Regional accounts give a detailed picture of a region’s economy and are a major information source for people who work in economic development and policy or who teach and study economics. The regional GDP is also the basis for the distribution of the European Union’s regional funds.
Introduction
In national accounts the economic activity can be measured in three different ways: from the production, income or expenditure sides.
If you think about national accounts as a big family where the mother bakes a strawberry cake and gives a piece to each of her five children.
If you would like to measure how much cake there is, you have three options. The first and easiest is to go to the kitchen and measure what ingredients the mother uses to bake the cake. You weigh how much flour, sugar and cream and how many eggs and strawberries she uses. This is the production approach.
A second way would be to check how much cake each family member received — the income approach. This becomes a bit more complicated than just measuring everything in the kitchen. You have to go to their rooms and see how big the pieces really were. If you are lucky, everybody will tell you precisely how much he or she received. In real life, however, there are always people who under-declare their income...
The third way is to try and measure how much they ate — the expenditure approach. In principle you ask each one how much they ate. However, maybe they do not remember exactly how much they ate. Maybe they saved some cake to eat later. Or maybe they traded cakes with the neighbour’s kids, who received a freshly baked apple pie, but prefer strawberry cake. Clearly measuring the level of expenditure is the trickiest option at a regional level.
In national accounts the production, income and expenditure approaches are used and checked against each other. However, in regional accounts most EU countries use the production approach and to some extent the income approach to measure the total value of all goods and services produced in the regions. This is because all data are not always available at a regional level. One obvious example is how to measure imports from and exports to a region. Another is the flow of income between regions, as commuting can make a big difference to received and paid compensation of employees in a region.
In theory the regional accounts should add up to the national figures. However, for many countries this is not always the case. Therefore, the regional figures are grossed up or down to the national level. If the regional figures are 97 % of the national ones, all regional figures are adjusted with the same amount to match the national one at the end.
Regional GDP
The output of regional accounts is first and foremost regional gross domestic product (GDP). However, the accounts include other types of data.
At the European level, the regional GDP per inhabitant is the indicator which determines which regions are supported through grants from the EU budget. In principle those regions which have a GDP per head less than 75 % of the EU average receive funding.
At the moment, the European system of accounts (ESA) 1995 requires regional accounts data to be published only in current prices. However, many users would like to have regional GDP also in volume, which excludes the effect of inflation.
The advantage with data published in constant prices is that also the GDP growth in different regions over the years can be seen
Timeliness
The regional accounts figures are transmitted with a delay of 24 months at a European level and published after 26 months. The delay is caused by the fact that regional accountants have to wait for other statistics which they use as sources and the final national accounts figures, before they can release their own final figures.
In most Member States the backbone of regional GVA compilation is the structural business survey, which has a delay of 18 months. This means that in June 2008 the countries report data for 2006.
Further Eurostat information
Publications
- Convergence and disparities in regional Gross Domestic Product - Statistics in focus 46/2011