Statistical Implication of Economic Globalisation - DGINS Conference Bratislava

1. 105th DGINS ConferenceBratislava, 9-10 October 2019“The statistical implication of economic globalisation” Measuring economic globalisation in the ESS: taking stock of progress Sophie Limpach, Business and Trade Statistics Director, Eurostat John Verrinder, Macro-economic Statistics Director (acting), Eurostat

2. Economic globalisation in a nutshell Statistical challenges of economic globalisation DGINS Conference Riga 2014 and subsequent activities Statistical goals and our response so far DGINS Conference Bratislava 2019 to discuss and shed light on the way forward Outline

3. Production processes are fragmented and located in multiple locations, by different global actors (MNEs) generating cross-border flows and transactions Economic globalisation in a nutshell… Source: BBC

4. What? Where? How?To record in national economic statistics: • National Accounts • Balance of Payments • Business Statistics • Trade Statistics • Putting to test well-established statistical concepts, methods, data sources and production processes used in the ESS • Measuring the domestic economies is increasingly challenging • Communicating and interpreting European statistics becomes also more challenging Statistical challenges of economic globalisation

5. DGINS Conference in Riga in 2014 Launching of a number of important activities and projects to better capture globalisation They now reached a certain level of maturity: need totake stock New challenges always around the corner: how to go forward? Economic globalisation, not a really new topic Impact on National Accounts GNI pilot exercise Consistency workLarge Case Units and Early Warning System Serving user needs and developing new statistical products European Statistical Infrastructure EuroGroups Register, European Profiling Quality management handling asymmetries in flow statistics

6. GNI pilots on MNEs launched in February 2018 • to achieve a reasonable understanding of globalization issues in GNI data • The pilots concerned 25 MNEs cases • Work supervised by the Joint BSDG/DMES Task Force • Close cooperation with all relevant statistical domains, including NCBs • Voluntary confidential data sharing on the basis of a need to know and according to the “Code of Conduct on Micro-Data Sharing” • Confidential data were stored in a secure Commission environment GNI MNE Pilot objective and enablers

7. Further work is required in view of providing enhanced assurance on the recording of major MNE for GNI own resources purposes and for European statistics as a whole Enhanced and better-integrated European statistical infrastructure, where necessary information flows fluidly across borders and on legally sound basis among statisticians and between statisticians and MNEs Follow-up in an action plan under the Joint BSDG/DMES TF leadership, taking into account the next national accounts benchmark revision by 2024 GNI MNE Pilot conclusions

8. Light non-legislative procedure based on voluntary cooperation of Member States • To timely detect restructuring events of MNEs and to agree on their methodological treatment to ensure consistency of the statistical output • Established cooperation ESS –ESCB • Secure channels to share EWS confidential information • So far, 20 restructuring cases were treated • How to integrate this information in the other MNE related activities? Early Warning System (EWS)

9. The EGR is the ESS register on MNEs active in the EU/EFTA countries • It is sourced mainly by Member States’ statistical Business Registers • It serves as: • acentralised storage of information about MNEs • a survey frame for producing cross-border statistics • a data source for producing statistics • Frequent restructurings of MNEs create challengesfor a tool managed by annual cycles updating one reference year at a time EuroGroupsRegister (EGR) EGR

10. Method to analyse legal, economic and organisational structure of top MNEs to derive high quality statistical information on them Collaborative process to agree on the global MNE structure European Profiling • Special attention for the most significant MNEs • In case of restructuring, important to describe the new structure and monitor the impact on statistics • systematic integration of results in national registers and into the EGR • European programme designed to serve identified needs

11. Increasing number of Member States established LCUs or similar arrangements to be the single entry point for MNEs • Typical LCUs activities and composition • Ensuring consistent micro-data on MNEs across domains • Direct contacts with MNEs with statistical relevance • Carry out consistency checks across surveys and sources • Include a balance of statistical, accountancy, business and communications skills • Eurostat : ESTP training courses, workshops, grants • LCU network – going beyond in order to also improve cross-country consistency Large Case Units (LCUs)

12. Eurostat action to handle asymmetries for trade flows: • Trade in goods for extra-EU trade (top transactions) and for intra-EU trade (making use of exchanged micro data on intra-EU exports) • Trade in services - little willingness to reconcile at country level, especially in case of disagreement what is the correct figure • FDI -microdata driven approach, FDI network, ECB/Eurostat asymmetryresolutionmeeting (ARM) • Objective: improved quality of statistical output Handling asymmetries

13. Global Value Chains (GVC) • GVC methodology available and tested in pilots • New voluntary GVC pilot before the introduction in FRIBS • FRIBS-based GVC survey in 2024 for the reference period 2021-2023 • Trade by Enterprise Characteristics (goods: TEC – services: STEC) • Trading enterprises are analyzed by their characteristics, including belonging or not to an MNE • TEC are official statistics since 2010 • STEC are experimental statistics for now … • Other micro-data linking activities Serving users with new statistics

14. Serve users with relevant statistics • Serve users with high quality statistics • Consistency across domains / countries • Features of our response: • Cost-effective and user-oriented • Improved consistency, timeliness and relevance • Re-use of developed capabilities, know-how and infrastructures • Improved cross-domain synergies • Strengthened cooperation across countries and institutions • Legal framework to share information between Member States We are aiming to…

15. Building upon those achievements the DGINS Conference can discuss and shed light on how to structure the way forward The Conference Program is designed to provide the opportunity to discuss some outstanding topics, such as: Some work ahead…

16. Thank you for your attention

17. AL1: Countries are invited to further scrutinize major MNEs from a National Accounts point of view in general and GNI in particular, through a risk-based approach • The list of MNE identified through the two 2016 and 2017 questionnaires of the GNI Committee and the experiences in the pilot studies will be a suitable starting point to select the major MNE for further studies • AL2: Enhance the ESS statistical and legal infrastructure and ensure cross-country and cross-domain cooperation based on a European network of LCUs (or corresponding functions) under Eurostat stewardship to ensure consistent measurement of MNE activities in European statistics GNI MNE Pilot action lines

18. AL3: Considering that not all information needed from MNEs to properly record their activities in European economic statistics is available to National Statistical authorities, further information will have to be requested from them based on a win / win approach and a clear legal framework AL4: Further enhance consistent methodological treatment of globalization related issues and practical implementation in Business and Trade Statistics, National Accounts and Balance of Payments AL5: Access to administrative data, in particular to BEPS information as promising input to better understand MNE economic behavior crucial for their proper recording in European statistics, should be granted to statisticians GNI MNE Pilot action lines (cont’d)