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ANNEX 3 THE PROCESS OF ESTIMATING THE
CONTRIBUTION TO
GDP
The estimate of the contribution of
MEBs is based on a number of
assumptions. The process is explained in more detail in
this annex. As indicated in the report, the estimate must
be treated with caution as each stage in this process
contains assumptions, which are detailed as follows.
Estimate of the number of
MEBs.
A3.1 This is based on the using the proportion of
minority ethnic self-employed as proxy for the proportion
of all
MEB owners. The proportion of
self-employed is calculated at 3 per cent, however, it was
noted that the method of recording self-employed may
under-estimate the proportion of all self-employed, this is
due to the age range that is used in Census data to
calculate the numbers of self-employed.
A3.2 Using the figure of 149,300 for all registered
enterprises in Scotland during 2001, gives a figure of
4,400 registered
MEBs. It can be argued that there are
more small or medium-sized enterprises (
SMEs) in total. One estimate is over
234,000 enterprises in Scotland. However, 4,400 can be used
as a conservative estimate of the number of
MEBs in Scotland.
GDP in Scotland in 2001
A3.3 The next stage is to use a figure for
GDP for 2001. The latest revised figures
for
GDP put this at £64,000 million for
2001.
Estimate of
MEBs contribution to private
sector's share of
GDP.
A3.4 According to the
DTI,
SMEs account for 52 per cent of private
sector turnover. It can be argued that turnover cannot be
used in calculating
GDP, since it is value-added that
contributes to
GDP. However, it is a reasonable
assumption that
SMEs also contribute 50 per cent of
value-added and hence the private sector's contribution to
GDP. Although, it should be noted that
correlation between turnover and contribution to
GDP will vary over time and by
industrial sector, so
inter alia such estimates may vary over time.
Contribution to
GDP: estimating the range
A3.5 The final step in the calculation is to assume that
the share of private sector turnover and value-added will
be in a range which is less than half of this, that is 1 to
1.5 per cent of
GDP.
A3.6 Strictly, 1 to 1.5 per cent would give a
contribution in a range from £600 million to £900 million.
To be more conservative the estimate has been reduced to
£500 to £700 million.
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