1993 SNA Update Information - Expert comments for issue:
Military expenditures | | Issue description | | Issue description in [English] | [French] | [Russian] | [Spanish] | | The 1993 SNA divides military acquisitions into offensive weapons and their means of delivery, and all
other. The former are excluded from capital formation regardless of their life length. This treatment implies
that “defence” is not a service provided by government using military hardware as associated assets.
Further, weapons that have already been expensed can actually be taken out of stock for use or for exports
and would have to be balanced by a negative component in government final consumption. Should the line
between gross capital formation and intermediate consumption be drawn differently? |
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| | Expert comments | | Number of expert comments for selected issue: | 3 | | Date posted | Source | Comment |  | | 8/24/2004 | Robin Lynch |  m1(c)uk; | | 8/11/2004 | Fadhil Mahdi (ESCWA) | The 1993 SNA distinguishes between military expenditure for civilian purposes (such as police, civil defense) and military expenditure for military purposes (such as purchases of tanks, ships, fighter aircraft…), where the first are treated as fixed capital formation and the latter are treated as intermediate consumption in government services.
The AEG approved the proposal of the Canberra II group to drop this distinction in the 1993 SNA and recommended treating such military expenditures as fixed assets.
However, this proposal did not meet unanimous acceptance from AEG members. In this regard, we think that the 1993 SNA treatment of this issue should remain since military expenditure does not generate tangible production. In addition, these expenditures increase drastically the value of capital formation in developing countries. While the value added generated by the total investment becomes very small especially in the non-producing countries importing the weapons. | | 4/27/2004 | Andre Vanoli | m1(c)vanoli; |
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