OECD Globalisation Indicators

1
OECD Globalisation Indicators
Agenda Item 10c

• OECD report

2
Background

• The OECD has established a solid track record in
  the field of globalisation statistics and
  indicators
• Historically, OECD has put together a set of
  guidelines to compile foreign direct investment
  statistics in the early 80s published in the OECD
  Benchmark Definition of Foreign Direct Investment
• The OECD Handbook on Economic Globalisation
  Indicators (HEGI) in 2005 laid the foundation for
  the
• Subsequent sometimes parallel development of
  OECD Economic Globalisation Indicators (EGI),
  also published in 2005.

3
The Handbook on Economic Globalisation Indicators

• Recognizing the multidimensional nature of
  globalisation, the former Secretary-General of
  the OECD, Donald J. Johnston, recommended that
  the work be undertaken collaboratively with other
  OECD groups with expertise in
• foreign direct investment
• international trade and technology
• Groups include
• the Investment Committees Workshop on
  International Investment Statistics (WSII)
  serviced by the Directorate for Financial and
  Enterprise Affairs (DAF)
• the International Trade Statistics Expert Group
  and the OECD-Eurostat Experts in Trade in
  Services Statistics (underlining by author)
  served by the Statistics Directorate (STD)
• and the Working Party of the Trade Committee
  serviced by the Trade Directorate.
• Among groups serviced by the Directorate for
  Science, Technology and Industry, the Committee
  for Scientific and Technological Policy (CSTP)
  and its working parties, the Working Party of
  National Experts on Science and Technology
  Indicators (NESTI) and the Working Party on
  Technology and Innovation Policy (TIP), also
  participated in the preparation of the Handbook

4
The Handbook on Economic Globalisation Indicators
and the Economic Globalisation Indicators
Publication

• The OECD Economic Globalisation Indicators
  publication represented a first attempt to
  develop the main indicators proposed in the OECD
  Handbook for the purpose of measuring the scope
  and magnitude of the globalisation process
  through its main vectors, which are
• Capital movements and foreign direct investment.
• The economic activity of multinational firms.
• The internationalization of technology.
• International trade.

5
The EGI Indicators

• Part I. International Transactions of OECD
  Countries
• A. International trade and investment flows
• B. Foreign direct investment.
• Part II. The Economic Activity of Multinationals
• C. The activity of multinationals in the
  manufacturing sector
• D. The activity of multinationals in the
  services
• E. Comparison between the activity of
  foreign affiliates in the manufacturing sector
  and in the services sector
• F. The contribution of multinationals to value
  added and labour productivity in the
  manufacturing and services sectors

6
The EGI Indicators

• Part III. The Internationalization of Technology
• G. The internationalization of industrial RD
• H. The international diffusion of technology
• Part IV. Aspects of Trade Globalisation
• I. Trends in international trade in goods and
  services
• J. Intra-firm trade of multinational
  enterprises

7
The challenge now

• The challenge OECD is facing now is how to expand
  the range of indicators in response to identified
  needs, but taking into account the limitations of
  statistical systems at national and also
  international level.

8
The challenge now

• Indicators corresponding to economic
  globalisation should ideally respond to the
  following policy questions
• To what extent can the intensity of the
  globalisation process be measured?
• How can the impact of globalisation on economic
  performance be evaluated?
• How can we measure the impact of structural
  policy reforms designed to get national economies
  to benefit more from globalisation?
• However, it is fully recognized in the Handbook
  itself that it covers measures concerning almost
  exclusively the first question that corresponds
  to the extent and intensity of globalisation.

9
The need to move forward

• Challenges are manifold and there are certainly
  different views what they are and in which
  priority order they should be seen
• But it may be useful to outline some first
  directions
• By no means the following is meant to be
  directive or a complete list it is merely a
  stocktaking of some aspects which have been
  identified from a statistical point of view

10
The need to move forward what next?

• Develop impact measures (see remarks above).
  Measuring outcomes instead of outputs gains is
  gaining in importance since it relates causes to
  effects (e.g. comparing export growth to growth
  in employment)
• How to translate policy questions into
  statistically operational concepts, measurable
  and ideally internationally comparable?
• How to adapt the statistical reporting systems
  to the fact that production activities have no
  national borders, that a flatter vertical
  integration of the production process makes it
  more difficult to correctly asses that share of
  a good which can be attributed to domestic
  production. There is growing evidence that the
  increasing share of re-imports and re-exports
  biases traditional trade performance indicators
  and inflates trade growth rates.

11
A new look at globalisation is necessary e.g.
trade

• The real problem today is that statistical
  systems have been overtaken by the speed of
  globalisation obliging national reporting systems
  and structures to align to this paradigm shift.
• In fact, the interpretation of trade statistics
  needs to be seen in connection with global
  production networks. A high export intensity may
  not mean anymore that the country has developed a
  comparative advantage in a given sector, but
  rather that it is integrated in a global
  production chain.
• Re-interpreting trade statistics also requires
  establishing connections with other statistical
  information, such as RD, innovation, labour
  skills, etc..
• In other words, national concepts need to
  incorporate the international dimension to
  adequately reflect the reality of todays
  production process

12
A new look at globalisation is necessary e.g.
SNA

• Concerning SNA there seems a need to repair
  the accounts
• A special Working Group will prepare a Report
  with recommendations/best practices on how to
  deal with the distortions in the accounts due to
  globalisation
• The report will
• Identify the areas of national accounts most
  affected by the impact of globalisation
• Put forward proposals to improve the surveying,
  the subsequent processing and the integration of
  statistical data
• Put forward proposals to arrive at an
  internationally consistent recording of
  transactions in national accounts and related
  source statistics
• Put forward proposals to improve relevant
  international guidelines for national accounts
• Put forward proposals to create some kind of
  medium (e.g. website, electronic discussion
  groups, etc.) to exchange best practices.

13
A new look at globalisation is necessary e.g.
SBS-Trade

• Linking of business statistics and trade.
• Global economies require data on who is trading
  and what are the characteristics of trade
  operators. This question requires establishing a
  direct relation between foreign trade and
  industrial statistics. But these two statistical
  domains are based upon different concepts
  (products versus economic activities) and use
  different classifications (SITC, HS, ISIC, and
  CPC).
• A central issue of such an analysis is to try to
  classify trade operators according to enterprise
  characteristics. Eurostat and OECD are working
  together in this field to develop comparable and
  consistent data.
• Another City Group, called 20th International
  Roundtable on Business Survey Frames Wiesbaden
  Group on Business Registers. Such a group takes
  the necessary comprehensive, national and
  international perspective to elaborate better
  statistical tools and frameworks.
• In response to more integrated world markets,
  growing competition and structural changes, the
  European Union is tackling the necessary
  modernisation of community statistics in a
  program, called MEETS (Modernisation of European
  Enterprise and Trade Statistics).

14
A new look at globalisation is necessary e.g.
integrated BR and statistical IDs

• A corollary of this integration of statistical
  subject matters, hitherto separated and
  operating with specifically own concepts and
  classifications, is the imperative need to
  develop common identifiers of statistical units
  at national level.
• The interoperability between the trade register
  and business register, but also administrative
  records gains in importance.
• A related issue is the role of the distributive
  trading sector in exports (so-called distributive
  services) that may distort the picture of export
  activities at the enterprise level.

15
A new look at globalisation is necessary e.g.
Enterprise Groups and MNEs

• The economic picture of a country crucially
  depends on the degree of inclusion or exclusion
  of statistical units operating internationally.
• As decision making body, the economic actor acts
  nowadays according to economic parameters, and
  not according to territorial ones.
• France has launched in 2005 a major high-level
  project of re-designing its enterprise statistics
  system. This was largely in response to new
  information needs due to globalisation gt see
  agenda item 10 (f)
• The EG (or sub-group of it) seems to be the
  relevant unit of analysis and users want to
  analyse market realities, not hierarchical
  structures within EGs.

16
A new look at globalisation is necessary e.g.
trade in goods and in services

• Concerning Trade in Good s and Trade in Services
  there is a need to review and amend the roles of
  the international Task Forces dealing separately
  with them
• Conceptual differences between international
  flows of goods and services in a number of cases
  are reduced due to the shift from "trade in
  goods" to "trade in tasks".
• Old concept of competitive (or comparative)
  advantage need to be reviewed in response to
  changes in actual business practices of
  international firms and the fact that the
  different stages of the production process of
  single merchandise may be distributed across
  various countries.
• The revision of major statistical frameworks)
  need reconciled and harmonised approaches
  wherever possible and feasible.
• Prominent examples are the recent reviews of the
  statistical treatment of goods for processing and
  merchanting in the context of the SNA and BPM
  revisions
• Because the borderline between goods and services
  in modern business practices is now somewhat
  blurred, it is clear that operational definitions
  and tools have to be designed in such a way that
  they satisfy needs of their respective users and
  also of those of other statistical frameworks to
  the maximum extent possible

17
A new look at globalisation is necessary e.g.
expanding the scope of analysis to impacts

• International production and re-imports and
  re-exports bias the picture of trade flows and
  growth rates.
• High trade growth rates may overstate the real
  picture. The use of Input-Output tables might
  help to better allocate factors
• A high import content of exports means that for a
  country such as Germany strong export growth can
  not translate into commensurate employment
  growth.
• Hence, the labour market characteristics,
  employment and migration flows all belong to a
  better appreciation of globalisation.
• Wage differentials play a determining role and,
  in the end, globalisation strategies of firms are
  always a function of expected productivity gains.
  Hence, productivity indicators may constitute a
  very useful addition to existing indicators.
• Much needs to be done and further developed!

18
Delegates are invited to prepare comments and
suggestions for discussion under agenda item 10
(g)Thank you for your attention!

• Andreas.lindner_at_oecd.org