Launch and Utilization of Economic Census for Business Activity

Consulting Fellow, RIETI

The Economic Census for Business Activity, a joint survey conducted by the Ministry of Economy, Trade and Industry (METI) and the Ministry of Internal Affairs and Communications (MIC), began on February 1, 2012. For those involved in statistics, conducting an economic census has been a long-standing goal. Calls for introducing an economic census began around 2003 in view of the necessity of comprehensive industrial statistics, as many people became aware of shortcomings in Japanese statistics. For instance, it has been pointed out that existing economic statistics, taken and compiled in a sectorally segmented manner, do not provide the whole picture of the service industries. Then in 2007, the Statistics Act was revised in its entirety for the first time in 60 years. The Economic Census for Business Activity was realized on the basis of the Economic Census for Business Frame conducted in 2009. The Economic Census for Business Activity and the Economic Census for Business Frame (collectively referred to as "Economic Census" unless a distinction is necessary) have a variety of features, but I would like to focus my discussion on the following two key aspects: "comprehensiveness" and "linking platform."


The Economic Census is comprised of two surveys. One is the Economic Census for Business Frame, the first of which was conducted in 2009. It is designed to capture the presence and nature of "establishments and enterprises," the type of information that serves as a basis for carrying out a census. The other is the Economic Census for Business Activity, the first of which is currently underway.

In a nutshell, the Economic Census for Business Activity is the economic version of the population census. Using information collected in the Economic Census for Basic Frame as the basis, a questionnaire is sent out to almost all establishments and enterprises in Japan, asking respondents to provide basic business data such as sales, the number of employees, and capital investment effective at a particular point in time. This is the nation's first survey designed to capture such business information effective at an identical point in time in the same format and in such a comprehensive scope. Indeed, the sheer size of the survey is evident in specific figures; approximately 6.2 million establishments, 1.8 million incorporated enterprises, and 2.4 million self-owned businesses are covered in the ongoing census.

The greatest significance of the Economic Census for Business Activity is the fact that it enables us to capture a comprehensive picture of Japan's industrial activities at a certain point in time. There is an old parable of the blind men and an elephant. It suggests that when you rely on partial information, you cannot get the overall picture and may end up with a mistaken idea instead. The metaphoric expression may be a bit too strong, but it has been long pointed out that Japan's overall industrial structure and trends cannot be captured accurately by data from surveys conducted on an industry-by-industry basis by the respective government agencies or the sections in charge at different points in time. The National Accounts of Japan (SNA), which provide the entire picture of the Japanese economy, are the product of various estimates. It is expected that we will be able to obtain a closer-to-real picture of the Japanese economy by utilizing findings from the Economic Census for Business Activity. Particularly noteworthy is that data from the Economic Census will enable us to capture the entire service sector quantitatively which, despite constituting a key segment of the Japanese economy, has been captured only in a fragmented fashion. The government's economic and industrial policies have long tended to be focused on the manufacturing sector. However, as the globalization of companies and businesses accelerates, the promotion of policy measures targeted at service industries, which are by nature driven by domestic demand, will likely become one of the pillars of the government's economic and industrial policies from the viewpoint of ensuring economic growth and maintaining employment in Japan. The Economic Census for Business Activity will provide basic data for implementing such policies.

Linking platform (functioning as a business register)

Another feature of the Economic Census is its function as a business register.

As discussed above, the government takes and maintains a number of industry-specific statistics, and there are also various other kinds including structure statistics, dynamic statistics, and business statistics. Thus, we can obtain various data and information concerning specific companies and establishments such as the annual amount of manufactured goods shipped (Census of Manufacturers) and monthly production figures (Current Survey of Production) of an establishment under the umbrella of a certain automobile manufacturer as well as various company-level figures such as sales, capital investments, and research and development (R&D) costs. However, it has been impossible to combine these various kinds of information for conducting comprehensive analysis.

The Economic Census assigns a code to each company or establishment surveyed. In the database, the code assigned to a certain company and those assigned to establishments under its umbrella are linked and managed as a group. The codes assigned in the Economic Census will be used in all subsequent government statistical surveys. This will make it possible to link all government statistical data longitudinally. The Business Register, slated for launch in January 2013 and a step-by-step functional expansion later on, is the system enabling this.

One way to analyze statistical data is through panel data analysis, which examines changes in longitudinal data on a fixed group of companies or establishments. It is expected that the Business Register will make this type of analysis easier than before.

Furthermore, it will be possible to develop new information by linking data from multiple statistical sources. For instance, suppose we select a group of highly performing companies on the basis of the return on assets (ROA) and the ratio of value added to sales using data from the Business Survey on Japanese Business Structure and Activities and perform comparative analysis on these companies in overseas business activities and intellectual properties owned. This will become much easier as well. It has been pointed out that the quality of labor input as a production factor from which companies generate value added is hard to measure. However, by providing appropriate linkage to data collected in the Basic Survey on Wage Structure, we will be able to develop useful labor input data that would contribute to policy discussion concerning industrial human resources.

Meanwhile, once accurate data on the geographic location of business establishments and so forth are registered and made available for use, it will become easier to grasp the picture of a local shopping district, a kind of information that takes considerable effort to create when using data from the Census of Commerce. This will enable us to analyze the shopping district?its rise and fall or else?more efficiently. The ongoing Economic Census for Business Activity covers not only eating and drinking establishments but also other kinds of service establishments. By using data on all those data, it will be possible to perform an even more detailed analysis of the shopping district.


As discussed above, we will be able to link establishment-level data to their relevant company-level data by utilizing the linking platform of the Economic Census. The Business Survey on Japanese Business Structure and Activities, which has been conducted by METI over the past 15 years, has not been utilized to its fullest potential and should be used further. By using data from the survey in combination with other data on establishments and enterprises, we would like to develop and enhance statistical information infrastructure as a policy platform, including the acceleration of a shift from a policy targeted at industries and business establishments to one focusing on company's activity that involves multiple types of business.

February 28, 2012

February 28, 2012

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