumer’s goal is to obtain maximum utility at minimum cost; macroeconomic equilibrium is the result of the equilibrium of supply and demand in the market for goods and services.
Equilibrium theory is the basis for the construction of balances, since it allows us to consider any economic phenomenon as a state of interrelated quantities, a qualitative expression of the relations between the hundreds of any activity that should balance each other. The very concept of a balance sheet is a form of reporting that reflects in monetary form the availability, placement and sources of funds of an economic entity. The balance sheet is drawn up in the form of a two-way table, where the left part – the asset – indicates the composition and placement of funds; and the right – a liability – shows the sources of their formation and purpose. The results of an asset and a liability are always equal. This is ensured by means of a double entry, i.e. each economic transaction is carried out through an asset and a liability. Consequently, the SNA is the “accounting of the country”, since it uses balance sheets, double entry, correspondence of accounts, and it is based on a model of national economic turnover, which allows you to analyze the flows of income and expenses carried out between agents of the national economy.
Thus, it is possible to give a generalized definition of the SNA as a statistical model of a market economy that reflects the functioning of the national economy in the form of closed flows of goods, services and money moving between macroeconomic actors. The national accounts indicators used in most market economies are considered by international statistical organizations as standards for accounting for the volume of national product received in each country and for a comparative analysis of the dynamics of the economies of different countries.