The contribution of the forestry sector to national economies is one dimension of sustainable forest management and information about this is needed to monitor progress in this respect. The Food and Agriculture Organization of the United Nations (FAO) is frequently asked for this information, so this study was commissioned to provide information about this topic. The work involved three main activities: the collection of statistics from published national and international sources; the estimation of missing data points (in order to complete the dataset so that regional and global totals could be produced); and analysis of the dataset.
The study covers the following three economic indicators: employment in the sector; value-added (i.e. the forestry sector’s contribution to GDP); and the value of forest products exports and imports (i.e. the sector’s contribution to trade balances). The objectives of the study were to produce a consistent and comparable dataset on forestry sector employment, value-added and the value of trade for every country and territory in the World, to examine the quality and amount of published data on this subject and to describe and comment on the trends in these indicators over the last ten years. The database that was produced can be freely obtained from FAO (e-mail: [email protected] or [email protected]).
Two major limitations were discovered during the collection of statistics. First, many countries do not publish statistics about employment and value-added in the forestry sector or, where they do, they are often not in sufficient detail. A second problem is that informal forestry sector activities (e.g. production of woodfuel and non-wood forest products) are often not recorded in official statistics and, where they are, the measurement of employment and value-added in these activities may not be very reliable.
It was decided in this study to deliberately exclude all informal forestry sector activities from the analysis. In many developing countries, these activities are significant, so it is very important to note that this study only presents information about the economic contribution of the “visible” or “formal” forestry sector. Therefore, the following figures are an underestimate of the total contribution of the sector to national economies.
Availability and quality of data
Detailed statistics on the total value of forest products trade were available for almost all countries and territories over the period 1990 to 2000. This is because FAO collects this information from countries every year.
For employment and value-added, it was more difficult to collect statistics because existing international databases do not cover the whole of the sector. The three main databases that exist are:
• The Industrial Statistics Database of the United Nations Industrial Development Organization (UNIDO). This includes statistics about employment and value-added in the wood industry and pulp and paper industry, but it does not cover forestry activities.
• The database of the International Labour Organization (ILO) on forestry sector employment in Europe. This includes employment statistics for all three sub-sectors of the forestry sector (i.e. forestry activities, the wood industry and the pulp and paper industry), but it only covers European countries.
• The National Accounts Statistics compiled each year by the United Nations (UN). These include statistics on value-added for every country in the World, but they often do not go into sufficient detail to identify forestry sector activities.
In addition to these sources, information on employment and value-added was collected from national statistical reports (on forestry and national income accounts) and from previous statistical studies commissioned by FAO.
Official statistics on employment in forestry were obtained for 41 countries each year (on average). For the wood industry and pulp and paper industry, official statistics were obtained for 107 and 97 countries respectively (on average each year). Official statistics on value-added in forestry activities were obtained for 85 countries each year (on average). For the wood industry and pulp and paper industry, official statistics were obtained for 94 and 89 countries respectively (on average each year).
As might be expected, at the regional level, the availability of statistics was generally better for developed regions (i.e. North America, Western Europe and the Developed Asia-Pacific region) than for developing regions. In addition, the availability of value-added statistics was slightly better than the availability of employment statistics (particularly in developing regions). It was difficult to assess the quality of the available statistics, but one issue that was identified was the problem of measuring employment numbers. It is suspected that many countries do not convert employment statistics to full-time equivalents. As already noted above, the main problem with the available statistics is that most published statistics probably do not include informal activities in the sector.
Although the absolute number of countries where statistics could be obtained is quite low, it should be noted that these countries account for the majority of the global forest area and production of forest products (i.e. over 80 percent). For countries where official statistics were not available (mostly developing countries) a variety of techniques were used to estimate missing data points from what little data was available. The figures presented here probably give a reasonable indication of the employment, value-added and international trade in the forestry sector at the global and regional levels, but the presence of many FAO estimates at the country level should be noted and these figures should be treated with caution.
Employment. Total employment in the (formal) forestry sector increased by about four percent over the last decade, from 12.4 million in 1990 to 12.9 million in 2000. At the global level, employment is divided roughly equally between forestry activities, the wood industry and the pulp and paper industry. However, at the regional level, forestry activities are relatively more important than processing activities in developing regions.
Labour productivity (i.e. the amount of output per employee) is higher in developed regions than in developing regions. Furthermore, labour productivity has generally remained the same or increased in all three sub-sectors and in most regions. In particular, labour productivity in the pulp and paper industry has increased significantly over the last decade, perhaps due to increases in the scale of operations. The one exception to these general trends is Eastern Europe, where labour productivity has fallen in the forestry and wood industry sub-sectors. This is due to the significant fall in production in this region over the last decade, which has not been matched by the fall in employment numbers.
At the global level, the forestry sector currently employs about 0.4 percent of the total labour force and this figure has fallen very slightly during the period 1990 to 2000. The contribution of the forestry sector to total employment is generally higher in the developed regions and Eastern Europe than in developing regions. This is largely due to the significant numbers of people employed in the processing sector.
Value-added. Total gross value-added in the (formal) forestry sector has not changed much during the 1990s, with an average value of USD 342 billion per year (in real terms) and annual figures within +/- five percent of this average. In 2000, total gross value-added in the forestry sector amounted to USD 354 billion.
Among the three sub-sectors, the pulp and paper industry makes the largest contribution to GDP, accounting for about half of the total gross value-added in the forestry sector. The wood industry is the next largest contributor, with a 30 percent share of the total, while forestry activities account for the remaining 20 percent of gross value-added in the forestry sector. This distribution of the value-added across sub-sectors remained stable in the 1990s.
At the regional level, the majority of global value-added in the forestry sector occurs in the three developed regions. This is largely due to the high levels of value-added achieved in the forest processing sectors in these regions (i.e. these three regions accounted for 85 percent and 80 percent of the global value-added in the wood industry and the pulp and paper industry respectively in 2000). However, these shares have fallen over the last decade, as value-added in the forestry sector has increased in the Latin America and the Caribbean and Developing Asia-Pacific regions.
Value-added per unit of output has generally increased or remained about the same in the forestry and wood industry sub-sectors, but has declined in the pulp and paper industry (due to falling real prices). The major exceptions to this are Western Europe and the Developed Asia-Pacific regions, where value-added per unit of output has declined in the forestry and wood industry sub-sectors, due to increased competition from neighbouring regions.
Value-added per unit of output in the forestry sub-sector is lower in developed regions than in developing regions (due to lower roundwood prices). In general, the reverse is true in the processing sectors. However, the value-added per employee is higher in developed regions than in developing regions in all sub-sectors.
During the last decade, the contribution of the forestry sector to GDP has declined from just under 1.6 percent in 1990 to just over 1.2 percent in 2000. This decline has occurred because the global economy has expanded (i.e. global GDP has increased by 30 percent over the last decade) while value-added in the forestry sector has not increased at all. At the regional level, most regions display the same downward trend, except Eastern Europe and the Latin America and the Caribbean region.
Trade. The real value of forest products exports rose by nearly 50 percent over the last decade to reach a level of USD 144 billion in 2000. Furthermore, international trade in forest products has generally expanded at similar rates in both developed and developing countries.
At the regional level, exports of forest products are dominated by the three developed regions. For example, in 2000, Western Europe and North America together accounted for about three-quarters of global forest products exports, followed by the Developing Asia-Pacific region (with a ten percent share). Furthermore, most international trade in forest products is either trade between these three regions or between countries within each of these regions.
Despite the rapid growth in international trade, the growth in forest products trade has been less than the growth of trade in other merchandise goods. Therefore, the share of forest products in total merchandise exports declined from 2.9 percent in 1990 to 2.2 percent in 2000. This downward trend also appears in all regions except Eastern Europe, where recovery in the forestry sector has generally been more rapid and successful than in many other parts of the economy.
The analysis of the trends in employment, value-added and trade show some interesting and important differences between regions in terms of their levels of development in the forestry sector.
First, in Africa, there have been some improvements in the sector, with increased employment, value-added and exports from the sector over the last decade. However, one country - South Africa - accounts for a large proportion of these improvements. Generally, the forestry sector in Africa does not perform well compared with other regions. For example, Africa accounts for about 16 percent of the global forest area, but only two percent of global value-added and exports. Furthermore, the level of value-added and exports per employee is well below the global average.
The structure of the forestry sector in Africa (i.e. the predominance of forestry activities compared to forest processing activities) suggests that Africa still suffers from a significant lack of industrialisation and general development, due to a variety of political, economic and structural problems. Addressing these problems is likely to remain a concern for policymakers in this region for many years to come.
At the other end of the scale, the three developed regions (North America, Western Europe and the Developed Asia-Pacific region) account for about 30 percent of global employment and the majority of global value-added and forest products exports. As would be expected, for almost all measures of productivity, the forestry sector in these three regions performs at a level that is well above the global average.
However, it is interesting to note that, in terms of the trends in these figures, only exports are increasing in all three regions. Employment is declining, but this is largely due to the substitution of capital for labour. The disturbing trend is that value-added is shrinking in many countries in Western Europe and Japan. This is due to increasing competition in neighbouring regions, which may lead to some structural changes and changes in trade flows in the future. Policymakers and the forest industry in these countries would be well advised to reassess their competitive strengths and advantages in view of the historical changes in these figures and the likely changes in the future.
Eastern Europe presents a very interesting situation that has arisen due to the profound social, political and economic changes that have taken place in this region during the last decade. Forestry sector employment has fallen, but is still relatively high given the overall size of the forestry sector in this region. Exports are significant and have increased dramatically over the last decade. The main problem in this region is that the level of value-added in the sector is comparatively low and has fallen significantly over the last decade (although it has started to rise again in recent years).
A comparison of the figures for employment, value-added and trade suggest that there is substantial potential for development of the forestry sector in this region. However, there is also a significant need for investment in new technology, improved marketing and an upgrading of human resources. The challenge for policymakers and the forest industry in this region will be to assess whether to follow the development model of the developed regions (i.e. substituting capital for labour) or to pursue expansion of the sector on all fronts.
Latin America and the Caribbean and the Developing Asia-Pacific region are the two regions where the forestry sector has expanded on all fronts over the last decade. In these two regions, forestry sector employment, value-added and trade have all expanded significantly over the last decade. This expansion has been driven by many factors, including: an abundance of cheap skilled labour; relatively abundant forest resources; a high rate of economic growth; specific policies to encourage development and investment in the sector; and more general improvements in the investment climate.
Many of these countries have made the transition from having a forestry sector that is largely focused on the production of roundwood and simple processed products to one where a diversified range of products are produced and marketed at a global scale. The measures of productivity in these countries are generally close to or above the global average and are certainly higher than the average for all developing countries. The challenge for these countries will be to maintain this momentum while, at the same time, reducing the pressure on their forest resources. Already, many countries have started to do this with significant forest plantation programmes to guarantee future wood supplies.
Lastly, the figures show that the forestry sector in West and Central Asia accounts for only a small share of global employment, value-added and exports. Outside of these countries, there is little information about the forestry sector in this region. However, it seems likely that they may face similar issues to the countries of Eastern Europe.
A final general observation from this analysis is that value-added in the forestry sector has not increased rapidly except in a few countries where development of the sector has been a specific national development priority. Very few countries have focused on the development of the forestry sector, preferring in stead to promote the development of other sectors. Thus, it is generally the case that the forestry sector has been left behind, particularly in rapidly growing economies. Furthermore, this suggests that the forestry sector is not a major driving force for economic growth and development except in specific circumstances.
The above comments are, of course, very generalised and there are many differences between countries in each of the regions analysed above. For example, the detailed tables presented in Annex 1 shows how important the forestry sector is in many relatively small countries and in a small number of large countries. It is hoped that the detailed figures presented in Annex 1 can be used as a starting point for more in-depth analyses of forestry sector developments at the level of individual countries. In addition to this, further work on the contribution of informal forestry sector activities would give a much better and more balanced picture of the importance of the sector at the global, regional and country level.