Explanation of items treated in the flow chart of the Japanese economy
The definitions of the items that make up the economic circulation diagram are arranged in a list format.
Table of Contents
Item
Suppy
Intermediate charge
This refers to the total amount of goods and services that producers input as raw material costs, utility costs, indirect costs, etc., and consumed in the process of producing goods and services. Fixed capital consumption (depreciation of fixed assets such as machinery and buildings) and employee remuneration (labor costs) are not included in intermediate input. These are recorded separately as components of added value.
Value added (gross) / gross domestic product
It is the total value added by domestic producers through domestic production activities. Value added refers to the value of output minus intermediate inputs. It is also called production-side GDP.
Importation
This accounts for expenditures on imports of goods produced overseas and services provided by foreign companies. These items are not domestically produced value added and are therefore deducted from GDP. On this dashboard, these items are classified into six categories, such as "Goods," "Transportation," and "Travel." For specific categories, please refer to the explanation in "Chapter 6: Estimates of Overseas Accounts" in the "National Accounts Estimation Method Handbook (Annual Estimates) 2020 Standard Edition" published in the "Statistics Compilation Method (Cabinet Office)." 2020
Distribution
Compensation of employees
This refers to the total amount of compensation distributed to employers for providing labor out of the value added generated by production activities (sales minus material costs, etc.). In addition to regular employees, "employers" also include directors of incorporated companies, public officer, etc., but do not include sole proprietors. Employee compensation is divided into wages / salaries and employers' social contributions. For a detailed breakdown, please refer to the explanation of demand items handled in the GDP dashboard .
Operating surplus / mixed income (net)
"(Net)" refers to pure earnings excluding consumption of fixed assets. For more details on operating surplus and mixed income, please refer to the explanation of demand items covered in the GDP dashboard .
Taxes on production and imports
A tax levied on producers for the production, sale, purchase or use of goods or services that is considered to constitute part of the cost of production by the producers and that is generally reflected in the price of the good or service to account for any taxes that would be borne by the purchaser. For a more detailed breakdown, please refer to the description of demand items covered in the GDP dashboard .
Subsidy (deduction)
Among ordinary grants granted by the general government to market producers, those that are used to cover the costs of daily business operations, not to support capital investment or compensate for losses, and are considered to have the effect of lowering the market prices of goods and services fall under this category. GDP is calculated based on the prices actually traded in the market, but since subsidies have the effect of lowering those prices, they are treated as deductions in the calculation of GDP on the distribution side.
Consumption of fixed capital
This is the amount of decrease in the value of fixed assets such as buildings, structures, machinery, equipment, and software that occurs as a result of their use in production activities. This is a concept similar to "depreciation" in corporate accounting. However, it is recorded at the market price at that time (replacement price = the price of newly acquiring equivalent assets) rather than the price at the time of purchase (book value). Unforeseeable losses such as loss due to a major disaster are not recorded in this item because their nature is different from the decrease in value due to normal production activities.
National income at factor cost
This is an indicator of the total value created and distributed in domestic and foreign production activities, excluding tax and subsidy effects on prices and fixed asset depletion. It corresponds to the sum of employee remuneration, operating surplus and mixed income, and income (net) from abroad, and corresponds to remuneration to pure production factors.
National disposable income
Disposable income refers to income that can be used for consumption and savings. National disposable income is the sum of the disposable income of all economic agents, including households, businesses, and the government. It is the national income after taking into account taxes and subsidies (factor cost presentation) plus current transfers from abroad.
Saving
It is the remainder of disposable income less final consumption expenditure. Saving in the SNA is a flow concept that shows the difference between income and consumption over a period, and can also be negative (consumption exceeds income).
Income from abroad (net)
This is the amount of compensation for employees (compensation for working overseas) and property income (such as interest and dividends from overseas investment) that residents of Japan (companies and individuals based in Japan) receive from overseas, minus the amount paid to non-residents.
Current transfers from abroad (net)
It is calculated by subtracting the amount of contributions to international organizations, recurrent official development assistance, remittances, and donations paid to foreign countries from the amount of remittances, donations, and insurance claims that residents of Japan receive from foreign countries.
Net capital transfers from abroad
A capital transfer between a resident and a non-resident. For example, the provision of funds for the purpose of counterparty capital formation, such as debt forgiveness or infrastructure development.
Demand
Private final consumption expenditure
It is the sum of household final consumption expenditure and household final consumption expenditure of private non-profit organizations (expenditure on services provided to households by private schools, nursing care facilities, etc.). For details on the breakdown of household final consumption expenditure, please refer to the explanation of demand items handled in the GDP dashboard .
Government final consumption expenditure
This is the amount of expenditure by the general government, such as the central government and local governments, on public services, etc. The classifications are in accordance with international standards. There are 10 classifications by function, such as "general public services," "health," and "education," and each classification is further divided into 69 more detailed classifications. For specific classifications, please refer to "Revision of 2015 (2015) Standards for National Accounts (Cabinet Office) ," through "Japan's National Accounts in Response to the 2008 sna (2015 (2015) Standard Version)," Appendix 6, General Government Expenditure Classifications by function.
Gross capital formation
This is the sum of gross fixed capitalformation (private housing, private facilities and public fixed capitalformation) and inventory changes (private inventory changes and public inventory changes). For details of the breakdown, please refer to the explanation of demand items covered in the GDP dashboard .
Export
Exports of goods and services are calculated based on the amount of goods produced in Japan and services provided to foreign companies. So-called inbound consumption is also included. On this dashboard, exports are classified into six categories, such as "Goods," "Transportation," and "Travel." For specific categories, please refer to the explanation in "Chapter 6: Estimates of Accounts" in the "National Accounts Estimation Method Handbook (Annual Estimates) 2020 Standard Edition" published in "Compilation Method of Overseas Statistics (Cabinet Office) ." 2020
Capital and Finance
Changes in non-financial assets
Shows the increase or decrease in non-financial assets (real assets such as land, buildings, and machinery) over a period of time. This is the net increase in new investment in equipment and buildings minus the depletion of existing assets, plus the increase or decrease in inventory, plus the purchase or sale of land.
Change in net worth
The increase or decrease in net worth (all assets less liabilities = national wealth) resulting from savings and capital transfers. It is a concept that represents the source of how much national wealth has increased or decreased over the period.
Net lending (+) / Net borrowing (-)
This is the difference between the total amount of savings and capital transfers, etc. and the increase in non-financial assets. A positive figure indicates that funds are being supplied overseas (outward investment, etc.), while a negative figure indicates that funds are being procured from overseas.