SNA Economic Agents and Groupings 1: Institutional sectors

The system of national accounts encompasses two kinds of institutional units, households and legal units. A household is a small group of persons who share the same living accommodation, who pool some of their income and wealth and who consume housing and food collectively. Legal units can be corporations, non-profit institutions or government agencies.

The most prominent grouping of units for the national accounts system is the groupings of the institutional units into institutional sectors. The aim of the grouping is classify transactors that are homogeneous according to their primary function in the economic process.

Households

The household sector consists of all resident households. Un-incorporated enterprises owned by households are also included in the household sector, regardless of whether they are market producers or produce for own final use.

The household-sector can be divided into sub-sectors according the household's largest source of income;

• Employers
• Own-account workers
• Employees
• Recipients of property incomes
• Recipients of pensions
• Recipients of other transfer incomes

Non-financial corporations or quasi-corporations¹ are corporations whose principal activity is the production of market goods and non-financial services. The institutional sector is composed of the following sets of resident units: (i) all resident non-financial corporations, irrespective of the residence of their shareholders, (ii) all resident non-financial quasi-corporations including the branches or agencies of foreign-owned non-financial enterprises that are engaged in significant amounts of production on the economic territory on a long term basis, and (iii) all resident non-profit institutions (NPIs) that are market producers of goods and non-financial services.

The non-financial corporations sector can be divided into sub-sectors according to the types of institutional units that exercise control over them;

The financial corporation sector consists of all resident corporations and quasi-corporations principally engaged in financial intermediation or in auxiliary financial activities closely related to financial intermediation. Financial corporations are separated from other corporations through the role they play in society, which is quite different from the role of other corporations. The role of financial corporations consists of channeling funds from lenders to borrowers by intermediating between them. A financial intermediary not only acts as an agent for other institutional units, but places itself at risk by incurring liabilities on its own account.

The financial corporations can be divided into sub-sectors according to main function;

The financial corporations can alternatively be divided into sub-sectors according to ownership (or control).

The principal function of government is to assume responsibility for the provision of goods and services to the community or to individual households and to finance the provision out of taxation or other income, to redistribute income and wealth by means of transfers, and to engage in non-market production.

The general government sector consists of all units of central, state, or local government, all social security funds at all levels of government, and all non-market NPIs that are controlled and mainly financed by government units. The sector does not include public corporations, even when all assets are owned by government. However, general government might include units which are markets producers, even though most of the production by the government are non-market.

The general government can be divided into sub-sectors according to level of government;

The non-profit institution (NPISH) sector consists of trade unions, professional or learned societies, consumer associations, political parties, churches and religious societies, social, cultural, recreational and sport clubs, and charities, as well as aid and relief organizations. If a NPISH is controlled and mainly financed by the government it belongs to the government sector.

Most of the production by the NPISH are non-market, meaning that the NPISH provide the public with their products at no charge, or at prices that are not significant and do not have any influence on neither supply or demand.

Rest of the world is not an institutional sector, but includes institutional units that are resident abroad. The system does not compile accounts for these units, but all transactions between resident and non-resident units are recorded. These transactions are grouped together in one single ‘institutional sector’ or ‘account’ called the Rest of the World.