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Comparing Different Estimation Methodologies of Regional GDPs in Latin American Countries

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Time and Space

Part of the book series: Palgrave Studies in Economic History ((PEHS))

Abstract

This chapter presents a survey of the different methods used to reconstitute long-run income estimations for the Latin American regions. The main purpose is to alert on potential biases derived from them. Although the bottom-up approaches based on the direct estimation of aggregate production, income or expenditure are the preferred option, they have barely been used. The main reason is that all of them are highly data-demanding. Instead, the indirect non-parametric approaches, combined sometimes with direct estimations for agriculture and extractive industries, have been the most recurrent way to estimate output. Out of the nine countries in the sample, seven have followed this “mixed approach” (Argentina, Bolivia, Brazil, Chile, Mexico, Venezuela and Uruguay). Meanwhile, the Peruvian estimates follow a parametric approach and the Colombian estimates backwardly discount the regional growth rates of proxy variables to current official regional estimates. Apart from other considerations, this issue should be taken into account when comparing the substantial differences across countries with regard to regional income disparities.

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Notes

  1. 1.

    EUROSTAT has regularly published regional GDP since 1995. For earlier years see the REGIO-database, which follows ESA 1979 and dates back to 1979.

  2. 2.

    There are estimates since the mid-nineteenth century for Great Britain (Crafts 2005; Geary and Stark 2016), for Spain (Martinez-Galarraga et al. 2010, 2015), for Italy (Felice 2011), for Portugal (Badia-Miró et al. 2012), for Belgium (Buyst 2010, 2011), for Sweden (Enflo et al. 2014) and for France (Combes et al. 2011; Díez-Minguela and Sanchis 2019; Caruana-Galizia 2013; Bazot 2014). Additionally, in a recent publication Rosés and Wolf (2019) have gathered some of these estimates and added those for other countries such as Austria, Denmark, Finland, Germany, the Netherlands, Norway, Switzerland and the United States.

  3. 3.

    In Chile, the Banco Central de Chile, founded in 1925, is in charge of national accounting.

  4. 4.

    All the countries in this book have carried out census rounds since 1970 following the concepts, definitions and recommendations of the United Nations—Statistics Division (UNSD).

  5. 5.

    The first official estimate in Brazil dates back to 1939, while national accounting was annually published since 1947.

  6. 6.

    The publication of official series of national GDP dates back to 1935 in Argentina, 1988 in Bolivia, 1939 in Brazil, 1960 in Chile, 1970 in Colombia, 1939 in Mexico, 1970 in Peru, 1983 in Uruguay and 1950 in Venezuela by Banco Central de Venezuela and the INE since 1997.

  7. 7.

    Rosés and Wolf (2019) also include a chapter on the long-run evolution of regional inequality in the United States.

  8. 8.

    In Bolivia, for instance, the earliest agricultural census was conducted in 1950. Then, a similar effort was attempted in 1984, but it did not include information on the capital city of La Paz or information on the indigenous communities who mistrusted the data-collection process. In 2012, however, another agricultural census was carried out. Similarly, industrial surveys started to be regularly published since 1972. This anecdotal evidence illustrates the distinct challenges and difficulties faced by census-takers and national statistical offices.

  9. 9.

    In Uruguay the balance between the huge number of agrarian surveys (1852, 1900, 1908, 1916, 1924, 1937, 1943, 1951, 1956, 1966, 1970 and 1980) and the limited number of industrial surveys (1936, 1975, 1988, 1997) and population censuses (1850, 1860, 1908, 1963, 1985, 1996, 2011) is quite disproportionate.

  10. 10.

    In Europe, in countries with agricultural and industrial surveys the researchers have tended to follow the direct approach based on production to estimate the regional value added for agriculture, livestock and manufacturing, as, for instance, Schulz (2000, 2007) does for the Austria-Hungary Empire, Combes et al. (2011) for France, Stohr (2018) for Switzerland, Ciccarelli and Fenoaltea (2009) for Italy.

  11. 11.

    Several sources have been combined; among them are the Tercer Censo Nacional de la República Argentina, the Boletín del Departamento Nacional del Trabajo for 1907 and 1912, and the Anuario Estadístico del Trabajo for (1916).

  12. 12.

    Bértola et al. (2012) provide estimates for 1872 and 1895. However, these data have been adjusted to 1895 according to the benchmark fit for this book’s dataset.

  13. 13.

    The most outstanding example of the income approach was offered by Delefortrie and Morice (1959) for France in 1954. These researchers assembled a well-stocked set of statistical sources to estimate regional incomes. A similar effort was made by Combes et al. (2011) to estimate the manufacturing and services value added for the French departments in 1860 and 1930. In both years agrarian and industrial surveys were available that were combined with fiscal sources, population and establishment censuses and government budgets, among other registers, to estimate the incomes by sector at the regional level.

  14. 14.

    There is no evidence of the use of fiscal sources in the Latin American countries, but it has been used to estimate the historical databases of the European countries. Some examples are France (Bazot 2014; Combes et al. 2011; Delefortrie and Morice 1959), Spain (Martinez-Galarraga et al. 2019; Díez-Minguela et al. 2018), the United Kingdom (Crafts 2005).

  15. 15.

    An interesting example that demonstrates a lack of representativeness is the use of fiscal revenues to make the distribution. Usually, in the past taxes related with the exercise of agrarian or manufacturing activities were levied on individuals. Thus, the individuals subject to the tax did not represent the whole population of active establishments. There used to be some income or size establishments exempt from the fiscal levy and also a high level of tax evasion. In these cases, the fiscal revenues overestimate the output of the richest regions, usually better represented by the tax, and underestimate that of the poorest regions where low-size activities predominate (Díez-Minguela and Sanchis 2019). Activities not subject to fiscal levies in the past included the army, public services, professional activities, household activities and small size establishments (Delefortrie and Morice 1959). To correct the biases the tax information should be combined with other sources, such as population, land and manufacturing censuses.

  16. 16.

    Geary and Stark (2002, 2016) for Great Britain, Martinez-Galarraga et al. (2010, 2013, 2015) for Spain, Felice (2005a, b) for Italy, Badia-Miró et al. (2012) for Portugal, Buyst (2010) for Belgium, Sweden, Enflo et al. (2014), Díez-Minguela and Sanchis (2019) and Rosés and Sanchis (2019) for France, Enflo (2014) for Finland.

  17. 17.

    Some datasets of European historical estimates have been constructed combining direct estimates based on production for some industries with others based on Geary & Stark. For instance, Schulze (2007, 2019) for Austria-Hungary, Felice (2011, 2019) for Italy, Martinez-Galarraga et al. (2011) for Spain.

  18. 18.

    This criticism has been tested for the Austria-Hungary Empire by Pammer (1997) with reference to the work of Good (1994).

  19. 19.

    The stability of the parameters across time has been tested by Díez-Minguela and Sanchis (2019) for France in 1911. They compare regional income estimates obtained using parameters estimated for different benchmark years. These results clearly confirm the instability of the estimated parameters and, therefore, question the consistency of regional income estimates.

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Authors and Affiliations

  1. Universitat de València, València, Spain

    Alfonso Díez-Minguela & María Teresa Sanchis Llopis

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  1. Alfonso Díez-Minguela
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  2. María Teresa Sanchis Llopis
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Correspondence to Alfonso Díez-Minguela .

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Editors and Affiliations

  1. Departament d’Anàlisi Econòmica, Universitat de València, València, Spain

    Daniel A. Tirado-Fabregat

  2. Departament d’Història Econòmica, Institucions, Política i Economia Mundial, Universitat de Barcelona, Barcelona, Spain

    Marc Badia-Miró

  3. Universidad de la República, Montevideo, Uruguay

    Henry Willebald

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Díez-Minguela, A., Sanchis Llopis, M.T. (2020). Comparing Different Estimation Methodologies of Regional GDPs in Latin American Countries. In: Tirado-Fabregat, D.A., Badia-Miró, M., Willebald, H. (eds) Time and Space. Palgrave Studies in Economic History. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-47553-6_2

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