Analysing the Trade in Services Data Draft analytical (annex 7)

STD/PASS/TAGS – Trade and Globalisation StatisticsSTD/PASS/TAGS – Trade and Globalisation StatisticsSTD/SES/TAGS – Trade and Globalisation StatisticsSTD/SES/TAGS – Trade and Globalisation Statistics

Analysing the Trade Analysing the Trade in Services Datain Services Data Draft analytical (annexDraft analytical (annex 7) 7)

OECD Statistics Directorate


IntroductionIntroduction

1. In September 2007 at the TFSITS meeting in Paris OECD presented paper setting out draft proposals for an analytical annex.

2. It addressed six themes highlighted by the responses to the world wide consultation and slightly amended at the Madrid (January) 2007 and Vienna (March) 2008 meetings.

3. Purpose of the annex: to provide a toolbox to make better use of trade in services data, which would ultimately help to improve the data quality.


Worldwide consultation priority rankingWorldwide consultation priority ranking

• 1) Combining balance of payments data, foreign affiliates trade data, and mode 4 data for analysis;

• 2) addressing linkages between services trade and production data;

• 3) how to link trade in services data with merchandise trade statistics showing overlaps and gaps;

• 4) bilateral asymmetries in trade in services data applying the data to models of world trade flows;

• 5) analysis on a sectoral basis of trade in particular services – such as health services;

• 6) identification of services for which a country has a comparative advantage in trade.


Theme 1. Theme 1. Combining balance of payments data, foreign Combining balance of payments data, foreign affiliates trade data, and mode 4 data for analysis;affiliates trade data, and mode 4 data for analysis;

• A text taking a broder view on international delivery of services (setting BOP,FATS and mode 4 in same picture) and giving an example on software services was was provided from the BEA.

• Diagram illustrating the BEA example on software services.


Theme 1. Diagram on modes of supply (software Theme 1. Diagram on modes of supply (software example)example)

Country A Country B

Alpha software company HQ (Functions: management, software development) Alpha Software

company affiliate (Functions: Marketing, systems analysts, customer support)

Customer

Mode 3: end sales of software FATS sales data

Mode 1: sending software solutions to customer BOP Computer and information services

Mode 4: software professionals (intra corporate transferees or CSS) FATS employment data, RSIM non-migrants

Mode 2: Customer travels to country B to buy software development services on his own account. BOP Travel item, Tourism statistics


Theme 2) addressing linkages between services Theme 2) addressing linkages between services trade and production data;trade and production data;

• A list of trade indicators– Basic

• Export propensity.• Import penetration

– Broader view of services delivered• Outward services sales of FA + Services exports (ODS)• Inward services sales of FA + Services imports. (IDS)

• A table produced by statistics Canada where trade is broken down by industry.


Outward Delivery of Services (ODS).

• Where• ODS= Total exports of services and outward foreign

affiliates sales of services .• Xs= BoP Total services exports• SFos= Outward foreign affiliates sales of services

excluding Wholesale, retail trade and repairs (ISIC G) and construction (ISIC F)

• XFos=FATS outward exports of services to the country of the parent or to a third country.

Theme 2


If aim of the analysis is to look at the affects of trade on the home economy (benefits of trade), smaller weight should be applied on FA sales information compared to Exports information as in term of primary flows:

•Exports: all gains from exports accrues to home economy•Foreign affiliates outward: Only a share of the profit would accrues to the domestically owned parent company.•W=weight (rate of return of outward DI ?) applied on the value of services local sales of foreign affiliates where 0<w<1.

Outward Delivery of Services divided by GDP (ODS’).

Theme 2


Outward delivery of servicesOutward delivery of servicesTheme 2

Affiliates

of A

Exports of services Xs

Local sales

SFOs-XFOs

Share (w) of profit accrues to home economy

Trade data

Production

data

Exports by FAs to

parent XFOs

All Export money accrues to home economy


Inward Delivery of Service indicator (IDS).Inward Delivery of Service indicator (IDS).

• Adds the value of services imports and inward foreign affiliates local sales of services.

• IDS = total imports of services and inward foreign affiliates sales of services • Ms = BoP Total services imports• SFis = Inward foreign affiliates sales of services excluding Wholesales, retail

sales and repairs (ISIC section G) and construction (ISIC section F) • XFis = Exports of services of inward foreign affiliates to the country of the

parent or a third country.

Theme 2


Inward Delivery of Services divided by Domestic Inward Delivery of Services divided by Domestic Demand (IDS’).Demand (IDS’).

• If aim of the analysis is to look at the effects of trade on the home economy (cost of trade), equal weight should not be applied on imports and FA sales as in term of primary flows:• Imports: all expenses of imports accrue to foreign economies• Foreign affiliates inward sales: Only a share of profit would accrue

to the foreign owned parent company.• W=weight (rate of return of inward DI ?) applied on the value of

services local sales of foreign affiliates where 0<w<1.

Theme 2


Inward delivery of servicesInward delivery of services

Imports of services Ms

Affiliates

Exports by FAs XFIsLocal sales

SF Is-XF Is

Trade data

Production data

All Import money leaves the home economy.

Only a share (w) of profits leaves the home economy

Theme 2


2005 Based on North American Industrial Classification System

Commercial services by category and by industry

Total, goods

producing

industries

Manufacturing [31-

33]

Other goods

producing industries

Total, services

producing

industries

Trade and transportat

ion

Information, culture and arts

Finance and

insurance [52]

Professional,

scientific & technical services

[54]

Management of

companies &

enterprises [55]

Other services

producing industries

Memorandum item: Informati

on & communi

cation technolog

y

CREDITS (in millions of C$)

Total, commercial services6,158 5,401 757

30,731 3,800 7,337 6,351 9,991 921 2,330 10,163

Communications services200 195 5

2,430 998 1,278 0 68 30 55 1,519

Construction services 57 52 5 165 11 0 0 125 28 1 0

Insurance services11 11 0

3,877 0 0 3,640 1 231 5 0

Other financial services8 3 5

1,914 2 39 1,719 64 12 78 41

Computer and information services168 147 20

4,585 313 1,559 174 2,423 36 81 3,811

Royalties and licence fees812 799 13

2,635 379 1,285 10 884 36 41 1,685

Non-financial commissions 104 97 7 738 569 14 86 59 6 3 311

Equipment rentals 15 2 13 305 190 0 0 4 0 111 0

Management services1,110 892 218

4,018 385 309 647 1,860 468 350 863

Advertising and related services 40 40 0 462 53 185 41 168 1 13 34

Research and development1,030 1,011 19

1,778 539 216 11 978 0 35 1,159

Architectural, engineering, and other technical services 1,265 890 375

3,418 160 5 21 3,001 40 192 304

Miscellaneous services to business1,078 1,001 78

2,144 170 470 1 339 33 1,131 413

Audio-visual services260 260 0

2,034 32 1,977 0 18 0 6 21

Personal, cultural and recreational services 0 0 0 229 0 0 0 0 0 229 0

Theme 2


Theme 3. Uses of bilateral flow data Theme 3. Uses of bilateral flow data including asymmetriesincluding asymmetries

• Mirror data can help in checking whether the flows reported by each reporting country are reflected by its partner country.

• To check whether the reported flows are the same or compatible.

• To detect systematic differences in the reporting process.• To detect differences in definitions from one country to the other.• The annex exposes the different uses of bilateral

data, with definitions, examples, asymmetries causes.• Reference on internet to work done by Eurostat on Asymmetries

in EU Current Account data.http://epp.eurostat.ec.europa.eu/cache/ITY_OFFPUB/KS-DB-06-002/EN/KS-DB-06-002-EN.PDF


Theme 3. Coverage of reported exports in partner Theme 3. Coverage of reported exports in partner country data and estimates based on mirror country data and estimates based on mirror statisticsstatistics

Reported data

Reported data supplemented by mirror data

World 2,234.8 76.0 88.1

OECD 1,709.6 94.3 97.8 NAFTA 397.0 98.0 99.0 OECD Asia and Oceania 173.7 93.1 97.3 OECD EU 19 1,045.9 98.1 98.1 OECD Europe Other 93.0 37.9 90.0 Africa 52.9 0.0 72.0 America 452.4 86.0 100.0* Asia and Oceania 531.4 40.7 70.3 Europe 1,206.2 90.6 91.5 International Organisations 1.9 0.0 100.0 * Reported imports from non-OECD America exceed reported exports of the region

Total exports (billion USD) 2004 Exporting Region

Total available exports data by partner country - % of total exports


Theme 4. Identification of services for which a Theme 4. Identification of services for which a country has a comparative advantage in trade.country has a comparative advantage in trade.

• Export Dynamics

Compare average growth for specific services among countries (explanation Formula) source ECB.

• Balassa index of Revealed Comparative Advantage (RCA) measures the intensity of trade specialization of a country within a region or the world. [Explanation , definition, formula, example of the calculation of the Balassa index for i) developed country ii) developing country]


Theme 5. Market accessTheme 5. Market access

• Why is it of interest • There is a growing interest in identifying Barriers to

service trade and to find out what gains could be achieved by removing those barriers.

• What does the annex say

Work is being undertaken to set up services restrictiveness indexes in major organisations (OECD).

The Productivity Commission and the Australian National University have been measuring restrictions on trade in services for a number of economies in Europe, Asia, and North and South America.


Theme 6. Example on global outsourcingTheme 6. Example on global outsourcing

• Herfindahl index of geographical concentration (shows geographical diversification of export)

(Formula, explanations, calculations)


Suggestions ?Suggestions ?

• Do you find analytical themes proposed in the annex useful?

• Do you have any other comments or suggestions regarding the content of the proposed analytical annex?

• Do you agree that a new analytical annex along the lines

of the draft provided should be included in MSITS to assist users in adding value to the basic statistics?

Analysing the Trade in Services Data Draft analytical (annex 7)

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