National Accounts in Transition Countries : Distortions and Biases

In this paper a number of problems are discussed concerning the introduction in transition countries of national accounts according to the 1993 System of National Accounts. These concern the classification of government owned enterprises and their transactions, valuation problems, undercoverage of economic statistics, and the practice of cumulative reporting. Several of these issues create biases that presently probably result in an underestimate of gross domestic product (that is, to the extent that holding gains have been removed). The paper also discusses ways to adress these problems but concludes that they cannot be fully removed.1