Transcript Globalisation and national accounts

National Accounts, Globalisation
and Business Surveys
Robin Lynch
UK Office for National Statistics
Globalisation and national accounts
• National accounts aim to measure the
economic activities of a nation
• Multi-national activities are a
measurement problem for national
accountants
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Globalisation and national accounts
• Once upon a time
– People lived in a sovereign country – a country
– People worked in the country
– All of production was in the country
– Output was sold mostly in the country
– people bought domestic produce
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Globalisation and national accounts
• People lived in a country
But now
• People leave their country (migration)
• People have second homes (residency)
• People live abroad some of the time
• People holiday and spend a lot of money abroad
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Globalisation and national accounts
• People worked in the country
But now
• People work abroad
• People work in many places in the world
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Globalisation and national accounts
All of production was in the country
But now
• Multinational companies span the world
•
•
•
•
Design centre in UK
Production in Eastern Europe
Marketing in United States
Financial centre in The Netherlands
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Globalisation and national accounts
• Output was sold in the country
But now
• Output is sold abroad
• Output is sold to foreign tourists
• Output is sold on the world wide web
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Globalisation and national accounts
• consumers bought local produce
But now
• We buy from abroad
• We buy as we travel abroad
• We buy on the internet
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Globalisation and national accounts
• Intellectual property
• Created on site
• Shared amongst many
• Can we measure a capital service
between countries?
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Globalisation and national accounts
• The EU is different
• Economic statistics are used for fiscal
targets
• Accuracy more important than appropriate
• Market transactions are measurable
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Globalisation and national accounts
• New SNA update globalisation challenges
• Goods for processing
• R & D generates intellectual property
assets
• 20% - 10% ownership rule for FDI
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Example Multinational Insurance
• So the profits centre values have changed from
UK
Canada
India
Old
New
55
-10
5
35
30
-15
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Example Multinational Insurance
• And the GDP values have changed from
Old
UK
Canada
India
135
5
10
New
115
45
-10
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Globalisation and national accounts
• National business surveys can no longer
collect market sales and costs
• Transfer pricing to minimise global tax
burden undermines traditional methods
• How can we retain the status quo?
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Globalisation and national accounts
• Ask firms to estimate an “arms-length”
value for non-marketed internationally
traded goods and services within the
multinational
• Use these values to produce a traditional
production accounts for the national
activity
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Globalisation and national accounts
• OR
• Change the mind-set – step outside the
box
• Are we attempting the impossible?
• Do national production functions mean
anything?
• Can we measure productivity for national
economic activity?
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Globalisation and national accounts
• Can we collect the necessary data?
• Will multi-nationals cooperate (and so
reveal their tax engineering activities)?
• Even if they wanted to, how can they
estimate the value of non-market
transactions?
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Globalisation and national accounts
• What’s the alternative?
• Use the income approach
• Measure the employment income of the
activity
• Estimate the operating surplus as the sum
of returns to capital assets plus the
“entrepreneurial turn”
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Globalisation and national accounts
• Can we measure return to capital within national
boundaries?
• How do we estimate entrepreneurial turn?
• How do you estimate national return on capital
for intellectual property accessed across
national borders
• No answers – but worth exploring these issues
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Globalisation and national accounts
• GDP through expenditures
• Reduce business surveys and bump up
consumer surveys and other demand
sources
• Make more use of administrative sources
(often tax sources)
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Globalisation and national accounts
• The way ahead for business statistics
• Use multi-national supply-use frameworks
to ensure consistency
• Cut this up to get country pictures, rather
than building the international picture like a
jigsaw of country estimates
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Globalisation and national accounts
• The defence
• Large business units
• International cooperation
• Profit centres
• Transfer pricing – standard methods
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Globalisation and national accounts
• For national accounts, business surveys
less important in the future
• Concentrate on income and spending
(good old days)
• Try harder on tax sources
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