The national accounting paradox: how statistical norms corrode international economic data

Published date01 June 2021
Date01 June 2021
DOI10.1177/1354066120936339
https://doi.org/10.1177/1354066120936339
European Journal of
International Relations
2021, Vol. 27(2) 403 –427
© The Author(s) 2020
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DOI: 10.1177/1354066120936339
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E
JR
I
The national accounting
paradox: how statistical
norms corrode international
economic data
Daniel Mügge1 and Lukas Linsi2
1University of Amsterdam, Amsterdam, Netherlands
2University of Groningen, Groningen, Netherlands
Abstract
The transnationalization and digitization of economic activity has undermined the
quality of official economic statistics, which still center on national territories
and material production. Why do we not witness more vigorous efforts to bring
statistical standards in line with present-day economic realities, or admissions that
precision in economic data has become increasingly illusive? The paradoxical answer,
we argue, lies in the norms underpinning global statistical practice. Users expect
statistics to draw on unambiguous sources, to allow for comparison over time
and across countries, and they prize coherence—both internally and with holistic
macroeconomic models. Yet as we show, the ambition of the transnational statistical
community to meet these norms has in fact undermined the ability of economic
data to represent economic life more faithfully. We base our findings on interviews
with two dozen leading statisticians at international economic organizations, archival
research at the International Monetary Fund and a thorough review of debates
among statistical experts.
Keywords
Economic measurement, international organizations, constructivism, balance of
payments, norms, statistics
Corresponding author:
Daniel Mügge, Universiteit van Amsterdam, Nieuwe Achtergracht 166, Amsterdam 1018WV, Netherlands.
Email: d.k.muegge@uva.nl
936339EJT0010.1177/1354066120936339European Journal of International RelationsMügge and Linsi
research-article2020
Article
404 European Journal of International Relations 27(2)
There is a growing appreciation that the statistical compilation tools and accounting frameworks
designed and developed over the last 60 years . . . may reflect a world that no longer exists.
Nadim Ahmad, Head of Trade and Competitiveness Statistics Division, OECD
(Ahmad, 2018: 1)
Introduction
Statistics are the bedrock of economic policymaking and debate. They allow computa-
tion, comparison, historical analysis, and future forecasting. Without such data, “the
economy” would remain an intractable abstraction for policymakers, citizens, and ana-
lysts alike.
Yet, the quality of ubiquitous economic data is much worse than their users typically
acknowledge (Damgaard and Elkjaer, 2017; International Monetary Fund, 1987, 1992;
Linsi and Mügge, 2019; Morgenstern, 1963; UNECE, Eurostat and OECD, 2011). If
economic data fail to capture what they purportedly claim to represent, public delibera-
tion, economic policy, and academic analysis drawing on them all suffer.
Statistical quality has deteriorated because of a widening gap between the concepts
international economic data claim to capture and the measurements that find their way
into official databases—a phenomenon we call the concept–measurement gap. Indicators
had been devised for economic structures clustered in national territories and focused on
material production—the industrial economies in the Global North that we associate with
the decades following the Second World War. Today, these structures are transnationally
integrated, and intangible production and assets—services, derivatives, knowledge,
licenses, and so on—are central. But while the transnationalization and digitization of
economic activity has undermined the conceptual validity of key economic indicators
(Ahmad, 2018; Lipsey, 2006), our statistical concepts have hardly changed. This is true
for many macroeconomic figures, yet it particularly affects Balance of Payment (BOP)
statistics, which measure cross-border flows of goods and capital, collected following the
Balance of Payments Manual (BPM) issued by the International Monetary Fund (IMF).
Statisticians who craft the standards for BOP statistics are keenly aware of the problems
an increasingly transnational and intangible economy poses (Ahmad, 2018; Bloch and Fall,
2015; Moulton and van de Ven, 2018; UNECE et al., 2011). Yet their attempts to address
the concept–measurement gap have thus far been remarkably ineffective. A priori, we
might expect statisticians to respond in two possible ways. They could either overhaul
statistical standards to match the new economic structures. Or they could incorporate ambi-
guity in their published statistics, for example by using uncertainty margins, or by simply
admitting that we lack meaningful figures. But we observe neither. The production of data
continues largely unchanged, leaving most data users with the erroneous impression of
high-quality figures. Why, we ask, is the widening concept–measurement gap neither nar-
rowed by reforming standards nor reflected in the data itself? What explains the skewed
statistical representations that surround us and guide economic debates and policy?
We argue that the stickiness of statistical standards stems from the norms that under-
pin macroeconomic statistics as a field of transnational knowledge production. Our anal-
ysis highlights four norms that create a strong conservative bias in international statistical
standards. We call them comparability (the desire to compare statistics across countries),

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