2.7 The concept of production

In national accounting, production is thought of as a process. Production means that labour and capital are applied to converting goods and service inputs into new goods and services. Production also comprises the manufacture and distribution of a wide range of different goods and services. A further dimension of the concept of production is that responsibility for the organisation, control and supervision of production is ascribed to some institutional unit.

Not all economic production, however, falls within the scope of the national accounts. It is therefore crucial to draw a boundary line between production that is within and production that is outside the scope of the national accounts. This production boundary provides clear directions for dealing with the extent of production in the national accounts.