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Chapter II. Industrial Production
Published online by Cambridge University Press: 26 March 2020
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The index of production, like all the national accounts series, has been rebased onto an average 1975 price basis. The series has been fully rebased from 1973 onwards with the earlier figures simply being rescaled.
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- Copyright © 1979 National Institute of Economic and Social Research
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Note (1) page 16 This can be explained by examining the precise way in which the total weight for MLH 104 is derived. To obtain a measure for net output, the CSO usually uses gross output and assumes a fixed relationship between net and gross output. However, it is clear that such an assumption would not be appropriate as the profile of gross output and costs (including exploration costs) would be very different. Instead two indicators are used: gross output, which has a positive weight, and costs, which have a negative weight. When exploration work is carried out by British contractors for a British licensee, gross output and costs have equal and opposite signs with a net weight of zero. However, when the work is undertaken by a foreign contractor, there is no gross output appearing in the accounts to balance the costs. Such work then has a net weight which is negative. As long as at least one foreign contractor is involved the net weight for such exploration will be negative. Exploration for oil was much more widespread in 1975 than in 1970 and extraction, which has a positive weight, was not correspondingly bigger, thus causing a reduction in the weight. (Price factors here also would have tended to increase the weight but this effect is completely swamped by the exploration effect.)
Note (1) page 18 Defined as imports/home demand.
Note (2) page 18 Defined as exports/manufacturers' sales.