Significant differences in definition, classification, and valuation affect the comparability of measures from the AIAs and the NIPAs. As described below, the AIAs measure GDP as the sum of industry value added, whereas the NIPAs measure GDP as the sum of final expenditures. Furthermore, the estimates from the AIAs are based on the classification of establishments (producing units), while the estimates from the NIPAs are based on the classification of products (goods, services, or structures). Finally, the industry production measures in the AIAs are valued at producers’ prices in contrast to the measures of final expenditures in the NIPAs which are valued in purchasers’ prices (i.e. inclusive of products’ transportation costs, trade margins, and taxes).
At an economy-wide level, the value added and final expenditure approaches to measuring GDP are equivalent; however, fundamental conceptual differences in these two methods of GDP measurement significantly affect their comparability at a disaggregated level. For example, in the NIPAs the final expenditure for an automobile, valued at purchasers’ prices, is recorded as goods GDP. This expenditure implicitly includes the value added of many industries, valued at producers’ prices, including the mining industry (steel chassis and other metal components), the plastics and rubber products manufacturing industry (tires and other plastic or rubber components), the miscellaneous professional, scientific, and technical services industry (automobile design), the motor vehicles, bodies and trailers, and parts manufacturing industry (automobile assembly), the water transportation, rail transportation, and truck transportation industries (automobile transportation services from autoplant to dealership), and the retail trade industry (automobile sales services). Because both goods-producing and services-producing industries contribute to the process of bringing an automobile to market, the purchasers’ value of an automobile, recorded simply as goods GDP in the NIPAs, will be accounted for by both goods-producing and services-producing industries’ value added in the AIAs. Similarly, the final selling price of a service is recorded in services GDP in the NIPAs while this value is split between goods-producing and services-producing industries’ value added in the AIAs.
In addition to this fundamental conceptual difference, there are several significant classificational differences between the NIPAs and the AIAs that impact the comparability of the two measures. First, a private industry that produces both goods and services output is classified wholly as a goods-producing or services-producing industry in the AIAs on the basis of its primary output. For example, the printing and related support activities manufacturing industry is classified wholly as a goods-producing industry even though it also produces technical services as secondary output. In addition, the secondary output of most goods-producing and services-producing industries includes both structures and software output that they have produced with their own labor and capital.
Second, certain services-producing industries as defined in the AIAs have primary output that is classified as goods GDP in the NIPAs. These include the food services and drinking places industry and publishing industries (includes software).
Third, the NIPAs divide GDP into goods, services, and structures with structures GDP including all or part of the value added of both goods-producing and services-producing industries including the construction, support activities for mining, wood products manufacturing, and real estate industries. By contrast, the AIAs divide GDP into the value added of goods-producing industries, services-producing industries, and government. The value added of general government is included entirely in the final expenditures for services in the NIPAs measure of GDP.
Fourth, although imported goods are excluded from GDP, the gross margins from distributing these goods are included. In the NIPAs, these margins are implicitly included as the difference between the value of goods in imports and the corresponding entries in other expenditure components; in the AIAs, they are included primarily in the value added of the trade and transport industries.
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