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.
The Handbook has been prepared by a team of experts from the OECD, the International Labour Organisation, the International Monetary Fund, the Interstate Statistical Committee of the Commonwealth of Independent States, the Italian National Statistical Institute, Statistics Netherlands, the Russian Federation State Statistical Committee, and the University of Versailles. A working draft of the Handbook was the subject of a Non-Observed Economy Workshop organised jointly by the OECD, Eurostat and the Russian Federation State Statistical Committee in Sochi, October 2000.
Following the publication of several studies on estimates of the underground economy, the international organisations that co-signed the well known "SNA 93" drafted the following official declaration.
Notions of the Non-Observed Economy
Assessment of National Accounts
National Accounts Methods to Achieve Exhaustiveness
Assessment and Improvement of Data Collection Programme
Household Production for Own Final Use
Analytical Frameworks for the Non-Observed Economy
IMF Data Quality Assessment – Generic Framework
Incorporating feedback from the Sochi Workshop, and from Eurostat and the World Bank, an updated draft of the Handbook was prepared and widely circulated for comments in July 2001. The final draft for printing takes account of all the suggestions. It will be published in print form, jointly authored with the three other international organisations that contributed to its development. It will be made available in English, French, Russian, and (depending upon funding) in Chinese. The English printed version will be available in April, 2002.
Several documents which are forerunners to the Handbook and from which material for the Handbook has been drawn are listed below. The first of these is an OECD publication. The following four are papers that were presented at the session on Principles and Practices in the Measurement of the Unrecorded Economy organised by the OECD at the Second International Conference of Establishment Surveys, Buffalo, June, 2000.
Framework for the Measurement of Unrecorded Economic Activities in Transition Economies , OECD/GD(97)177
A Systematic Approach to the Hidden and Informal Activities , by Ronald Luttikhuizen and Brugt Kazemier, Statistics Netherlands.
The Exhaustiveness of Production Estimates: New Concepts and Methodologies , by Manlio Calzaroni, ISTAT.
Estimation of the Non-Observed Economy: the statistical practices of Russia , by Irina Masakova, State Statistical Committee, Russian Federation.
Principles and Practices in the Measurement of the Unrecorded Economy: Discussant's Remarks , by Michael Colledge, OECD