22 Government Finance Statistics Manual 2014
one or more market establishments.^25 A market es-
tablishment is an establishment that charges econom-
ically signifi cant prices. Where a general government
unit sells some of its output at prices that are econom-
ically signifi cant, it may be possible to identify market
producers. Market establishments within government
that satisfy the criteria to be separate institutional
units are quasi-corporations (see paragraph 2.22),
and are treated in the same way as corporations. Th e
remaining market establishments would remain an
integral part of the general government sector.Th e General Government Sector and Its Subsectors
2.76 Th e general government sector consists of
resident institutional units that fulfi ll the functions of
government as their primary activity. Th is sector in-
cludes all government units and all nonmarket NPIs
that are controlled by government units. For analytic
purposes, it is oft en necessary or desirable to disaggre-
gate the general government sector into subsectors.
2.77 Depending on the administrative and legal
arrangements, there may be more than one level of
government within a country, and statistics should
be compiled for each level (also referred to as sub-
sectors). However, because of these diff erent arrange-
ments, international comparison of data for each
subsector of general government should be under-
taken with some caution. In macroeconomic statis-
tics, provision is made for three subsectors of general
government: central, state, and local. Not all countries
have all three levels; some may have only a central
government or a central government and one level
below. Other countries may have more than three lev-
els. In that case, the various units should all be classi-
fi ed as one of the three subsectors suggested here. In
addition to levels of government, the existence of so-
cial security funds and their role in fi scal policy may
require that statistics for all social security funds be
compiled as a separate subsector of the general gov-
ernment sector.
2.78 A full classifi cation of the subsectors of the
general government would allow for both NPIs and
social security funds to be distinguished for each of(^25) Th e sales of goods and services (142) include sales of market
establishments and sales by nonmarket establishments, and
are identifi ed as specifi c categories of revenue (see paragraphs
5.136–5.141).
central, state, and local government subsectors. In
practice, though, it is usual to present social security
funds in one of two alternative sets of subsectors, as
illustrated in Figure 2.3.^26
- All social security funds could be combined into
a separate subsector and all other general gov-
ernment units could be classifi ed according to
their level. In that case, the central, state, and
local government subsectors would comprise
all government units other than social security
funds; or - Social security funds could be classifi ed accord-
ing to the level of government that organizes and
manages them and therefore be combined with
the other general government units at the respec-
tive subsectors. Th us, the general government
would consist of central, state, and local govern-
ments, assuming that all three levels of govern-
ment exist. To facilitate analysis of social security
funds as a whole, separate statistics for them may
be provided within the statistics for each level of
government.
Countries may choose either presentation.
2.79 Classifi cation problems may arise when gov-
ernment operations are carried out by a general gov-
ernment unit jointly accountable to two levels of
government.^27 Th is classifi cation decision may be espe-
cially diffi cult if the agency has its own source of fund-
ing, such as earmarked taxes. In some cases, an NPI
might be controlled by two or more government units
at diff erent levels of government. For example, a state
government unit might have the right to appoint the
majority of offi cers managing an NPI but the fi nancing
might be provided mainly by the central government.
General government units subject to dual control
should be classifi ed to the level of government that pre-
dominates in terms of control in accordance with all
the indicators of control (see Boxes 2.1 and 2.2).
2.80 Th e central, state, and local government sub-
sectors of general government are each made up of
(^26) Th e alternative methods of subsector classifi cation are designed
to accommodate diff erent analytic needs. Th e decision as to
which method is more appropriate in a given country depends
on how signifi cant social security funds are and on the extent to
which they are managed independently of the government units
with which they are associated.
(^27) Also see the discussion on joint ventures in paragraphs
2.140–2.143.