Beware the data ... who is doing the counting?

The picture that the US government (and the wider public) get about the financial health of the country is distorted by the way in which data are gathered and analysed. This is the claim from last week's gathering of economists from academia and government determined to come up with a more accurate statistical picture.

The fundamental shortcoming is in the way imports are accounted for. A carburettor bought for $50 in China as a component of an American-made car, for example, often shows up in the statistics as if it were the American-made version valued at, say, $100. The failure to distinguish adequately between what is made in America and what is made abroad falsely inflates the gross domestic product, used in national productivity calculations.

“We don’t have the data collection processes to capture what is happening in a real time way, or what is being traded and how it is affecting workers,” said Susan Houseman, a senior economist at the W.E. Upjohn Institute for Employment Research in Kalamazoo, Michigan., who has done pioneering research in the field. “We have no idea how to measure the occupations being offshored or what is being inshored.”

The statistical distortions can be significant. At worst, the gross domestic product would have risen at only a 3.3 percent annual rate in the third quarter instead of the 3.5 percent actually reported, according to some experts at the conference. The same gap applies to productivity. And the spread is growing as imports do.

Korean Challenge

Korea's long-term challenges are different from other parts of Asia and they include raising productivity in the service sector, a high-ranking official of the International Monetary Fund said recently.

Korea should increase productivity in the service sector and needs structural reforms to create a smoother relocation of resources and reforms in the labour market and small- and medium-sized enterprises, Anoop Singh, director of the Asia Pacific department of the IMF, said in a conference in Seoul.

Korea has a rebalancing challenge ... The nation's dependency on exports has gone up in recent years, he said.

Singh added that policy stimulus in Asia generally needs to be maintained until the recovery is ensured.

Public Sector looking for help

The drive to increase productivity is the number one concern for government organisations across the globe. Most countries are cutting funding and looking for government agencies and organisations to take up the slack. As an example, in Australia, Telstra’s Government Productivity Report which surveyed 200 government executives across federal, state and local levels, found that productivity (ranked by 84 per cent as a priority) outranked delivering better front line services (73 per cent), reducing costs (67 per cent), risk management (61 per cent) and attracting and retaining staff (57 per cent) as priorities.

Some you win

The North American steel industry has undergone significant restructuring in recent years and the industry now has fewer, but financially stronger companies. The changes have been forced on the industry by global competition but the industry has responded with impressive productivity gains and improved environmental performance.

The steel industry has outdistanced other manufacturers with a 5.8 percent annual productivity jump over the past decade, allowing America to produce more steel with fewer man-hours and increase its ability to compete in the global marketplace.

Hospital balances

Australians should be reassured that their public hospital system is performing efficiently and delivering good value to the community said the Productivity Commission whose recent draft discussion paper on public and private hospitals found that on the basis of available data, the costs of providing care in the public and private systems were almost the same.

The Commission’s cost estimates suggest that, at a national level, public and private hospitals had a broadly similar cost when adjusted for the different mix of cases.

The Commission acknowledged the difficulties involved in comparing the two sectors, given their very different patient populations and mix of services provided.

The commission admits that it is almost impossible to adjust for many factors, such as the lower socio-economic status of patients in public hospitals. Other differences, such as the fact that about half of admissions to a public hospitals occur through emergency departments whereas private hospital admissions are almost all planned, are noted but their impact on overall costs is not assessed.

Given this, it is likely that the cost of public hospital treatment is even lower than that of private hospitals, when all the differences in patient populations are taken into account.

Downward slope

It is day 2 of the European Productivity Conference. Things are going (mostly) very well and I know we have a good social event organised this evening, with the kind support of North East Lincs Council. So, if this afternoon's sessions are as good as this morning's (plenty of 'real people' involved in productivity improvement on a daily basis as part of their day-to-day work), and this evening's event goes as well as I fully expect, I will have a bunch of happy delegates. Then we have a powerful keynote speaker tomorrow and they will all leave informed and inspired ... good value, I think.

No more planning

This is it. Day 1 of the European Productivity Conference. No panic ... because the team here has done such a good job of planning and preparation, I have confidence that all will be well.

Of course things will go wrong (The best laid plans ...) but the real test of the planing is the contingency plans you have made in anticipation of things going wrong ... and the flexibility and creativity of the team behind the scenes.

So, ask me tomorrow or preferably on Friday when its all over. I expect to give a good report.