Main aggregates like gross domestic product (GDP), household consumption expenditure, general government deficit, etc., are compiled using a unified and internationally comparable framework: the system of national accounts.
National accounts play a key role in understanding the workings of the economy by providing information on the economic interactions taking place between different sectors of the economy (households, corporations, government, non-profit institutions and the rest of the world) allowing for macroeconomic analysis and evidence based decision making. To maintain relevance in describing how countries economy's function, the national accounts needs to evolve and adapt to the changes in the economy. One prominent example is the need to better reflect the growing importance of the knowledge economy by recognising research and development as investment.
Four successive national accounts methodological revisions have taken place: 1952, 1968, 1993 and 2008.
System of National Accounts 2008 (SNA08) - Main Changes
The major methodological changes which have the most impact on the level of GDP refer to investment.
According to SNA08, expenditure on research and development and weapons systems (warships, submarines, military aircraft, tanks, etc.) are now included in gross fixed capital formation, i.e. investment. This is recognition that expenditure on these items provide long-lasting services to businesses, non-profit institutions, and the governments who use them. This increases the level of GDP across time, but the impact on GDP growth rates will generally be minor (as can be seen in countries who have already implemented SNA08).
Moreover, in situations like this when a major methodological change is proposed and agreed to at the international level, countries tend to take advantage of the unique situation and make changes to improve all their compilation methods - therefore increasing the general level of revision. It is important to underline that the impact of compilation improvements could be higher than the impact of the SNA08 implementation. For example, the Netherlands increased their level of GDP by 7.6 % for 2010, but only 3 percentage points are related to SNA08 implementation.
Who and when?
Australia implemented the SNA08 in 2009, Canada in 2010, Israel, Mexico and the United States in 2013.
In 2014, all European Union member states as well as Korea, Iceland, Norway, Switzerland and New Zealand will implement the SNA08.
Therefore by the end of 2014, all OECD countries except Chile, Japan and Turkey, will be publishing GDP estimates according to the SNA08.
Turkey plans to implement SNA08 by the end of 2015, whereas Chile and Japan will adopt the new standards in 2016.