Rest of the world

Rest of the world sector accounts.

To account for foreign economic transactions, the “Rest of the World” sector, which is not characterized by specific resources and specific functions, unlike the sectors of the domestic economy, is singled out. Therefore, there is no need to make a complete set of accounts for it.

The “Rest of the World” (RoW) accounts are compiled from the perspective of non-residents. The “Resources” side reflects non-residents’ receipt of resources from residents. The “Use” side reflects the transfer of resources from non-residents to residents. Thus, what are resources for a given country’s economy are shown on the use side. Conversely, the use by residents of a country is reflected in the resources of the “Rest of the World” sector accounts.

The following accounts are compiled for the Rest of the World sector:

– external goods and services account;

– the external account of primary income and current transfers;

– the external capital account;

– external financial account.

Table 11 presents the chart of accounts for the Rest of the World sector.

Account sequence for the Rest of the World sector

External goods and services account
Use Resources
Exports Imports
Balance of the rest of the world goods and services account = Imports – Exports
External account of primary income and current transfers
Use Resources
Balance of wages and salaries Balance of the rest of the world goods and services account
Balance of net other taxes on production
Balance of net taxes on products and imports
Balance of income from property
Balance of current transfers
Balance of the rest of the world current account = Resources – Usage = Balance of the T&C account – Balance of OT – Balance of PNPNP – Balance of PNPDPI – Balance of DC – Balance of TT
External capital account
Use Resources
Net purchases of land and other non-produced non-financial assets (NPA&NPA) = = Purchases by non-residents from residents – sales by non-residents to residents Balance of current transactions of the rest of the world (TO balance)
Balance of capital transfers (CT balance)
Net Borrowing from the Rest of the World = Resources – Utilization = Balance of TO – NPL&NPA – Balance of CT Net Borrowing from the Rest of the World = Usage – Resources = NPL&NPA + CT Balance – CT Balance
External Financial Account
Purchase of financial assets by non-residents from residents Net lending (+) (net borrowing (-))
Obligations assumed by non-residents vis-à-vis residents

Imports of goods and services are treated in this account as the receipt of current income by other countries (non-residents) from imports of goods and services of that country. The domestic economy has sold goods to the rest of the world – using the resources of the rest of the world to buy goods produced by the domestic economy.

Exports of goods and services are viewed as transfers to other countries (non-residents) of a given country’s current income from its exports of goods and services. The domestic economy received imported goods from the rest of the world-the rest of the world received money-resources.

The balance of wages and salaries in the primary income and current transfers account represents wages and salaries transferred by the rest of the world to the household sector of the domestic economy (use of resources from the rest of the world) minus wages and salaries received by the rest of the world (households of the rest of the world) from the domestic economy sectors (receiving resources with a “minus” on the “use” side).

Other items in this account are similarly recorded: the balance of net other taxes on production, the balance of net taxes on products and imports (taxes transferred to the rest of the world minus taxes received by the rest of the world), the balance of property income (property income transferred to the rest of the world minus income received by the rest of the world), the balance of current transfers (transfers transferred to the rest of the world minus transfers received by the rest of the world).

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Net purchases of land and other nonproduced nonfinancial assets are defined as purchases by nonresidents from residents minus sales by nonresidents to residents. The capital transfers balance in the external capital account is calculated as the difference of capital transfers transferred by the rest of the world (domestic economy) and capital transfers received by the rest of the world from the domestic economy.

Rest of the world

Cash in foreign currency in the SNA is considered a claim by its owners on the Rest of the World sector . In the financial accounts of all sectors of the domestic economy, changes in cash are reflected as changes in assets. [c.179]

The Rest of the World sector consists of non-resident units transacting with resident institutional units of a given country. [c.184]

Its accounts provide a generalized overview of the economic relations linking the national economy of a given country with the economy of the rest of the world . In other words, in the SNA, the Rest of the World accounts reflect all transactions between residents and non-residents of a given country. [c.184]

All the accounts of the Rest of the World sector are compiled from the perspective of non-residents. Therefore, the Resources column of these accounts shows the receipt of economic value by non-residents from residents, and the Uses column shows its transfer from non-residents to residents. [c.184]

The Rest of the World sector represents foreign economic units to the extent that they transact with residents of that country. [c.177]

At the sectoral level, the concept of the rest of the world is broader than at the level of the whole economy, since for each sector, the rest of the world is not only non-residents entering into economic relations with residents of the country, but also economic units of other sectors. [c.505]

The primary income distribution account shows the distribution of gross value added in the form of primary income between the most important factors of production, labor and capital, as well as between government agencies. The account also reflects primary income flows between the domestic economy and the rest of the world. The balancing item of this account is the balance of primary income (at the level of individual sectors) or gross national income (at the level of the economy as a whole). The gross national income indicator differs from the GDP indicator by the amount of net primary income paid to the rest of the world sector, particularly in the form of interest on foreign loans. [c.531]

The indicator of wages for employees includes all types of monetary and in-kind payments to employees, paid as compensation for their work. This indicator does not include social payments, which are not directly related to the quantity and quality of labor, but includes payments of contributions to all types of social insurance (pension, social insurance, unemployment). In the SNA, social payments are recorded as part of the primary income of households, which the latter transfer to the appropriate funds at the stage of distribution of secondary income. In the rest of the world sector accounts, this line reflects the wages of employees who are residents of the economy, received as compensation for work in non-resident units. [c.532]

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Property income includes distributable corporate profits, stock interest payments, rents, and loan fees. Virtually all sectors exchange this type of primary income. The state pays interest on the national debt, much of it to the rest of the world sector, and receives payment on government loans made to other countries, as well as a portion of the profits of state enterprises. Households receive interest on deposits, [p.534]

At the bottom of the circuit diagram we place the foreign sector, the Rest of the World . This block includes all the foreign countries with which we deal, as well as the individuals, firms, and governments that comprise them. [c.110]

The Rest of the World sector consists of all non-resident institutional units that have an economic relationship with the resident institutional units of a given country. Some of these may be physically located within the country’s geographical boundaries (e.g., foreign embassies, consulates, military bases, international organizations, foreign seasonal workers, etc.). [c.205]

Production and income generation accounts are compiled by industry. The external accounts describe flows between resident and non-resident institutional units. They are constructed in terms of the rest of the world sector . This means that the transactions recorded in the resource part of this group of accounts characterize the values received by non-residents from residents. These same transactions are shown, in parallel, in the uses of the respective accounts for the sectors of the national economy as values transferred to the rest of the world. Conversely, the use of external accounts shall reflect the values transmitted by non-residents to residents. If the balancing item has a positive sign, it follows that more is transferred to the rest of the world than is received from it by residents of the country (a deficit for the national economy). This group includes [p.385]

Groups of external transactions accounts form a section in the SNA, the purpose of which is to summarize information on the economic relations between the national (domestic) economy and the rest of the world in the current period. The accounts of the rest of the world record all transactions and other economic flows that took place during the reference period between institutional units resident in the country and institutional units non-resident. The accounts are compiled from the perspective of the rest of the world sector. This means that the resource section of the accounts shows transactions whose essence is the receipt of income by non-residents from residents, and the use section shows transactions related to the transfer of income from non-residents to residents. [c.427]

The external primary income and transfers account shows the process of redistribution of current income between residents (the national. economy as a whole) and non-residents (the rest of the world). From the previous account, the balance of goods and services is transferred to resources. Also, it should reflect the primary incomes received by non-residents from direct or indirect participation in production of GDP of the given country and current transfers transferred to them by residents in the given period. The use section records primary incomes, received by the residents as a result of direct or indirect participation in production of GDP of other countries, and current transfers, transferred to them by non-residents of the country. The balancing item of the account in question is the balance of current operations. This indicator in its content and significance for the rest of the world sector is similar to the savings indicator for the institutional sectors of the domestic economy. The external primary income and current transfers account correlates with a number of domestic economy accounts, namely the income generation account, the primary income distribution account, and the secondary income distribution account. Below is a diagram of this account [p.428]

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The rest of the world sector, on the one hand, places demand on the products of the country in question and thus contributes to the growth of production in it; on the other hand, it competes with domestic production by reducing the aggregate demand for domestic products. The rest of the world can also both direct its savings to the country in question for investment and divert its savings for investment in other countries (see Open Economy). [c.150]

The SNA uses the grouping of economic units into sectors. The sector is a set of institutional units, i.e., economic entities that can, in their own name, own assets, incur liabilities, carry out economic activities and transactions with other units that are homogeneous in terms of the functions performed and sources of funding. The following sectors of the national economy are distinguished: non-financial enterprises financial institutions, government institutions non-profit organizations serving households households. In order to reflect their interrelations with other countries, a conventional sector is formed – the rest of the world – uniting all non-resident institutional units insofar as they interact with residents of the national economy. Residents are enterprises, organizations and households participating in economic activity on the economic territory of the country for a long period of time (at least a year). [c.110]

The Rest of the World sector (foreign economic activity) covers foreign economic units insofar as they conduct transactions with residents of a given country. [c.178]

The foreign sector, or the rest of the world sector , is the set of institutional units – non-residents of a given country (i.e. located outside the country) with economic ties, as well as embassies, consulates, military bases, international organizations located in the territory of a given country. [c.7]

Savings of the domestic economy Current account of the rest of the world sector 27.5 -2.9 24.4 -0.9 20.3 -4.0 [p.29]

If we sum the balance of primary income across all sectors, including the balance of primary income received and transferred from the rest of the world, and subtract the consumption of fixed capital, we get [p.195]

If we sum the balance of gross primary income by sector, the balance of property income, and the balance of current transfers received and transferred from the rest of the world, the resulting value is [c.195]

The public entity financial account is compiled both for the financial assets and liabilities of a given sector and to reflect the financial transactions of the country’s residents with the Rest of the World . The same classification of transactions is used for both the assets and the liabilities of this sector of the economy. Each asset item in the accounts corresponds to a certain liability item. [c.440]

Special drawing rights are international reserve assets created by the IMF and distributed to its members to supplement their existing reserve assets. Transactions in SDRs are recorded in the financial account of the NPO and Rest of the World sectors . They are considered obligations of the IMF, and IMF members to whom SDRs are allocated have no actual [p.441]

The following pro forma data are available, billion rubles net government sector spending – 97 net government sector spending – 65.5 current transfers, property income and subsidies received from the rest of the world – 21.5 spending on products and services provided by other sectors of the economy – 6.5 special financial transactions balances – 10.5. [c.504]

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There are the following pro forma data for the public administration sector, billion rubles. final balance of budget financing – 60 capital transfers transferred to the rest of the world – 10 net purchases of land and intangible assets – 30 capital transfers received from the rest of the world – 20. [c.509]

The balance sheet of assets and liabilities compiled for the economy as a whole characterizes the economic and financial situation of the country. Its balancing item is the indicator of national wealth. Thus, according to the SNA methodology, the amount of national wealth is defined as the sum of the value of all economic assets (financial and non-financial) of residents of the country minus their financial liabilities. The balance sheet items reflect a nation’s economic resources and allow us to assess the size of its external debt or, on the contrary, its net claims on the rest of the world (its position as a creditor). The national wealth of a country is equal to the sum of the net value of the equity of all sectors of the economy. [c.133]

The SNA methodology provides for the use of standard concepts, definitions, classifications and groupings. This allows economists of different countries to communicate in the same statistical language and ensures comparability of macroeconomic information. The previous sections have already dealt with such important SNA categories as goods, services, economic production, economic territory, center of economic interest, resident, national economy, rest of the world, institutional unit, economic sector, establishment, industry, output, intermediate consumption, final consumption, accumulation, assets and liabilities, national wealth. The concepts of economic flow, operation, stock are also of great importance in the SNA. [c.380]

The balancing item of the primary income distribution account is the primary income balance, showing the amount of primary income that remains with resident institutional units after all settlements with participants in the production process and owners of borrowed assets have been made. The sum of the balance of primary incomes across all sectors corresponds to the balance of primary incomes in the economy as a whole. The latter, in turn, is equal to the difference between the amount of primary income received by the national economy from the rest of the world, and the amount of primary income transferred to it. Therefore, the consolidated account at the level of the economy as a whole shows only the property income received by the national economy from the rest of the world (in resources) and transferred to it (in use), without taking into account the part of property income that is redistributed between sectors. The balancing item of the composite account also has another name, gross national income, which is the most important macroeconomic indicator and shows the amount of primary income received by residents of the country as a result of direct or indirect participation in productive activities both within the national economy and outside it. Fig. 25.2 shows the relationship between GNI and other indicators of the system. [c.398]

For the Households sector, resident wages received from the rest of the world , 4.5 interest received on deposits, 27 interest paid on loans, 0.1 land rents paid 0.9 property income imputed to policyholders, 4. [c.400]

The consolidated account usually shows only current transfers between a country’s economy and the rest of the world , the balance of which is equal to the sum of the balances of current transfers received and transferred by all sectors of the economy. [c.402]

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The balancing item of the capital account is net lending (+) or. net borrowing (-). It characterizes the ratio between the amount of funding sources (income received in the current period) and expenditures on the net acquisition of non-financial assets. If the sector’s sources of funding exceed its expenditures on the acquisition of non-financial assets, free resources are formed, which can be provided to other sectors. Thus the sector increases its financial assets. If the difference between resources and their use is negative, the deficit of own funding sources can be covered by the resources of other sectors. In this case, the sector assumes financial liabilities. At the level of the economy as a whole, the balancing item shows the amount of resources a country provides to the rest of the world or, conversely, receives from the rest of the world. The scheme of the summary capital account is as follows [p.413]

National economy gross fixed capital formation 291 growth in inventories 30 net acquisition of valuables 5.5 capital transfers received by all sectors, 52.6, including from the rest of the world 10.3 capital transfers transferred by all sectors, 54.0, including the rest of the world 11.7. [c.414]

State whether the following statement is true The sum of the balance of primary income by sector of the domestic economy is equal to the balance of primary income received from and transferred to the rest of the world [c.434]

Gross National Disposable Income (GNDI) is equal to GDP at market prices plus the balance of primary income and current transfers received from and transferred to the rest of the world (i.e., taxes on production and imports, subsidies, wages, property income, and current transfers). GNDI is equal to the sum of the gross disposable income of all sectors of the economy. [c.128]

Sector of the economy (e onomi se tor) – a set of economic units, homogeneous in terms of the economic functions performed and sources of funding. The SNA distinguishes the following sectors a) enterprises producing goods and services, except financial ones b) enterprises providing financial services, including insurance organizations c) public administration (government) d) households e) non-profit organizations serving households f) the rest of the world, for which foreign economic transactions of foreign countries with residents of the country are reflected in a special sector. [c.687]

Economic unit (agent) (e onomi agent) – a legal or physical person performing an economic operation. The economic unit may be an individual, household, collectives, enterprises, institutions, organizations, economic regions, industries and sectors of the economy, the state. A special economic unit is abroad (the rest of the world). [c.697]

The second stage of the income distribution process through current transfers in cash is reflected in the secondary income distribution account. The resources section of the primary income distribution account takes its balancing item of the primary income balance and records current transfers received by resident institutional units from institutional units in other sectors and the rest of the world. The use section shows current transfers transferred to other resident and non-resident institutional units. The balancing item of the account is gross disposable income (in the consolidated account of the economy as a whole – gross national disposable income GNDI)), which characterizes the amount of current income, which can be used for the purposes of financing final consumption or accumulation. The relationship of this indicator with national income [p.402]

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