Parallel session IARIW 2014

1. MEASURING GLOBAL PRODUCTION
IN THE NATIONAL ACCOUNTS AND
THE BALANCE OF PAYMENTS
BY MARK DE HAAN, MICHAEL CONNOLLY,
TIHOMIRA DIMOVA, RAMI PELTOLA
Discussant comments
IARIW 33rd General Conference
Rotterdam, the Netherlands, August 24-30, 2014
Jennifer Ribarsky, OECD

2. Main issues
Paper reflects on the work of the UNECE Task
Force on Global Production (TFGP).
Main issues covered are:
• Summary of findings of the TFGP;
• Overview of the Guide to Measuring Global
Production;
• Implications of Globalization for economic
analysis;
• Conclusions and recommendations.
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3. Summary of main findings
• Global fragmentation of value chains is
increasingly a challenge for NA and BoP
compilers;
• Organisation of MNE Groups is often tax
driven, seemingly leading to legal/economic
ownership disparities.
• Accounting for global production can be very
demanding in terms of data sources and
human resources.
 Global production will keep statistics
compilers busy for some time to come.
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4. Overview of the Guide to Measuring
Global Production
Conceptual framework:
• Typology of global production
arrangements;
Main purpose: identifying the specific roles of
units active in these chains, dealing with
ownership issues, recording of transactions.
• Factoryless Goods Producers;
i.e. those companies outsourcing all aspects of
material transformation.
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5. iPhone Study
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6. Overview of Guide
Conceptual framework continued
• Principles of economic ownership,
particularly in the area of intellectual
property products.
– Decision tree;
– Royalty and licences SPEs.
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7. Overview of the Guide to Measuring
Global Production
Practical issues:
• Guidance on overcoming data gaps
(territory versus ownership recording)
• Role of so-called Large and complex Cases Units
Based on a specific survey collecting NSI experiences
• Specific topics:
– Multiterritory enterprises;
– Quasi-transit trade;
– Trade in value-added;
– Merchanting of services.
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8. Implications for economic analysis
• Industrial classification (ISIC) does not
indicate the role of an entity in a global
production arrangement
- Can entail a variety of fragments;
- Which may affect (IO) analysis (homogeneity
of coefficients)
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9. Productivity analysis
• Productivity analysis
– Brass-plate type of companies with sometimes
huge turnover;
– Specific aspects of price and volume
measurement;
– ‘Distribution’ of productivity gains from the
FGP to the contract producer.
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10. International trade
• International trade
– Enlarging of gross trade flows
(imports/exports)
– Intra-company services
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11. TFGP’s main recommendations:
• Testing and further improving typology;
• FGPs are manufacturers;
• Sub-classify Royalty SPE related flows
(output, international trade in services);
• Explicit reporting in surveys on intra-group
trade in services;
• Install “large case units”;
• Develop price measurement where needed in
global production specific areas.
• Facilitate exchange of experiences.
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12. Comments/Discussion points
• Is GDP still the appropriate featured
measure of a country’s economic activity
or should it be GNI?
• What is manufacturing and where is it
happening?
• How can use of intangibles be tracked
within an multinational enterprise?
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13. Comments/Discussion points
• Does the classification of a variety of units
under manufacturing lead to too much
heterogenity of production
functions…making the IO coefficients on
average meaningless?
– Leading units -VM, processing, factoryless
– Contract producers- providing manufacturing
services or goods ex. IPP.
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