Data requirements for village
level social accounting
matrices

Kiyoshi Taniguchi

Introduction

This short note complements the previous chapter and describes the necessary data sets to construct a ‘typical’ village-level Social Accounting Matrix (SAM). Village SAMs capture the linkages among production activities, institutions, and outside world of the village. Furthermore, constructed SAMs will be served as a base data source for the village-level computable general equilibrium (CGE) models to analyse village-wide impacts of globalization. In general, the necessary data sources to construct the national-level SAMs include the input-output table, household expenditure survey, household labour force survey, national accounts, government budgets, and commodity trade data. Since the construction of the SAM requires a consistent consolidation of data from different sources, they need to be integrated and balanced to build the SAM. The challenge for building village-level SAMs is that there are no ready-made data sources, unlike the national level. Researchers need to have a comprehensive knowledge on the village, and thus it takes time to acquire such knowledge. Since there are no a priori data sources, the complete data sets have to be collected through, for example household surveys and participatory rural appraisal (PRA).

Building the social accounting matrix (sam)

The SAM framework reconciles input-output analysis with national income and product accounts, which adopts double-entry accounting. The SAM is a snapshot of the economy that represents the expenditures (columns) and revenues (rows) for each production activity, commodity, value-added, institutions, capital market, and the rest of the world. The typical SAM includes: 1) an input-output matrix representing intermediate input use between production sectors; 2) value-added paid by these sectors to factor inputs of labour and capital, and 3) these payments distributed to different types of households; 4) expenditures of these households on consumption of locally produced goods and services, and 5) trade market of imports and exports of goods and services, 6) a government which collects taxes from activities and institutions, and which distributes income through its consumption of goods and services, transfers; 7) a capital account for savings and investment; and 8) a rest of the world account for trade flows and taxes. Incomes generated from each of the accounts in the SAM are redistributed throughout the economy, and is accounted for by the expenditures. Therefore, the SAM follows double-entry accounting principles, and since total incomes equate total expenditures, the SAM is a square matrix.

Required data

The structure of the typical SAM is shown in Table 10, which contains the description of the numerical entries. The following section describes the SAM entries as shown in the Table, and identifies possible extensions. Note that brackets represent [row, column] entries.

1. Activities (ACT) and Commodities (COM) Accounts

Activity account mainly describes purchase of raw materials, intermediate goods, and primary factor inputs to produce commodities. Commodity accounts are domestic product markets. These accounts describe production, sales and purchase of commodities. For the intermediate demand cell, the necessary data are the amount of purchase of intermediate inputs for the production and total amount of production for the commodities. For the product sales cell, we need the total amount of the products which are sold in the domestic or village market. Transaction cost is in these accounts, and it is recorded as a loss of commodities.

The cells to be filled are: intermediate demand of commodities [commodities, activities]; product sales [activities, commodities]; transaction cost [commodities, commodities]; exports of goods and services [commodities, rest of the world]; imports of goods and services [rest of the world, commodities].

One possible grouping of activities and commodities is: major food crops (maize, root/tuber, millet, oil seeds, coffee/coco, cotton, vegetables/fruits); livestock (large ruminant, small ruminant, chicken, fish); manufacturing (fertilizer, seed, agriculture chemical); service (health/medical, transport).

2. Factor Inputs (FACT) Accounts

These accounts are for primary inputs, usually labour and capital. In some cases, land is added. They receive payments from the sales of their services in the form of wage for labour and rental fee for capital and land. Fees for capital and land are usually difficult to derive; hence, the residual of total inputs is considered as payment for capital.

The cell to be filled is only: value added to factors [factor inputs, activities].

A possible grouping of factors is as follows: skilled/unskilled labour; land; physical capital (machinery, irrigation, infrastructure); and animal capital (productive animal, draft animal).

3. Institutional Accounts

Institutions in general include households, firms, and governments. Households are disaggregated by the socio-economic or geographical criteria like urban-rural, high-low income. Firms are defined as the providers of capital. Government collects taxes, and distributes them through transfer payment. In the village SAM, governments could be disaggregated into local and national levels.

3.1 Households (HH) Accounts

These accounts rely on a comprehensive household budget survey, supplemented by household labour force survey. At the national level, census data are used.

The cells to be filled are as follows: factor income [households, factor inputs]; transfer of enterprise surplus to households [households, enterprises]; transfer payments [households, government]; transfers HH from ROW [households, rest of the world]; autonomous consumption [activities, households]; final private consumption [commodities, households]; inter-household transfer [households, households]; income Tax [government, households]; household savings [S-I, households].

Possible grouping of households are as follows: large holder/Small holder; rich/poor; food secure/food insecure; male-headed/female-headed; migrants.

3.2 Enterprise (ENT) Accounts

These accounts are for firms and institutions, which provide various inputs and transfer surplus to the society.

The cells to be filled are: enterprise (direct) Tax [government, enterprise]; enterprise savings [S-I, enterprise]; transfers to enterprises from rest of the world [enterprise, rest of the world].

Possible grouping of enterprises or other institutions are: religious institution; private firms; traders; marketing; agricultural cooperatives.

3.3 Government (GOVT) Accounts

A SAM requires revenues and expenditures of local and national level of government.

Cells to be filled are: tax on activities [government, activities]; sales tax [government, activities]; import tariff [government, commodities]; export duties [government, commodities]; factor taxes [government, factor inputs]; transfer from rest of the world [government, rest of the world]; final government consumption [commodities, government]; transfer to households [households, government]; transfer (payment) to enterprises [enterprises, government]; inter-government transfers [government, government]; government Savings [S-I, government]; transfer payment from rest of the world to government [government, rest of the world].

Possible grouping of the government sector are: national government; local government.

4. Savings and Investment (S-I) Accounts

Savings and investment accounts are capital or financial accounts. Even though many villages do not have a formal banking system, a financial sector plays an important role to supply credits to consumer-producer households. This account captures flows of financial goods. The main difficulties, with incorporation in SAMs will be data availability; in the village, there is few established financial market, and collecting data will be very difficult.

Cells to be filled are: household savings [S-I, households]; enterprise savings [S-I, enterprises]; government savings [S-I, government]; net capital inflow [S-I, rest of the world]; investment [commodities, S-I]; foreign savings [S-I, rest of the world].

Possible grouping of the financial institutions are: formal banks; informal financial institutions.

5. Rest of the world (ROW) Accounts

Transactions between the village and rest of the world are recorded in the rest of world accounts. Unless the village is completely closed market, these accounts largely describe domestic as well as international trade.

Cells to be filled are as follows: transfers abroad [rest of the world, households]; transfers abroad [rest of the world, enterprises]; factor payments to rest of the world [rest of the world, factor inputs]; factor incomes from rest of the world [factor inputs, rest of the world].

Possible grouping of rest of the world are: outside of village; outside of country.

Table 10a: Schematic SAM