Other countries, especially highly industrialized ones, may choose to design an economic census to cover other sectors of the economy, such as construction, wholesale and retail trade, and services, concurrently with canvassing manufacturing, mining, electricity, and gas. There are several advantages in that approach, such as the avoidance of overlapping in the enumeration of establishments. However, the additional effort and pressure on available staff and other resources are so great that the broader approach was not adopted for Providencia; nor is the broader approach recommended for countries whose statistical systems are in the developing stage.

factor in the relative ease or difficulty with which respondents are able to provide

the required data, and (d) directly affect the speed and cost of the data collection by the statistical organization.

4.21

Establishment.--The statistical unit recommended by the United Nations for the 1973 World Programme of Industrial Statistics, and therefore the one chosen for the Providencia Industrial Census, is the establishment. The establishment is defined by the UN as the "economic unit which engages, under a single ownership or control (that is, under a single legal entity) in one or predominantly one kind of economic activity at a single physical location. Data related to the establishment are readily classified to largely homogeneous industry groups--a form in which economic data are particularly useful for analysis and can be easily aggregated to virtually any level of an area classification for the purpose of regional analysis. The establishment also affords a workable unit for examining the relationship between size and other economic characteristics.

117

The kind of statistical unit chosen for economic surveys, including benchmark censuses, is very important because that unit will (a) determine the way in which the data can be compiled and published, (b) determine the extent to which the results of one survey can be related to another survey, (c) be a major

Providencia strives for a report for each separate physical location but recognizes the reality that different activities may be carried on at the same location. Accordingly, it adopted for its manufactures census the following simplified definition of an establishment: an establishment is defined as a single physical location where manufacturing is performed (for example. a factory, mill, or plant).

6 The term "statistical unit," as used throughout this case study, is synonymous with the terms "reporting unit" and "tabulating unit."

"Ibid, footnote 1.

In the mining sector, however, Providencia decided to follow the UN modified approach. For mining, the UN recommends that the definition of locations should be such that the establishment includes the combination of wells, shafts, or pits of the enterprise which tap a single field; any ore-processing or ore-beneficiating plants located at the mine site should be included as part of the establishment." For its minerals census, Providencia defined a mineral establishment as a single physical location where mineral operations are conducted (for example, a mine, group of oil or gas wells, or preparation plant or natural gas liquids plant). The term "establishment" includes a working or group of workings at a given locality in which operations are conducted as a unit or are unified by common management or joint handling of some part of the mining or the preparation process.

In its instructions for reporting oil and gas field operations, Providencia's minerals census defined an oil or gas field mineral establishment as representing all oil and gas field activities in one province operated by the reporting company. Offshore operations adjacent to each province would constitute a separate establishment.

In the case of the electricity and gas industries census, Providencia defined the establishment as embracing the producing plant and its associated distribution system. For the electricity industry, transformer stations were included.

It should be pointed out that the typical instance, especially in developing countries such as Providencia, is that of a single economic unit engaging in a single kind of

Ibid, footnote 1.

business under a single ownership at a single location. Here, the enterprise and the establishment are the same. Even where one encounters enterprises with two or more producing units, the organizational structure of such enterprises often provides sub-divisions that meet quite adequately the separate location and single activity criteria of the simple establishment concept. However, this is not always the case and, particularly with larger establishments, one encounters single locations engaged in diverse industrial activities. This phenomenon can be so serious in highly industrialized countries, affecting the validity of the industrial classification of establishments, that respondents are urged to submit separate establishment reports where a single physical location encompasses two or more distinct industrial activities. It must also be the case that the employment in each such activity is significant (usually there are 100 or more employees) and that reports can be prepared on the number of employees, their wages and salaries, and other establishmenttype data.

In addition to producing units, the industry sectors of industrialized countries and to a lesser extent countries with developing economies, such as Providencia, have units engaged in auxiliary activities. Such units operate primarily or exclusively for a related establishment or a group of related establishments and provide goods or services that are normally supporting activities for most establishments. Units of this kind serving a single establishment should be treated as an integral part of the main establishment. If, however, the units are separately located in areas which are distinguished in the area classification used in the industrial census, those auxiliary units should be regarded as separate establishments and reports should be obtained for them.

Information should be collected on a questionnaire designed uniquely for auxiliary units. These units may be classified industrially either as a separate group or according to the predominant activity of the establishments served.

The clearest example of an auxiliary unit is a central administrative office. Other examples of auxiliary units are warehouses, garages, repair shops, and research laboratories that primarily serve their parent establishments.

As is characteristic of most countries with developing economies, Providencia has very few multi-unit enterprises. Consequently, there is no separate questionnaire for auxiliary units in Providencia. Typically, supporting or auxiliary-type operations are included as part of the establishment which they serve. A very limited number of cases required special handling by the NSO of Providencia. For example, a sizeable central administrative office located in a different geographic area from the producing establishment(s) was assigned receipts to cover its payroll and overhead; the office was coded industrially on the basis of the establishment it services. In effect, such an auxiliary unit is treated as a manufacturing (or mining) establishment doing contract work in order to have its activities tabulated in the appropriate geographic area.

(2)

(3)

The enterprise may be defined narrowly in terms of the smallest, legally defined entity engaged in economic activities or broadly in terms of effective ownership or control of economic units. In either case the enterprise is the only one of the statistical units discussed in this case study from which it is possible to obtain purely financial data. Certain costs--advertising, selected business services, interest payments, etc.--are not generally allocated among the constituent units of the enterprise. Financial data of the balance-sheet type are also strictly enterprise statistics (such as indebtedness, net worth, capitalization, etc.) Countries, in compiling national accounts and similar statistical summaries, face the task of interrelating establishment and enterprise data.

was designed for large establishments (that is, those with 10 or more persons engaged) in manufacturing and mining and for all establishments in the electricity and gas industries (where units tend to be sizeable). A short form with fewer data items was used for all small manufacturing and mining establishments (that is, those with fewer than 10 persons engaged).

Although the UN suggests that, in the case of developing countries, complete enumeration be restricted to establishments with five or more persons engaged and other establishments be represented by a sample, that recommendation has not been adopted by Providencia. The absence of an industrial directory for Providencia worked against the designation of such a sample; a few key items of information are needed from each establishment in order to provide the country with an industrial directory.

Cottage industries (households) were canvassed in Providencia by a small area sample. The supplementary data from these households (reporting on a modified short form) added to the establishment coverage of selected manufactured goods and services.

Also, government owned-and-operated establishments were included in the census together with the much larger private sector. The nationalization of certain industries in the manufacturing and mineral sectors made it necessary that units owned and operated by the government be canvassed. Such operations face special reporting problems, such as valuation of output.

4.4 Classification systems

For industrial census results to be useful, the reported data must be classified in meaningful arrangements. The classification process is sometimes referred to as coding.

The two principal methods are to classify the statistics industrially and by geographic area. In addition to these systems, economic data are often aggregated by size of establishment (as measured by number of persons engaged, value of output, or value added) or by other characteristics of the establishment such as form of ownership or legal organization. 4.41 Industrial classification.--The industrial classification structure for a country should reflect the manner in which the producing units are organized. The individual industries should group homogeneous products or services made or performed in establishments that typically do not engage to a significant extent in other activities. The system should make distinctions that are important to most of the users of the data. However, those distinctions should not be such that the information needed for assigning industry codes is very difficult to collect. Of course, the classification should encompass all industrial activities carried on in the country and be comparable to international recommendations for classifying industries.

In coding industry on the census returns, Providencia will use the International Standard Industrial Classification of All Economic

Activities (ISIC) 10 developed and issued by

the United Nations Statistical Office. As recommended by the UN for the 1973 World Programme, Providencia will publish the full industry detail for the data items in the census to the lowest (4-digit) level of the ISIC.

Under the ISIC, an industry is generally defined as a group of establishments producing a single product or a more-or-less closely related group of products. In some instances,

10 Ibid, footnote 4.

the classification is determined on the basis of the materials used or the types of production processes employed. The industries are so defined that the resulting groups of establishments are significant in terms of their number, value of output, value added, and number of employees. The application of these criteria in the formulation of the ISIC has led to the defining of 81 industries in the manufacturing sector, 8 industries for mineral activity, and 1 electricity and 1 gas industry. Each of these industries has been assigned a 4-digit code number.

The ISIC divides all economic activities into 9 major divisions (identified by the first digit of the codes), 33 two-digit divisions, 73 three-digit major groups, and 158 four-digit industry groups. The coding system follows the "waterfall" principle of classification, as illustrated by the following example:

Division 32: Textile, wearing apparel, and leather industries

Major Group 321:
Group 3211: Spinning, weaving, and
finishing textiles

Manufacture of textiles

Group 3212: Manufacture of made-up textile goods except wearing apparel

An establishment is classified in a particular industry if its production of the primary products of that industry exceeds in value its production of products of any other single industry. Although some establishments produce only the primary products of the industry in which they are classified, it rarely happens that all the establishments in an industry specialize to that extent. A statistical measure has been devised to show the extent to which the data shown for each published industry reflect the primary activities (products) of that industry. That measure is the "specialization ratio" and such ratios are shown in several of the manufacturing industry

tables in the published reports. The ratio is defined as the proportion of product shipments (both primary and secondary) of the industry represented by primary products. Another relationship between the industry and product data is measured by the "coverage ratio." This ratio is the proportion of the total production of the primary products of an industry accounted for by establishments classified in the industry. The table outlines given in exhibit III-5 also provide for showing this ratio for manufacturing industries. The ratios do not appear in the tables for mining and the other sectors where the phenomenon of secondary production is considerably less significant than in manufacturing.

The census report forms must provide the information needed for classification purposes. With respect to industrial classification, this is accomplished through the inquiries on products made and materials used, but predominantly the former. This procedure requires that there be classification systems for products and materials. Providencia's Industrial Census classification systems are reflected in the Product and Materials Reference Lists which have been developed for the 1975 census. (See exhibits III-1-1 and III-1-2.)

The Product Reference List has a 5-digit list of products which are directly related to the ISIC and represent an expansion of the 4-digit industries shown in that system. The first 4-digits of each 5-digit product code in the Providencia list are those of the ISIC industry in which the product is classified.

In effect, the products (or they might more appropriately be termed product classes) sub-divide the 4-digit industries into various homogeneous groupings of products which are of sufficient economic importance to warrant separate listing.