Jennifer Ribarsky Head of Sectoral National Accounts Section Statistics Directorate

OECD Global Forum on Productivity

14 October 2016, London

MEASURING GDP

IN A DIGITALISED ECONOMY

Background

2

Increased prevalence of ‘new’ transformative (digital) technologies

But….

…. Declining productivity

Market capitalisation of AirBnB (£ Billions)

Trend labour productivity growth

Is it a mis-measurement problem?

Charlie Bean: “statistics have failed to keep pace with the impact of digital technology”

The internet and the productivity slump

The U.S. Underestimates Growth

Charles Hulten: Valuing the Net and the wide range of applications… is challenging…. and their omission or undervaluation surely affects GDP.”

Diane Coyle: The pace of change in OECD countries is making the existing statistical framework decreasingly appropriate for measuring the economy

Why we’re

measuring the

digital economy

in the wrong

way

Some optimists argue instead that the problem is one of measurement. Technological progress often raises productivity in ways that statistical agencies struggle to detect

• Based on an OECD working paper on Measuring GDP in a digitalised economy (N. Ahmad, P. Schreyer)

– Issues and challenges of digitalisation

• Aim: Take stock of current and best practices of OECD countries and key partners

– 29 country responses (as of 1/10/2016)

Survey of country practices

Digital intermediaries

Digital intermediaries

For C2C

Dwelling services, Business & Transport, Finance

Conclusions:

Conceptual framework sufficiently robust

Estimation methods may need to be adjusted

• A few countries capture digital rentals of dwelling services- mainly through tax records

• More countries appear to capture Business and transport services- mainly from tax records and labour force surveys

• Almost no country has estimates on financial intermediation services

Consumer durables and investment

Household durables used in production

Rise of the ‘occasionally’ self-employed:

And use of durables in production

Not a new phenomena and no impact on GDP

Although MFP will be affected

• But may be a need for more detailed guidance on delineation

• A few countries make this distinction based on car registration, surveys, private market research, assumptions

Knowledge based capital and

globalisation

‘Investment’ outside of the SNA asset boundary and cross-border flows

Many ‘intangible’ assets already in the SNA but many are not:

Human capital,

Knowledge in databases,

Organisational capital ,

Brands

And for those assets in the boundary, difficulties with cross-border transactions remain

Not a new phenomena

Considered in the 2008 SNA revision process but ruled out on practical grounds.

Guidance developed in various Task Forces but further work may be needed as the scale of the problem remains unknown

Prices and volumes

A significant challenge

Customisation

Outlet bias

Quality change

Not a new phenomena but challenges remain

Price indices for software investment

• Majority treat as change in price, price differences in distribution margins occurring from buying products provided on-line versus in a store.

• Only one country takes into account changes in quality (such as self-service checkouts at super markets) due to the increased participation of consumers in the production process.

• Some countries are currently using or exploring new data sources, such as those that can be captured via web-scraping, to help deal with rapid quality changes and the emergence of new products as a consequence of digitalization.

Prices

• For own account software, many countries use some variation of an input method or use a services producer price index (SPPI)

• For R&D, countries use an index of wage and salary earnings or in many cases taking into account all input costs (aka. Input method) • Input method does not capture quality or productivity

changes (unless an explicit adjustment is made)

Software and R&D prices

• That the conceptual framework is robust

• But measurement in some areas may require improvement and new approaches for

– The occasionally self-employed

– International transactions in IPPs

– And Prices

• Whilst also recognising that complementary statistics to bridge gaps between consumer surplus and GDP may be necessary (satellite accounts)

Conclusions:

Thank you