The Impact of Globalisation on National Accounts Joint UNECE/OECD/Eurostat Working Group

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The Impact of Globalisation on National
AccountsJoint UNECE/OECD/Eurostat Working Group

• Lidia Bratanova
• UNECE Statistical Division
• 14 October 2008, OECD WPNA

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Globalisation

• Unprecendented increase in the cross-border
  movement of goods, services and financial flows,
  as well as people
• Favourable conditions
• Lowering of trade barriers
• Reduced costs of communication and transport
• Internet enabling quicker conduct of business
  abroad
• Increased ability of companies and people to
  operate abroad

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Challenges to the compilation of NA

• Increased difficulties to measure economic
  transactions from a national viewpoint
• Insufficient coverage and guidance in the
  existing international standards
• Need for up-to-date recommendations and solutions
• Practical implications - challenges to find the
  necessary data

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Working Group on the Impact of Globalisation on
NA (WGGNA)

• CES decided to create a body to coordinate the
  work on globalisation statistics (June 2006)
• CES Bureau created the WGGNA in April 2007
• Objectives
• to review the main distortions in the
  compilation of national accounts and related
  source statistics, as caused by globalisation
• to put forward proposals on how to deal with
  these distortions in order to improve the quality
  of NA.

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Terms of reference of WGGNA

• Coordinate with related Working Groups
• Inventory of work that have undertaken work on
  issues related to the impact act of globalisation
  on statistics in general and national accounts in
  particular-to avoid duplication
• Membership
• Joint UNECE/OECD/Eurostat WG - open for all
  member states. IMF, UNCTAD and WTO participate
  actively
• Leadership sub-group chaired by Netherlands
  includes Canada, Czech Republic, Finland, United
  Kingdom, USA, UNECE, OECD, Eurostat and IMF.
• Secretariat provided by the UNECE

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Expected Output

• Output Report providing recommendations and best
  practices
• Identify the areas most affected by globalisation
• Proposals on how to improve surveying, processing
  and integration of data
• Proposals how to arrive at international
  consistency
• Operational guidelines on treatment of goods for
  processing and merchanting
• Timetable
• 2008-2009 Regular meetings of LG (twice a year)
• May 2009 Second meeting of WGGNA
• April 2010 Third meeting of WGGNA-draft report
• June 2010 Presentation of the final report to CES

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WGGNA Research Agenda

• Four groups of topics
• Problems linked to allocation of value added and
  income to national economies
• Transfer pricing and improved understanding of
  MNEs behaviour
• Specialisation of supply chains
• Transactions in intellectual property (e.g.RD)
• Special Purpose Entities (SPEs)
• Goods for processing, toll manufacturing
• Merchanting
• Consignment goods
• Commissionaire trading
• Re-exports and centralisation of logistics
• Other centralised services

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WGGNA Research Agenda (contd)

• Issues related to households, persons and
  employment
• E-commerce
• Labour mobility and trade in services through the
  movement of persons
• Remittances
• Tourism and second homes
• Other issues
• Foreign Direct Investment and related income
• Transit trade
• Common trading and currency block issues

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First Meeting of the WGGNA

• Three issues discussed in detail
• Goods sent abroad for processing main
  conclusions
• - General agreement to record on a change of
  ownership basis as recommended by 2008 SNA and
  BPM6
• - Record in a consistent manner in the BOP and
  NA
• - Data extracted from supply and use tables
  affected
• - Useful for analysts (users) if NSIs preserve
  additional supply and use tables that record the
  gross flows of processing industries

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First Meeting of the WGGNA (contd)

• Merchantingmain conclusions
• - General agreement on 2008 SNA and BPM6
  proposals
• - Merchanting of services should be further
  addressed what exactly entails and how to deal
  with it
• - Narrower definitions for global
  manufacturing and merchanting activities
  needed
• - Measuring merchanting activities is
  challenging what data to collect and how? Needs
  to be addressed in more detail

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First Meeting of the WGGNA (contd)

• MNEs and allocation of income in NA main
  conclusions
• - The issue of transfer pricing is important
• - Reluctance to adjust for transfer prices
  unless prices recorded in the companys books are
  clearly wrong and information on true market
  prices is available
• - GNI may become more important in future
  because it is invariant to use of misleading
  transfer prices
• - Surveys and interviews may give new insights
  on data availability on transfer prices
• Detailed minutes on the UNECE website

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Second Meeting of the WGGNA

• 11-13 a.m. May 2009 in Geneva to discuss
• Follow-up discussion on MNEs and allocation of
  income goods for processing and merchanting
• Transactions in intellectual property
• Transit trade and re-export
• Remittances and labour mobility
• Special purpose entities
• Foreign direct investment

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WGGNA Dedicated Website

• http//www.unece.org/stats/groups/wggna.e.htm
• General information TOR, list of related TFs and
  other specialised groups, research agenda
• Meetings
• Useful documents reading list, Leadership Group
• Useful links