Indicator 2.a.1 The agriculture orientation index for government expenditures

Indicator 2.a.1: The agriculture orientation index for government expenditures

Target 2.a: Increase investment, including through enhanced international cooperation, in rural infrastructure, agricultural research and extension services, technology development and plant and livestock gene banks in order to enhance agricultural productive capacity in developing countries, in particular least developed countries

Food and Agriculture Organization of the United Nations (FAO)

Definition:

The Agriculture Orientation Index (AOI) for Government Expenditures is defined as the Agriculture share of Government Expenditure, divided by the Agriculture value added share of GDP, where Agriculture refers to the agriculture, forestry, fishing and hunting sector. The measure is a currency-free index, calculated as the ratio of these two shares. National governments are requested to compile Government Expenditures according to the Government Finance Statistics (GFS) and the Classification of the Functions of Government (COFOG), and Agriculture value added share of GDP according to the System of National Accounts (SNA).

Concepts:

Agriculture refers to the agriculture, forestry, fishing and hunting sector, or Division A of ISIC Rev 4 (equal to Division A+B of ISIC Rev 3.2).

Government Expenditure comprise all expense and acquisition of non-financial assets associated with supporting a particular sector, as defined in the Government Finance Statistics Manual (GFSM) 2014 developed by the International Monetary Fund (IMF). NOTE: Transactions in assets and liabilities, such as loans by general government units (disbursement and repayment), are excluded when compiling COFOG data for GFS reporting purposes.

Government Expenditure are classified according to the Classification of the Functions of Government (COFOG), a classification developed by the Organisation for Economic Co-operation and Development (OECD) and published by the United Nations Statistical Division (UNSD).

Agriculture value-added and GDP are based on the System of National Accounts (SNA).

Index

See 4.c. Method of computation, below.

Data on government expenditures is collected from countries through an annual questionnaire administered by FAO. These data are not affected by sampling error, given that countries typically compile the questionnaires administered by FAO on the basis of their financial and accounting systems, using administrative information on government expenditures based on the availability and comprehensiveness of source data. For some countries that do not report directly data to FAO, key expenditure aggregates needed to calculate Indicator 2.a.1 are obtained either from the IMF GFS database, from other regional organizations, or from official national governmental websites.

Data on agriculture value-added and GDP are retrieved from the UN Statistics Division, which provides national accounts estimates for 220 countries and territories.

Ministry of Finance, Central Planning Agency, Central Banks, National Statistics Office, and/or Ministry of Agriculture.

Since the numerator of this data is based on financial and accounting systems and administrative sources, there is no confidence interval or standard error associated with government expenditure data. For the denominator, national accounts data typically do not provide any standard error or confidence interval information.

The key limitation with this indicator is that Consolidated General Government expenditure – the best measure for cross-country comparisons – is not available for all reporting countries. While most advanced economies – and many emerging market economies – do report these data, many smaller and/or low-income economies either do not have significant fiscal interventions in agriculture at the state/provincial and local/municipal levels; or do not have adequate source data to compile meaningful general government estimates for each subsector, as relevant. Given that in several countries, significant intervention in agriculture is implemented by sub-national governments, the Indicator 2.a.1 is calculated using the highest level of government available for the reporting country. For some countries, such as India, where the general government sector is defined for fiscal policy purposes as budgetary central government plus state government, the Indicator will take this into account.

Annex I lists the reporting countries, their M49 code, the latest year for which data are available and the level of government for which data has been reported. The level of government notation used is as follows: GG: Consolidated General Government; CG Consolidated Central Government (excluding Social Security Funds): CGI: Consolidated Central Government (including Social Security Funds); BA: Budgetary Central Government.

$AOI\mathrm{\ }=\mathrm{\ }\frac{Agriculture\mathrm{\ }Share\mathrm{\ }of\mathrm{\ }Government\mathrm{\ }Expenditures}{Agriculture\mathrm{\ }value\mathrm{\ }added\mathrm{\ }Share\mathrm{\ }of\mathrm{\ }GDP}$

where:

$Agriculture\mathrm{\ }Share\mathrm{\ }of\mathrm{\ }Government\mathrm{\ }Expenditures$

$=\mathrm{\ }\frac{Government\mathrm{\ }Expenditures\mathrm{\ }on\mathrm{\ }Agriculture}{Total\mathrm{\ }Government\mathrm{\ }Expenditures}\times 100$

Agriculture refers to COFOG category 042 (agriculture, forestry, fishing and hunting); and

$Agriculture\mathrm{\ }value\mathrm{\ }added\mathrm{\ }Share\mathrm{\ }of\mathrm{\ }GDP$

$=\mathrm{\ }\frac{Agriculture\mathrm{\ }value\mathrm{\ }added}{GDP}\times 100$

Agriculture refers to the Division A of ISIC Rev 4 (agriculture, forestry, fishing and hunting), equal to Division A+B of ISIC Rev 3.2.

2024-07-29

Food and Agriculture Organization of the United Nations (FAO)

Indicators 17.1.1 and 17.1.2 also apply IMF GFS methodology.

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