Expert Group Meeting Handbook on SUT (ACS/UNECA) Addis Ababa Oct. 24-28, 2011

1. Expert Group MeetingHandbook on SUT (ACS/UNECA)Addis Ababa Oct. 24-28, 2011 Discussion: Chapter 7 – Balancing supply and uses Oct. 26, 2011 Simon Mevel / RITD / UNECA

2. Chapter 7 – Balancing supply and uses Objective: Presenting main methodologies to balance supply and use table: 1) Manual balancing 2) Automatic balancing Interests – at least double: - Calculating and checking national account data - Serving as a database from which data for calibrating economic models can be derived

3. Chapter 7 – Balancing supply and uses How practical is the Chapter? The Chapter is: - Concise - Clear - Well illustrated with specific examples Could be improved: A general outline of main steps to be followed for manual balancing would be helpful – if given before examples – such as: 1) Large inconsistencies require more attention 2) Checking carefully data sources 3) Discussing data with experts from concerned area

4. Chapter 7 – Balancing supply and uses How applicable is the Chapter to countries in Africa? Africa faces important challenges in terms of data: - Lack of data - Poor quality of available data Consequences in terms of SUT balancing: - Balancing is most of the time required - Manual balancing As discrepancies between supply and uses are often very large - Time consuming - Balancing methodologies could be ineffective If differences between supply and uses are too large

5. Chapter 7 – Balancing supply and uses How applicable is the Chapter to countries in Africa? Need extra efforts to address challenges faced by African countries: - In terms of data collection & data treatment for the various component of the SUT - Capacity building Handbook on SUT goes in the right direction to enhance knowledge on the topic

6. Chapter 7 – Balancing supply and uses What is your view on the good practical examples and/or cases in the Chapter? 3 examples provided in the Chapter: - 2 very explicit examples for manual balancing (Commodity garments & advertising services): Suggestion (manual balancing): - Chronology in justifying satisfactory vs. unsatisfactory data could be slightly re-organized: Assumptions on uses first, then assumptions on supply

7. Chapter 7 – Balancing supply and uses What is your view on the good practical examples and/or cases in the Chapter? - 1 very instructive example for automatic balancing (Showing different iterations necessary to converge to an acceptable solution): Suggestions (automatic balancing): 1) Detailed explanation given for row adjustments (or horizontal distribution; “The first row (Crops) was multiplied by 70/65”…) but similar precise indications would bring clarity for the column adjustments (or vertical distribution; such as: “The first column (Agriculture) was multiplied by 80/78.4”…).

8. Chapter 7 – Balancing supply and uses What is your view on the good practical examples and/or cases in the Chapter? Suggestions (automatic balancing) - continued: 2) RAS method is not the only one: - Brief comparison with other automatic balancing methods could be added - The Stone et al. algorithm (based on least- squares principle) can deal with situations where row totals and column totals are not know; while RAS method cannot be applied in that case

9. Chapter 7 – Balancing supply and uses A Wish: - Reliable SUT could be build for all African economies: One consequence: - Enriching GTAP database used as Social Accounting Matrix to calibrate CGE models and conduct policy analysis with a greater focus on African economies

10. Chapter 7 – Balancing supply and uses Thank you !