Dividing the economy into sectors helps to provide a more detailed analysis of how the various parts are faring. ‘Sector’ has two meanings in National Accounts: NACE economic activity sector which divides up producers based on the goods or services they output (e.g. manufacturing, education), and institutional sector which divides up producers and consumers based on their internal characteristics (households, government, corporations).
NACE economic activity sectors and institutional sectors are dividing the same thing different ways, so the total for all NACE sectors equals the domestic economy, and so does the total for all institutional sectors. One institutional sector can produce goods across many NACE sectors. The government institutional sector has activities in the NACE sectors of public administration, education, health and so on. Similarly, one NACE sector might have several institutional sectors active within it. In the education NACE sector there are several institutional sectors creating value: as well as government schools, there are colleges run by companies, households (for example, a self-employed music tutor) and non-profit organisations providing education.
Economic activity sectors group producers according to what their output is. Producers include companies, people working for themselves and government agencies. Ireland, like the rest of the European Union, uses the Statistical Classification of Economic Activities in the European Communities to define the different groups. In French this is called Nomenclature générale des Activités économiques dans les Communautés Européennes and the acronym NACE from the French is commonly used. In the Annual National Account, formerly know as National Income and Expenditure the economy is divided into ten sectors:
The NACE system also provides more detailed classifications. For instance, there is a 21-sector breakdown, in which the sectors above are further sub-divided. In this 21-sector classification, group 9 is split three ways: public administration is shown separately from education, and health is in its own category. If very detailed analysis is needed, NACE gives hundreds of narrow categories, such as “manufacture of brooms and brushes” (group 32.91) or “motion picture, video and television programme post-production activities” (group 59.12).
The NACE sector of a producer is the activity it makes most of its money from. If a factory makes mostly brooms (group 32.91) but also a few walking sticks (group 16.29), then the whole factory will be classified in group 32.91.
The economic sector of a worker depends on the sector of the employer, not on the kind of work that they do. For example, if someone is working as a doctor for a drug company, their wages will be counted in the manufacturing sector’s wages (group 2, above), not in the health sector (group 9 above) wages.
Institutional sectors divide the economy in terms of the types of institutions they are, and not what they produce. The institutional sectors are
There is also an institutional sector called Rest of the World, which shows the economic transactions between the domestic economy and all other countries.
