Glossary:Allocation of primary income account
From Statistics Explained
The allocation of primary income account of the national accounts (NA) account focuses on resident institutional units or sectors in their capacity as recipients of primary incomes rather than as producers whose activities generate primary incomes.
It lists two kinds of primary income under 'resources':
- primary incomes already recorded in the generation of income account that are receivable by resident institutional units by virtue of their direct participation in the production process (mainly operating surplus and mixed income, compensation of employees)
- property incomes receivable by the owner of a financial asset or a tangible non-produced asset in return for providing funds to, or putting the tangible non-produced asset at the disposal of, another institutional unit (interest, dividends, withdrawals from income of quasi-corporations, reinvested earnings of foreign direct investment, rents on land).
Property income paid is recorded under 'uses'.
The balancing item of the allocation of primary income account is called 'balance of primary income' for sectors and sub-sectors and 'national income' for the total economy. When the balancing item includes consumption of fixed capital (CFC), it is called 'gross balance of primary income' and 'gross national income (GNI)', respectively. After deduction of CFC it is called 'net balance of primary income' and 'net national income (NNI)', respectively.
The allocation of primary income account can be calculated only for the institutional sectors and sub-sectors because, in the case of industries, it is impossible to break down certain flows connected with financing (capital loans and borrowings) and assets.