General Principles

The section explores the general principles to be used in disaggregating the GDP produced by the INE's Department of National Accounts by provinces/regions. Thus we start by defining the concept of regional territory, and then establish rules for the provincial/regional breakdown of the GDP.

In an initial approach, the regional/ provincial accounts consist of the regionalised registration of operations concerning the flow of goods and services between the residents of a region/province, and make possible the construction of a series of macro-economic indicators that facilitate comparisons of structure and evolving analyses of different regions. Thus each region is treated as a specific economic entity.

However this undertaking involves some conceptual difficulties since the complete description of the economy of each region/province cannot be obtained with the same breadth or depth as a national economy, given the multiplicity of statistical restrictions on deeper knowledge of regional or provincial activities.

Like the national accounts, the regional accounts are governed by the principle of residency, according to which each economic or productive unit is allocated to a particular economic territory in relation to which it has a centre of economic interest. Thus the application of the principle of residency, as a general principle, in the regional/provincial accounts by area of activity means that the Gross Value Added should be allocated where the production unit resides. In the case of households, since they are single-region institutional units, it is considered that their centre of economic interest is in the region where the majority of their activities take place, which corresponds to the region where they live, but not necessarily the region where they work.

Delimiting the regional economy rests on the functional perspective, that is, the technical-economic unit of reference is the establishment whose activity in the region where it is located it is intended to capture. Since the establishment is the unit which best represents regional activity, it is also here that one finds the greatest constraints on constructing an accounting system identical to that used for the national accounts, since the establishment, unlike the company, does not possess legal status, and has no autonomous accounting. This fact makes it difficult to individualise an important part of the flows supporting the production of regional accounts.

The value added method consists in calculating the production of each sector, or each production unit, establishing the difference between "value leaving" and "value entering", coming from other sectors, and hence not produced in the sector or unit. SCN93 defines Value Added in residual terms as "the difference between the value of production and the intermediate consumption".

There are several concrete concepts that portray the idea of production. The product can be calculated in "gross" or "net" terms, depending on whether it includes the production equivalent to the wear and tear or depreciation of the fixed capital. It can be estimated at "market prices" or at "factor cost", depending on whether or not it includes indirect taxes, excluding possible subsidies to production. The product may be "national" rather than "domestic" when one includes in the aggregate the income received by "residents" from abroad, and the income paid to "non-residents". Finally, it can be calculated at current prices, of the year to which the estimate refers, or at constant prices, of a particular year of reference, which makes it possible to measure real variations, or variations in the volume of production, since the possible effect of variation in price levels has been corrected.

The estimates we have made are of the Gross Domestic Product at market prices, both at constant (1996) prices, and at current prices of 1997, 1998 and 1999. Obviously we have included the estimates at current prices (equal to the constant prices) for the base year of 1996.