Globalisation and Globalisation and national accountsnational accounts
Robin LynchRobin Lynch
UK Office for National StatisticsUK Office for National Statistics
Globalisation and national accountsGlobalisation and national accounts
National National accounts aim to measure the accounts aim to measure the economic activities of a economic activities of a nationnation
Multi-nationMulti-nation activities are a measurement activities are a measurement problem for problem for nationalnational accountants accountants
Globalisation and national accountsGlobalisation and national accounts
Once upon a timeOnce upon a time
People lived in a villagePeople lived in a village
People worked in the villagePeople worked in the village
The whole production process was in the villageThe whole production process was in the village
Output was sold in the villageOutput was sold in the village
Villagers bought local produceVillagers bought local produce
Globalisation and national accountsGlobalisation and national accounts
People lived in a villagePeople lived in a village
People have second homesPeople have second homes
People live and work abroad but retain a centre People live and work abroad but retain a centre of economic interest in their home countryof economic interest in their home country
People holiday and spend a lot of money abroadPeople holiday and spend a lot of money abroad
Globalisation and national accountsGlobalisation and national accounts
People worked in the villagePeople worked in the village
People work abroad People work abroad
People work in many different places in People work in many different places in the worldthe world
Globalisation and national accountsGlobalisation and national accounts
The whole production process was in the villageThe whole production process was in the village
Multinational companies organise themselves across the world to Multinational companies organise themselves across the world to produce efficiently, and minimise global tax burdenproduce efficiently, and minimise global tax burden
Design centre in UKDesign centre in UK Production in Thailand and MexicoProduction in Thailand and Mexico Marketing in United StatesMarketing in United States Financial centre in the NetherlandsFinancial centre in the Netherlands
Can we produce national accounts from observation of this global Can we produce national accounts from observation of this global process?process?
Measuring production across Measuring production across national boundariesnational boundaries
Toll-processing – no charge for goods, no change of Toll-processing – no charge for goods, no change of legal ownershiplegal ownership
Merchanting – an agent provides goods from one Merchanting – an agent provides goods from one country to another, without the goods ever crossing the country to another, without the goods ever crossing the agent’s country borderagent’s country border
Export of capital services from intellectual property such Export of capital services from intellectual property such as design – are they captured?as design – are they captured?
Multi-nationals organise on ownership principles, not Multi-nationals organise on ownership principles, not territory, so measuring territories (nations) is difficultterritory, so measuring territories (nations) is difficult
Example Multinational InsuranceExample Multinational Insurance
A multi national corporation has a A multi national corporation has a computer centre in Canada, a help call-computer centre in Canada, a help call-centre in India and sales in the UK.centre in India and sales in the UK.
Multi National Production accountMulti National Production account
UsesUses
Material Material costscosts
5050
Computer Computer servicesservices
xx
Call-centre Call-centre servicesservices
yy
WagesWages 100100
ProfitsProfits 5050
ResourcesResources
SalesSales 200200
Computer Computer servicesservices
xx
Call-centre Call-centre servicesservices
yy
Example Multinational InsuranceExample Multinational Insurance
Let the value of the computer services to Let the value of the computer services to the rest of the group be 10, 5 to the sales the rest of the group be 10, 5 to the sales activity in the UK and 5 to the call-centre activity in the UK and 5 to the call-centre activity in India.activity in India.
Let the value of the call-centre services to Let the value of the call-centre services to the UK sales activity be 20the UK sales activity be 20
UK Production accountUK Production account
UsesUses
Material Material costscosts
4040
Computer Computer servicesservices
55
Call-centre Call-centre servicesservices
2020
WagesWages 8080
ProfitsProfits 5555
ResourcesResources
SalesSales 200200
Canada Production accountCanada Production account
UsesUses
Material Material costscosts
55
WagesWages 1515
ProfitsProfits -10-10
ResourcesResources
Computer Computer servicesservices
1010
India Production AccountIndia Production Account
UsesUses
Material Material costscosts
55
Computer Computer servicesservices
55
WagesWages 55
ProfitsProfits 55
ResourcesResources
Call-centre Call-centre servicesservices
2020
Example Multinational InsuranceExample Multinational Insurance
Now suppose the computer services to the Now suppose the computer services to the rest of the group are re-valued at 50, 25 rest of the group are re-valued at 50, 25 to the sales activity in the UK and 25 to the to the sales activity in the UK and 25 to the call-centre activity in India.call-centre activity in India.
UK Production accountUK Production account
UsesUses
Material Material costscosts
4040
Computer Computer servicesservices
25 (5)25 (5)
Call-centre Call-centre servicesservices
2020
WagesWages 8080
ProfitsProfits 35 (55)35 (55)
ResourcesResources
SalesSales 200200
Canada Production accountCanada Production account
UsesUses
Material Material costscosts
55
WagesWages 1515
ProfitsProfits 30 (-10)30 (-10)
ResourcesResources
Computer Computer servicesservices
50 (10)50 (10)
India Production AccountIndia Production Account
UsesUses
Material Material costscosts
55
Computer Computer servicesservices
25 (5)25 (5)
WagesWages 55
ProfitsProfits -15 (5)-15 (5)
ResourcesResources
Call-centre Call-centre servicesservices
2020
Example Multinational InsuranceExample Multinational Insurance
So the profits spread has changed fromSo the profits spread has changed from
UKUK 55 55CanadaCanada -10-10IndiaIndia 5 5
ToTo
UKUK 35 35CanadaCanada 30 30IndiaIndia -15-15
Globalisation and national accountsGlobalisation and national accounts
Once upon a timeOnce upon a time
People lived in a villagePeople lived in a village
People worked in the villagePeople worked in the village
The whole production process was in the villageThe whole production process was in the village
Output was sold in the villageOutput was sold in the village
Villagers bought local produceVillagers bought local produce
Globalisation and national accountsGlobalisation and national accounts
Output was sold in the villageOutput was sold in the village
Output is sold abroadOutput is sold abroad
Output is sold on the world wide webOutput is sold on the world wide web
Globalisation and national accountsGlobalisation and national accounts
Villagers bought local produceVillagers bought local produce
We buy from abroadWe buy from abroad
We buy as we travel abroadWe buy as we travel abroad
We buy on the internetWe buy on the internet
Globalisation and national accountsGlobalisation and national accounts
This day concentrates on the This day concentrates on the measurement of productionmeasurement of production
The first paper from Canada describes The first paper from Canada describes how a register can meet the demands of how a register can meet the demands of national measurements in global national measurements in global production process. Presented by Michel production process. Presented by Michel Girard, Director of Industry Accounts Girard, Director of Industry Accounts Division in Statistics CanadaDivision in Statistics Canada
Globalisation and national accountsGlobalisation and national accounts
Second paper is presented by Nico van Second paper is presented by Nico van Stokrum from the Netherlands, and sets Stokrum from the Netherlands, and sets out a practical approach to measuring out a practical approach to measuring national production as part of global national production as part of global activitiesactivities
Globalisation and national accountsGlobalisation and national accounts
After the morning break, Steve Landefeld, After the morning break, Steve Landefeld, Director of Economic Statistics in the US Director of Economic Statistics in the US Bureau of Economic Analysis will present Bureau of Economic Analysis will present a very wide ranging paper on measuring a very wide ranging paper on measuring globalisation. This will be followed by globalisation. This will be followed by discussion and then we break for lunch.discussion and then we break for lunch.
Globalisation and national accountsGlobalisation and national accounts
After lunch, Dave Hobbs of the UK will After lunch, Dave Hobbs of the UK will present a pragmatic approach adopted by present a pragmatic approach adopted by the UK in measuring firms in the UK who the UK in measuring firms in the UK who are part of a global toll-processing set-up.are part of a global toll-processing set-up.
Then before the afternoon break, Soly Then before the afternoon break, Soly Pelig will present a paper on the Pelig will present a paper on the measurement of cross-border transactions measurement of cross-border transactions with particular attention to intellectual with particular attention to intellectual propertyproperty
Globalisation and national accountsGlobalisation and national accounts
Finally, Carol Carson, Project Manager of Finally, Carol Carson, Project Manager of the Updating SNA process, will present the Updating SNA process, will present current plans on how this issue will be current plans on how this issue will be addressed in the updated SNA.addressed in the updated SNA.
The session is wound up with a discussion The session is wound up with a discussion with authors providing a panel to answer with authors providing a panel to answer questions from the floor.questions from the floor.
Globalisation and national accountsGlobalisation and national accounts
Does it matter?Does it matter?
ECB paper Dec 2005ECB paper Dec 2005
Asymmetries between the Euro area and Asymmetries between the Euro area and UKUK
Globalisation and national accountsGlobalisation and national accounts
Euro Euro bnbn UK imports EU exports discrepancy UK exports Euro Z imports discrepancy
from Euro z to UK to Euro Z from UK
Goods 04 184 202 -18 147 142 5
Services 03 56 93 -37 51 69 -18
FDI 03 230 482 -252 618 882 -264
Globalisation and national accountsGlobalisation and national accounts
net UK net Euro Z discrepancy
to Euro Z to UK
-37 -60 23
-5 -24 19
388 400 -12
Globalisation and national accountsGlobalisation and national accounts
UK and Netherlands will exchange data on UK and Netherlands will exchange data on a confidential and bilateral basisa confidential and bilateral basis
Article 8 (3) of EU regulation No 184 / Article 8 (3) of EU regulation No 184 / 2005 allows this exchange in order to 2005 allows this exchange in order to improve EU statisticsimprove EU statistics
What will the businesses think?What will the businesses think?
Globalisation and national accountsGlobalisation and national accounts
Eurolinks and Eurogroups RegisterEurolinks and Eurogroups Register
European registers of multi-national European registers of multi-national companies will keep data on ownership companies will keep data on ownership and links of control between legal units in and links of control between legal units in the EUthe EU
A Community register of multi-nationals A Community register of multi-nationals will be introduced from 2008will be introduced from 2008
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