The paper raises three questions. Firstly, it is warranted that a significant part
of primary (property) income is not shown in the national accounts as being distributed
to the owners of the assets to which it accrues but ends up as capital gains in the
revaluation account? Secondly, why has the SNA chosen not to record reinvested earnings
of corporations as flows of property income with the exception of foreign direct
investment, and thirdly why the asymmetrical recording of stock investments constituting
more than 10 percent of equity capital depending on whether domestic or foreign transactions
are concerned? Reinvested earnings on domestic equity investment above 10 percent
of a corporation are not recorded as property income in the system.
The paper looks at these three questions from the perspective of the analytical
uses of national accounts. The consequences for the analysis of income distribution
both between nations and within nations are examined.