GDP and INFORMAL
SECTOR in Mongolia
DEMBEREL Ayush
Director, Statistical Research
Department
LKHAGVAJARGAL Baasantseren
Senior Officer, Macro Economic
Statistics Department
National Statistical Office,
Mongolia
Contents
1.
Gross Domestic Product
1.
2.
2.
Informal Sector
1.
2.
3.
Scope and Coverage
Data and Indicators
Scope and Coverage
Conducted surveys
Some issues/concerns
Gross Domestic Products
What is the GDP?
1.
2.
3.
GDP (production) is the market value of all final
goods and services produced within a country during
a given time period.
GDP (income) is sum of compensation of employees,
consumption of fixed capital, net taxes on product
and net operating surplus or mixed income.
GDP (expenditure) approach is the value of final
consumption expenditure, gross capital formation
and net exports of goods and services.
Gross Domestic Products
GDP approaches
Total Output
Intermediate
Consumption
GDP (value added + net tax)
GDP, production approach
Wage
Profit
Net tax
Capital
consumption
GDP, income approach
Consumption
Capital consumption
Statistical changes
Net Export
GDP, expenditure approach
Gross Domestic Products

Production approach:

GDP, by sectors, yearly, current and constant
2005 prices
 GDP, by sectors, quarterly, constant 2005 price
 GDP, by aimags and sectors, current price
 GDP, by type of owner and sectors, current price
Expenditure approach: GDP, yearly, current price
Income approach: GDP, yearly, current price

WB Atlas approach, GDP per capita, US dollar


Gross Domestic Products
Classifications and frame

Classifications





International Standard Industrial Classification
(ISIC)
Classification of Individual Consumption of
Purpose (COICOP)
Classification of Function of Government
(COFOG)
Harmonized systems (HS)
Business Register
Gross Domestic Products

Methods of data collection:
 Census (Livestock)
 Fully Covered Survey for large and medium sized
enterprises (Industry, construction, transportation
and communication etc)
 Sample survey (industry, whole and retail trade and
restaurant etc)

Data sources:
 Annual balance sheet of enterprises
 Result of sample survey
 Administrative statistical information
Gross Domestic Products
GDP estimation
Year
Quarter
Production approach: GDP,
current and constant 2005
prices
1990-2008
2000-2008
Expenditure approach: GDP,
current price
1995-2008
-
Income approach: GDP, current
price
1990-2008
-
Aimag GDP, current price
2000-2008
-
GDP per capita (WB approach)
1991-2008
-
Gross Domestic Products
GDP growth rate, by percentage
12.0%
10.0%
8.0%
6.0%
4.0%
2.0%
0.0%
2001
2002
* Preliminary estimates
2003
2004
2005
2006
2007
2008*
Gross Domestic Products
Growth rate of QGDP, percent
%
20.0
15.0
15.0
10.0
10.0
8.9
4.3
5.0
0.0
2008 I
-5.0
-10.0
2008 II
2008 III
2008 IV
2009 I
-4.2
Gross Domestic Products
Composition of GDP by expenditure approach
100%
6.4
1.4
34.5
38.5
59.1
60.1
72.6
2007
-16.2
2008**
Final consumption
90%
80%
70%
43.6
60%
50%
40%
30%
20%
10%
0%
-10%
-20%
2006
Net export
Gross capital formation
Gross Domestic Products
40.0
Percentage share of major divisions to GDP
%
29.5
30.0
28.2
20.5
18.8
20.0
10.0
14.6
13.6
10.4
10.0
6.1
6.1
2007
2008 *
0.0
Agriculture, hunting & forestry
Mining & quarrying
Manufacturing
Wholesale & retail trade, repair of motor vehicle, motorcycle & personal & household goods
Transport, storage & communication
INFORMAL SECTOR
Total economy
Official economy
Shadow economy
Non market and Statistical
Non-observed economy
Definitions for Non-observed economy:
“Activities which should be included in GDP but are not
covered in statistical surveys or administrative records used
in National Account compilation”
Non-observed economy handbook of OECD (2002)
INFORMAL SECTOR
Shadow economy is called as follows:
– Shadow economy
– Non observed economy
– Hidden economy
– Irregular economy
– Unofficial economy
– Parallel economy
INFORMAL SECTOR
Non-observed economy consists of 5 subgroups1:





1
Underground
Illegal
Informal
Do-It-Yourself
Statistical
Shadow Economy
– OECD (2002), Measuring the Non-Observed Economy, a hand book
INFORMAL SECTOR
5(1) of the 15th ICLS Resolution
“The informal sector may be broadly characterized as consisting of
units engaged in the production of goods or services with the
primary objective of generating employment and incomes to the
persons concerned. These units typically operate at a low level of
organization, with little or no division between labor and capital
as factors of production and on a small scale. Labor relations –
where they exist – are based mostly on casual employment, kinship
or personal and social relations rather than contractual
arrangements with formal guarantees.”
INFORMAL SECTOR
The Methods of Estimating the Size of the Shadow Economy
Direct
1. Sample survey
2. Other source (tax auditing…)
Indirect
1. SNA approaches (Discrepancy between expenditure and
income measurements of GDP and IOT )
2. Labour method
INFORMAL SECTOR
3. Monetary method
a. Transaction method
b. Currency method
4. Physical input method
a. Kaufman-Kaliberda method
b. Lacko method
5. MIMIC method
Conducted Surveys in Mongolia
INFORMAL SECTOR
Conductor
1 James H. Anderson
Year
Results, %
of GDP
Survey
units
1997
5%
770 units
2
Bill Bikales,
Chimed Khurelbaatar
1999
13 %
4042 units
3
NSO of Mongolia
2003-2004
10.5 %
1000 units
4
Establishment census
2006
8%
-
5
Informal Sector and
Informal Employment
2007-2008
-
1558
households
2. The Mongolian Informal
Sector 1999, Bill Bikales
INFORMAL SECTOR



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

Period: 1999
Sample technique: three-stage stratified cluster
Variables: average revenue per month, purchases of goods
for resale per week, various purchased services and
employment
Survey frame: “economic units under single ownership
engaged in one kind of economic activity at a fixed place of
business” – a total of 25282 units, and for taxi service (16320
vehicles)
Sample size: 6 regions for 17 activities, 4042 economic
entities or 9.7 percent of the population of 41602
Survey result: total value added of 117,255.3 mln.tog and
total employment 60283 workers.
3. “Informal Sector Survey,
2003”, NSO
INFORMAL SECTOR


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
Period: 2003-2004
Sample technique: sample survey by region
Variables: revenue, operating expenses and number of
employees
Survey frame: for trade sector: “patent” business – a total of
29296 units; for transportation: procedure similar to to 1999
survey, and number of vehicles for taxi service (28000
vehicles)
Sample size: all regions, for trade 700 units (of 21496), for
transportation 300 units of the population of 28000
INFORMAL SECTOR
4. “Enterprise Census,
2006”, NSO





Period: 2006
Sample technique: census
Variables: gross income, number of employed workers
Survey frame: unincorporated businesses “with
indeterminate income” under the taxation legislation
(patents)
Survey result: according to the result of this census VA of
informal sector was about 8 percent of GDP.
5. Informal Sector and Informal
Employment
INFORMAL SECTOR



With the support of UNESCAP, Informal employment
data is collected, using and informal employment
module in Labor Force Survey in two phases:
- In phase 1: Informal employment data is collected,
using Labor Force Survey.
- In phase 2: Informal sector enterprise data is
collected .
Out of 7008 households selected in the Labour Force
Survey, 1558 households that met criteria has used for
HUEM Survey.
Survey period: Data covers the period from July 2007
INFORMAL SECTOR


Before 2006 we estimated VA of informal sector only in retail
trade, restaurants (cafeteria) and transport sectors. For
estimation of informal sector we used result of “Informal
sector survey” which conducted on 1998/1999. Survey result
shows output and intermediate consumption of unincorporated
enterprises.
In 2006, NSO provide “Enterprises census” which also collect
data on unincorporated enterprices.
INFORMAL SECTOR




In 2007, the share of informal sector to the GDP was
about 7.5 percent.
NSO is not finish yet the compiling of GDP for 2008.
In Mongolia indirect methods are used for
– Time series data
– Compare with other countries’ informal economy
– Compare with other indirect methods’ results
Two reports are published about indirect methods of NOE
(informal economy)
SOME ISSUES/CONCERNS

In the future, it is possible to conduct this survey as a module
of LFS in every 3 years, estimations can be made based on
LFS survey results. In order to conduct the survey, a
financial assistance from international organization will be
needed.

Apply the estimation of informal sector by some model
approaches (MIMIC method)
Thank you for your
attention
Web page : www.nso.mn
E-Mail : nso@magicnet.mn