Industrial Classifications in National Accounting

Abstract

In the Western world, the classification of industries in the national accounts is universally based on the United Nations International System of Industrial Classification—the I.S.I.C. This system, while ensuring international standardisation and comparability, has to be modified by any particular country to meet its own particular problems. Departures from the system are common where the unit of classification is the enterprise and even frequently where it is the establishment. What is rare is a rearrangement of industries carred out ad hoc to elucidate the particular economic problems of a country. I believe that in the case of most primary producing countries there is opportunity and need for greater initiative and flexibility on the part of national accountants in the arrangement of industries. It is characteristic of primary producing countries that the centres of production lie either in agriculture and or mining. This production is generally export oriented. There are normally industrial and distributive activities associated with the primary industries, corresponding to the backward and forward linkages. The backward linkages arise with the provision of goods and services to the primary industries, and the forward linkages with the bulk processing, beneficiation and distribution of the primary products.