GIK04
Supply and use tables
Supply and use tables (SUT) summarize all transactions between producers and consumers in economy.
Economy of Latvia is made up of many industries, each of which producing some goods and services. As a small and open economy, Latvia depends on imported goods and, to a lesser extent, services. In SUT, goods and services purchased by enterprises and used further in the production of their products are defined as intermediate inputs. Enterprises can buy products and use them as investments in fixed assets (gross capital formation). Goods and services can be purchased by households and the government, or they can be exported to other countries.
All transactions between producers and consumers are recorded in SUT, which answers three key questions:
- Which industries produce what types of goods and services?
- Who purchases what types of goods and services?
- How much added value is generated in this process?
Final consumption expenditure of households
Final consumption expenditure of associations, political and religious organizations (final consumption expenditure of non-profit institutions serving households) is also added to the final consumption expenditure of households.
Final consumption expenditure of general government
Final consumption expenditure of general government includes final consumption expenditure of central and local government-financed institutions, social security fund, central and local government-controlled and financed capital companies.
Products (goods and services)
SUT provides insight in cycle of products in Latvian economy. In what proportions are products produced by each industry or imported, and who consumes them: other industries, households, government or consumers in other countries?
- Supply at purchasers’ prices is equal to:
- product output at basic prices
- plus imports at basic prices
- plus trade and transport margins
- plus taxes on products
- minus subsidies on products.
- Use at purchasers’ prices is equal to:
- intermediate consumption
- plus final consumption expenditure (of households and general government)
- plus gross capital formation
- plus exports.
Margin
Margin includes wholesale, retail and transport margin and applies only to goods.
Taxes on products
Produced and imported goods and services are subject to taxes on products, such as value added tax, excise tax, etc.
Use of general government
Services provided free of charge by general government to households, such as primary education, is use of general government.
Goods that general government buys from enterprises and offers to households free of charge, such as reimbursable medicines, is use of general government.
Many goods and services consumed by government for the functioning of institutions and their employees are recorded as intermediate consumption in 'Public administration and defence, compulsory social security'. See infographics Industries in Latvian economy.
Industries
- SUT illustrates which industries make up the Latvian economy and shows how value added is generated in industries, what is its distribution (compensation of employees, taxes on production (minus subsidies) and gross profit and mixed income). The share of value added of the industry in total value added illustrates the importance of the industry in economy, while changes in value added – whether the industry is developing or stagnating. The breakdown of industry output by products shows what goods and services are produced by the industry. Intermediate consumption is the goods and services used in the production process.
Taxes on production
Taxes on production are not tied to a specific product. They are, for example: taxes on natural resources, annual vehicle tax for vehicles of legal entities, business risk state fee, etc.
Supply table
The supply table presents supply of different goods and services that are produced in the domestic market or imported from abroad. In other words, it answers a question: Which industries produce what types of goods and services? Products (goods and services) are shown in rows, while domestic industries and imports are shown in columns.
Use table
In use table products (goods and services) are listed in rows. Industires, households, government, investment in fixed assets (investment) and exports are listed in columns. The table helps answering the question:Who purchases what types of goods and services? The use table also shows the value added by each industry. Value added consists of compensation of employees, taxes on production (minus subsidies) and operating surplus or gross profit and mixed income of the sector.