Institutional Units and Sectors 13
by individual members of the same household may
be pooled for the benefi t of all members. Moreover,
many expenditure decisions, especially those relating
to the consumption of food or housing, may be made
collectively for the household as a whole. It may be
impossible, therefore, to draw up meaningful balance
sheets or other accounts for individual members of a
multiperson household. For these reasons, the house-
hold as a whole rather than the individual persons in
it must be treated as the institutional unit.
Legal and social entities
2.30 A legal or social entity is one whose existence
is recognized by law or society independently of the
persons or other entities that may own or control it.
Th ree types of legal or social entities are recognized as
institutional units: corporations and nonprofi t institu-
tions are primarily created for purposes of production
of goods or services; and government units are cre-
ated by political processes.
Corporations
2.31 Corporations are defi ned as entities that
are capable of generating a profi t or other fi nancial
gain for their owners, are recognized by law as sepa-
rate legal entities from their owners, and are set up
for purposes of engaging in market production. Th e
key to classifying a unit as a corporation in macro-
economic statistics is not its legal status but rather the
economic substance of the nature of the entity. Th e
laws governing the creation, management, and op-
erations of legally constituted corporations and other
entities may vary from country to country, so that it
is not feasible to provide a legal defi nition of a cor-
poration that would be universally valid. Th erefore,
in macroeconomic statistics, the term corporation is
not necessarily used in the same way as in the legal
sense.^11
2.32 Th e key to classifying a unit as a corporation
in macroeconomic statistics is the notion of being a
market producer (see paragraph 2.65). Of particular
importance are the characteristics to produce goods
and services for the market at economically signifi -
cant prices as explained in paragraph 2.66, and the
potential to be a source of profi t or other fi nancial
(^11) For a full discussion on the features of corporations, also see the
2008 SNA, paragraphs 4.38–4.50.
gain to the owners. Some nonprofi t institutions and
government units have the legal status of a corpora-
tion, but are not considered corporations for the pur-
poses of macroeconomic statistics because they are
not market producers. Other nonprofi t institutions
are legal corporations that produce for the market
but they are not allowed to be a source of fi nancial
gain to their owners. Conversely, some entities with
diff erent legal titles, such as partnerships or a joint-
stock company, could be considered corporations for
economic statistics when they satisfy the defi nition of
corporations.
2.33 A quasi-corporation is either (i) an unincor-
porated enterprise owned by a resident institutional
unit that has suffi cient information to compile a com-
plete set of accounts, that is operated as if it were a
separate corporation, and whose relationship to its
owner is eff ectively that of a corporation to its share-
holders, or (ii) an unincorporated enterprise owned
by a nonresident institutional unit that is deemed to
be a resident institutional unit because it engages in
a signifi cant amount of production in the economic
territory over a long or indefi nite period of time.^12
Th ese entities are not incorporated or otherwise le-
gally constituted, but function as if they were corpo-
rations. Th ey are treated as corporations in GFS (see
paragraphs 2.125–2.127).
2.34 An establishment or group of establishments
engaged in the same kind of production activities
should be treated as a quasi-corporation if the follow-
ing criteria hold:
- Th e establishment charges prices for its outputs
that are economically signifi cant (see paragraph
2.66).
- Th e establishment is operated and managed in a
similar way to a corporation. - Th e establishment has a complete set of accounts,
or is able to construct a complete set of accounts,
that enable its stock positions and fl ows to be
separately identifi ed and measured.
(^12) Unincorporated enterprises, such as some post offi ces or na-
tional railways, may exist in government ministries. When these
unincorporated enterprises produce goods and services for the
market at economically signifi cant prices, and have separate sets
of accounts, they are quasi-corporations and classifi ed as part of
public corporations. If not, they may be market establishments as
discussed in paragraph 2.75.