The Production Boundary

In section 2.1 fixed assets were defined as multiple-use assets in the hands of producers. But who are to be considered as producers and what constitutes production in the national accounts context? It is not enough to state that the concept of production consists of the provision of goods and services, since not all such production is recorded in the accounts. Somehow it has to be made clear as well therefore what production is covered in the accounts and what is not. One way of doing this is to draw up a detailed and exhaustive list of all the production activities that qualify for inclusion in the accounts and the circumstances under which they do so qualify. But this is clearly a cumbersome procedure. The alternative is to concentrate attention on the area where reasonable doubt may exist as to whether and to what extent the production in that area does qualify for inclusion and to describe how the boundary between production that is, and production that is not included in the accounts is drawn through that area. This alternative procedure, which is on the whole highly effective, is far less cumbersome since it consists largely of formulating rules as to what is and what is not to be included. These rules do not only affect the size of the product recorded in the accounts, but also its allocation between different uses.