Innovative Frameworks for Emerging Economic Challenges

1. Innovative Frameworks for Emerging Economic Challenges Seminar on Shifting Paradigms New York, 18 February 2011 Walter Radermacher Chief Statistician of the EU

2. Innovative Frameworks for Emerging Economic Challenges Mandate of statistics – change of societies Paradigm shift? Conclusions

3. State, Citizen, Statistics • Statistical information has always (or at least since 250 years) had its particular place in the way a society has organised its regime, its state and its government • Statistics represents the knowledge that is used in the interaction between "gouvernant" and "gouverné". • The role of statistics will change with changes in the relationship between state and citizen, nowadays predominantly defined by the constitutional arrangement of institutions • New forms ("governance") or additional governmental layers (supra-national institutions) are emerging Walter Radermacher

4. Globalisation: Decoupling of systems • Lessons from financial crisis, environmental and other crises • Limitation of solution potential for governments and politics on national level • Politicians are faced with expectations from voters, consumers, employees, employers, investors, pensioners, current and future generations etc. • New is: • these groups are not any longer captured by national boundaries • the reaction time of these groups is partly very different • cause and effect of an activity or a political measure fall apart in terms of territory and time • A paradox? • Participation in political decision making can be facilitated through modern ICT and the young generation expects these opportunities to be used. • Communication or even participation cross borders is a new challenge Walter Radermacher

5. Trust, Trust, Trust • Oh, people can come up with statistics to prove anything. 14% of people know that. Homer Simpson • Do not put your faith in what statistics say until you have carefully considered what they do not say.  W. W. Watt • The most important things cannot be measured.W. E. Deming • Any observed statistical regularity will tend to collapse once pressure is placed upon it for control purposes. Charles Goodhart • Statistical information can be used for trust building. It can also be misused. Statisticians are the guardians of quality. Walter Radermacher Walter Radermacher

6. Paradigm shift? What do we „sell“? Business model of Official Statistics • Dimensions of the paradigm: • Which products? Changes in the portfolio • Which services? Answers to democratic societies • Which quality? More than sound methodology • Governance, cooperation, coordination Walter Radermacher

7. Broadening the mission of Official Statistics: from “product” to “business case” • We provide • information • service • high quality • We provide • information Walter Radermacher

8. The world in one figure? Walter Radermacher

9. The Economic System in Statistics: A “flat” projection space stocks investment depreciation flows export import time Walter Radermacher

10. The Paradigm related to Statistical Products Gross Domestic Product Prices Main line flows 1 period 1 nation outcome Net Global Income Expenditure partner elements depreciation (produced) capital BoP external trade labourdistribution consumption investments Purchasing Power Parity complementary building blocks Productivity Walter Radermacher

11. Review of the paradigm Gross Domestic Product Prices Main line outcome flows 1 period 1 nation 1 Net Global Income Expenditure partner elements depreciation (produced) capital BoP external trade labourdistribution consumption investments Purchasing Power Parity complementary building blocks Productivity Walter Radermacher

12. 1. Long-term effects / sustainability • International crises ask for more information about stocks: • Produced stocks (e.g. real estate market) • Financial assets (or liabilities), public, private • Raw materials (traded on markets) • Human, natural, social capital • Measurement problems • Stocks beyond property rights (public/common goods), e.g. knowledge, culture, nature • Valuation of stocks (non-market) • Role of Official Statistics: • Best information for choices between short- and long-term • No simulation of choices labelled as official statistics Walter Radermacher

13. Review of the paradigm Gross Domestic Product Prices Main line outcome flows 1 period 1 nation 1 2 Net Global Income Expenditure partner elements depreciation (produced) capital BoP external trade labourdistribution consumption investments Purchasing Power Parity complementary building blocks Productivity Walter Radermacher

14. 2. Cross-border flows ≠ “external trade” • Globalisation statistics: system-of-systems • Comprehensive framework of international trade, integration ofservices (incl. mode of service supply, etc.), capital flows,foreign affiliates • International Input-Output-Tables, value added chain analysis cross border energy balances, carbon footprint etc. • Measurement problems • Mirror differences • Confidentiality, mutual data access • Incoherence in cultures in statistical communities Walter Radermacher

15. Review of the paradigm Gross Domestic Product Prices 3 Main line outcome flows 1 period 1 nation 1 2 Net Global Income Expenditure partner elements depreciation (produced) capital BoP external trade labourdistribution consumption investments Purchasing Power Parity complementary building blocks Productivity Walter Radermacher

16. 3. Services, knowledge, nature as important elements of the production process • Improved quality of statistics on services (incl. output of public services) • Integration of innovation (incl. R+D, patents etc.) • Internalise external effects: natural inputs (incl. services from nature) and collateral output (emissions, waste, …) from the production process Walter Radermacher

17. Review of the paradigm Gross Domestic Product Prices 3 Main line outcome flows 1 period 1 nation 1 2 4 Net Global Income Expenditure partner elements depreciation (produced) capital BoP external trade labourdistribution consumption investments Purchasing Power Parity complementary building blocks Productivity Walter Radermacher

18. 4. Distribution, non-market production • Follow the recommendations of Stiglitz-Sen-Fitoussi Commission • Strengthen the income side of National Accounts • Measure time use and set-up corresponding satellite accounts • New indicators for well-being and poverty Walter Radermacher

19. Review of the paradigm Gross Domestic Product Prices 3 Main line outcome flows 1 period 1 nation 1 2 4 Net Global Income Expenditure partner elements depreciation (produced) capital BoP external trade labourdistribution consumption investments 5 Purchasing Power Parity complementary building blocks Productivity Walter Radermacher

20. 5. Multifactor productivity • Provide a data-warehouse for more comprehensive productivity analyses • Capital • Labour • Energy • Material • Services Walter Radermacher

21. A system-of-systems • International models: • standards, nomenclatures, handbooks ensure comparability • International tools (e.g. internat. Input-Output-Tables, Euro-Groups-Register) open appropriate analysis • International cooperation avoids unnecessary variation and redundancy of work • National models • Sub-standards adapted to the national situation and request from national users • National tools are additive • Sub-national models • Disaggregation of national results along the needs of users is feasible • Governance issues have to follow the future structure of the system(s) Walter Radermacher

22. Services provided by Official Statistical • In order to allow a great variety of user groups around the globe the highest degree of participation in decision making process (political, economic, financial) • meta-data • accessibility of data • comparability (international standards) play an extremely important role • Open spaces, open solutions • Micro-data access for research Walter Radermacher

23. Quality: statistics useable as (the) global language • Quality-assurance (incl. the assurance of fundamental principles) • Quality labelling • Official statistics • Official statistics with quality certificate • Experimental official statistics • Education / statistical literacy Walter Radermacher

24. Main messages • No replacement of paradigm, but components of paradigm receive new „weights“ • Integration of long-term impacts from short-term activities • System-of systems-approach • GDP&Beyond / Stiglitz-Sen-Fitoussi-recommendations • Services around statistical products allow access from „all sides“ • The role of official statistics as the central provider for decision making is reinforced with a strong quality concept Walter Radermacher