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13 May 2002

ISIC 4 questionnaire - Summary of responses C1

For each of these issues, please provide your views concerning the importance and relevance of the issue, as well as any reasons for the preferred solution. Please add any other cross-cutting issues you would like to see addressed in the revision. C. Content and boundary issues 1. There are many gray areas at the boundary between primary industries and manufacturing. For example, in the case agriculture and manufacturing, should cotton ginning be classified as an agricultural activity or a manufacturing activity? How can such issues be dealt with? Are there any guiding principles that can be used?

The responses to this question bore out clearly the need for greater definition and practical guidance in distinguishing between the agriculture and manufacturing divisions and also between the mining and manufacturing divisions. The need for similarity criteria in the creation of ISIC categories was stressed. However, such criteria should reflect the diversity found in economies worldwide. The interpretation of "transformation" was identified as a key aspect in such definition. In general terms, the following ideas received the greatest currency for serving as rules in the delineation of the boundaries between manufacturing and mining or agriculture: - preliminary processing activities associated with agriculture should be classified in agriculture - activities done on the same premises, by the same entities should be classified together (presumably in the category of the primary activity) - the concept of vertical integration is important. Activities that are an indispensable part of an integrated process should be classified with the primary activity. The destination of a product should also be a consideration. In more specific terms, a majority of respondents were in favour of classifying cotton ginning as an agricultural activity, mainly because of the guiding principles cited above, however a number of respondents preferred to classify it as a manufacturing activity, citing among their reasons: - Cotton ginning is a predominantly manufacturing activity because it is carried out in a factory setting; - Cotton ginning has much in common with activities such as wheat milling and oil extraction, activities which are clearly identified as being within manufacturing - Cotton ginning does not entail the nurturing of organic growth or the harvesting of mature organisms. These two criteria are being proffered as important defining elements in the agriculture division. A compromise suggestion was also proposed: - creation of a separate category for processing, where activities such as cotton ginning, seed separation, tobacco drying, washing/grading of minerals, etc. could be placed. This would create flexibility, allowing for differences in patterns of production, respecting local custom, but retaining the ability for combination with the other categories, if this was deemed important/necessary.