Introduction Data Ownership-based indicators Conclusions
How does multinational production affect themeasurement of competitiveness?
Stefano Federico
Bank of Italy
October 20, 2016Conference of European Statistics Stakeholders
Budapest
Introduction Data Ownership-based indicators Conclusions
Outline
1 Introduction
2 Data
3 Ownership-based indicators
4 Conclusions
Introduction Data Ownership-based indicators Conclusions
Motivation
In a world with multinational companies, the geographicallocation of production does not coincide with the ownershipof production...
... growing disconnect between domestic (geography-based)indicators and national (ownership-based) indicators
This raises issues for several measures of competitiveness,based on the location of production, e.g.:
Gross exportsValue added in exports‘GVC income’
Question: How does multinational production affect themeasurement of competitiveness (i.e. production capabilitiesin tradables)?
Introduction Data Ownership-based indicators Conclusions
Our contribution
Assemble a unique bilateral dataset on foreign affiliates inthe manufacturing sector of 44 countries
Value added and factor incomes broken down according to locationof activity and ultimate owner country
Compute ownership-based measures of productioncapabilities
Value added by nationality of firmsValue added by nationality of factors involved in production
Evaluate exports and FDI using a common metric based onvalue added
Value added in exports versus value added of foreign affiliates
Introduction Data Ownership-based indicators Conclusions
Related literature
Ownership-based approach (applications to the U.S. andJapan)
Baldwin and Kimura 1998, Kimura and Baldwin 1998, Lipsey et al.1998This paper: much larger set of countries
FDI and multinational productionFukui and Lakatos 2012, Ramondo 2014, Ramondo et al. 2013,Alviarez 2014This paper: more detailed dataset with a longer time span
Global value chains (GVC)Johnson and Noguera 2012, Johnson 2014, Koopman, Wang andWei 2014This paper: value-added approach to the analysis of exports andproduction by foreign affiliates
Introduction Data Ownership-based indicators Conclusions
Dataset on multinational production
We build an innovative bilateral dataset on multinationalproduction for 44 countries and a RoW aggregate
44 countries account for more than 90% of world manufacturingvalue addedYears: 2004-2011Manufacturing sector as a whole
For each country pair we report the following variables:TurnoverEmploymentValue addedLabor compensation (Wages and social benefits)Capital compensation (Gross operating surplus)
ExamplesValue added by German-owned affiliates in HungaryCapital compensation of U.S.-owned affiliates in Brazil
Introduction Data Ownership-based indicators Conclusions
Sources
Inward and outward foreign affiliates statistics (FATS)OECD, Eurostat and national sourcesData on majority-owned firms only (50% rule), by ultimatecontrolling country
BvD Orbis: worldwide firm-level data
Estimation methods
FATS data account for about 80% of sales of foreign affiliatesworldwide (>90% in large advanced economies) but only 60%of value added
Introduction Data Ownership-based indicators Conclusions
Foreign affiliates (manufacturing; 2011)
Global activity of foreign affiliates (USD billion)Foreign affiliates % of world manufacturing
Sales 9337 21.2Employment 26758 6.7Value added 2052 18.0Labor compensation 1012 18.3Capital compensation 1040 17.7
Introduction Data Ownership-based indicators Conclusions
Ownership-based measures of production capabilities
Define location with first subscript and ownership with secondsubscript
Value added by location (“domestic”)
VAlocationi = VAi ,i +
∑j 6=i
VAi ,j (1)
Value added by nationality of firms
VAfirmsi = VAi ,i +
∑j 6=i
VAj ,i (2)
Value added by nationality of factors
VAfactorsi = VAi ,i +
∑j 6=i
LABi ,j +∑j 6=i
CAPj ,i (3)
Introduction Data Ownership-based indicators Conclusions
How to interpret ownership-based measures?
VA by nationality of firmsMeasures the global capabilities of domestically-owned firms(combining capital, management, proprietary technology with laborat home or abroad)
VA by nationality of factorsMeasures the global value added generated by national factors(labor at home, capital at home or abroad)
These indicators capture important aspects of thecompetitiveness of a country’s firms or factors of production...
... which could be used to supplement competitivenessindicators based on the location of the activity (Lipsey et al.1998)
Introduction Data Ownership-based indicators Conclusions
Ownership-based and location-based VA
How does value added by nationality of firms (or factors)differ from value added by location of activity?
-30
-20
-10
010
2030
GBR FRA JPN USA DEUKOR ITA IND CHNRUS ESP IDN MEXCAN BRA
15 largest countries in terms of manufacturing VA
VA by nationality of firm VA by nationality of factors
VA by nationality of firms is 25% larger for France and UK...
...15% larger for Japan, 10% larger for Germany and US
... and 15-30% smaller for large emerging countries
Introduction Data Ownership-based indicators Conclusions
Exports and FDI in value-added terms
What happens to world market shares on VA in exports if weinclude the VA of foreign affiliates?
-30
-20
-10
010
2030
GBR USA JPN FRA DEUKOR ITA CAN IND ESP MEX BRA RUSCHN IDN
15 largest countries in terms of manufacturing VA
30% increase for UK and US, 10% increase for France and Japan
no change for Germany, 7% decrease for Italy
up to 20% decrease for large emerging countries
Introduction Data Ownership-based indicators Conclusions
Concluding remarks
Foreign affiliates matterAlmost 20% of world manufacturing VA
Ownership-based indicators differ from location-basedindicators
VA by nationality of firms larger than domestic VA only in largeadvanced economies (esp. France and U.K + Japan, U.S. andGermany)Considering foreign affiliates also matters for assessing countries’recent performance on international markets
“Ownership as well as geography matters for economicbehavior” (Baldwin and Kimura 1998)
Improvement of official statistics on foreign affiliates (esp. forvalue added and trade) is needed for further progress
Introduction Data Ownership-based indicators Conclusions
Thank you for your attention
Introduction Data Ownership-based indicators Conclusions
Availability of FATS data
Share of activity of foreign affiliates for which FATS data is availableYear Sales Empl VA LAB CAP
2004 78 55 59 60 552005 78 55 58 58 542006 75 56 61 62 562007 77 60 63 63 582008 75 58 62 63 602009 79 63 59 65 532010 77 60 59 62 542011 79 62 59 62 55
Introduction Data Ownership-based indicators Conclusions
Availability of FATS data
By controlling country
Ctrl %World Sales Empl VA LAB CAPUSA 26.3 90 63 89 91 88JPN 10.6 98 99 27 34 20DEU 10.2 90 80 56 62 50GBR 8.8 83 41 58 58 58FRA 6.5 88 82 50 95 62NLD 6.3 78 77 64 76 54CHE 4.6 77 62 79 79 79ITA 2.6 92 93 58 34 33
KOR 2.5 5 2 3 0 0SWE 2.2 96 93 53 42 30
By location country
Loc %World Sales Empl VA LAB CAPUSA 16.1 95 87 95 78 74CHN 10.2 58 57 14 24 22DEU 8.3 95 94 93 93 93GBR 4.7 93 90 90 85 95CAN 4.3 93 85 70 63 84BRA 4.1 80 82 31 33 46FRA 4.0 95 95 95 96 95ESP 2.7 91 95 83 86 78BEL 2.7 80 89 37 42 51ITA 2.6 82 91 80 74 88
Introduction Data Ownership-based indicators Conclusions
Asymmetries in FATS data
Comparison with total sales reported by the controlling countryCtrl Sales (our estim.) Sales (outward FATS) Ratio
USA 2452 2611 0.94JPN 987 1108 0.89DEU 958 879 1.09GBR 824 641 1.29FRA 616 802 0.77ITA 243 278 0.87
SWE 195 248 0.79CAN 132 169 0.78LUX 128 88 1.44FIN 122 130 0.94BEL 110 30 3.70AUT 97 83 1.16IRL 79 27 2.94ESP 63 62 1.02POL 22 18 1.18
Examples of large asymmetries between inward and (mirror) outward data
Belgian-owned affiliates in US, Germany and FranceIrish-owned affiliates in USLuxembourg-owned affiliates in GermanyUK-owned affiliates in US and GermanySwedish-owned affiliates in USUS-owned and Japanese-owned affiliates in Hong Kong
Introduction Data Ownership-based indicators Conclusions
Robustness analysis (2011)
Ratio between VA by nationality of firms and VA by location of activityCountry Baseline Robustness
CHN 0.93 0.93USA 1.10 1.13JPN 1.16 1.14DEU 1.09 1.10ITA 0.99 0.96BRA 0.72 0.72KOR 1.05 1.06CAN 0.78 0.78RUS 0.87 0.87IND 0.97 0.97GBR 1.25 1.26FRA 1.26 1.28MEX 0.79 0.79IDN 0.80 0.80ESP 0.83 0.82
Robustness estimates do not impose consistency with total activityreported by inward country
This has a relatively minor impact on the ratio between VA by nationalityof firms and VA by location
Introduction Data Ownership-based indicators Conclusions
Importance of service activities in manufacturing groups
How much do non-manufacturing activities matter for salesand profits of manufacturing groups?
Evidence from selected large multinationals:Apple Inc.: 10% of sales in ‘iTunes, Software and Services’FCA Group: 1% of sales in ‘Other activities’ (group services &media)Philips Group: 4% of sales in ‘Innovation, group & services’ (groupservices + IP services)Toyota Motor Corporation: 10% of sales and 28% of operatingincome in ‘Financial services & other activities’Volkswagen Group: 10% of sales and 13% of operating income in‘Financial services’Notes: 2014 data. Inter-company transactions included except forApple
Introduction Data Ownership-based indicators Conclusions
Correlation between FATS and ORBIS: Log employment
AUSGBR
AUSIRL
AUSITA
AUSNLDAUSPRT
AUSROM
AUSSWE
AUSUSA
AUTAUS
AUTBELAUTBGRAUTBRA
AUTCAN
AUTCHE
AUTCHN
AUTCZE
AUTDEU
AUTDNK
AUTESP
AUTFIN
AUTFRAAUTGBR
AUTHUN
AUTIND
AUTIRL
AUTITA
AUTKOR
AUTLUX
AUTLVA
AUTMEX
AUTMYS
AUTNLD
AUTPHL
AUTPOL
AUTPRT
AUTROM AUTRUSAUTSVK
AUTSVN
AUTSWE
AUTTHA
AUTTUR
AUTUSA
BELAUSBELAUT
BELBGR
BELBRA
BELCAN
BELCHN
BELCZE
BELDEU
BELDNK
BELESP
BELFIN
BELFRA
BELGBR
BELHUNBELIND
BELIRL
BELITA
BELJPNBELKORBELLTU
BELLUXBELLVA
BELMEXBELMYS
BELNLD
BELPOL
BELPRT
BELROM
BELRUS
BELSVK
BELSWE BELTHA
BELTUR
BELUSA
BGRROM
CANAUT
CANBEL
CANBGR
CANCZE
CANDEU
CANESP
CANFIN
CANFRA
CANGBR
CANIRL
CANITA
CANLTUCANNLD
CANPRT
CANROM
CANUSA
CHEAUT
CHEBELCHEBGR
CHECZE
CHEDEU
CHEDNK
CHEESP
CHEEST
CHEFRA
CHEGBR
CHEHUN
CHEIRL
CHEITA
CHELTUCHELVA
CHENLD
CHEPOL
CHEPRT
CHEROM
CHESVKCHESVN
CHESWE
CHEUSA
CHNDEUCHNFRA
CHNGBR
CHNHUN
CHNITACHNNLD CHNPOL
CHNROM
CHNUSA
CZEBGR
CZEDEUCZEPOL
CZEROM
CZERUS
CZESVK
CZESVN
DEUAUS
DEUAUT
DEUBEL
DEUBGR
DEUBRA
DEUCAN
DEUCHE
DEUCHNDEUCZE
DEUDNK
DEUESP
DEUEST
DEUFIN
DEUFRA
DEUGBR
DEUGRC
DEUHKG
DEUHUN
DEUIDN
DEUIND
DEUIRL
DEUITA
DEUJPN
DEULTU
DEULUX
DEULVA
DEUMEX
DEUMYS
DEUNLD
DEUPHL
DEUPOL
DEUPRT
DEUROM
DEURUS
DEUSGP
DEUSVK
DEUSVN
DEUSWEDEUTUR
DEUUSA
DNKAUT
DNKBELDNKBGR
DNKBRADNKCAN
DNKCHN
DNKCZE
DNKDEU
DNKESP
DNKEST
DNKFIN
DNKFRA
DNKGBR
DNKHUN
DNKIND
DNKIRL
DNKITA
DNKJPN
DNKLTU
DNKLVA
DNKMEXDNKMYS
DNKNLD
DNKPOL
DNKPRT
DNKROM
DNKRUS
DNKSGP
DNKSVK
DNKSWEDNKTHA DNKUSA
ESPAUT
ESPBELESPBGR
ESPBRA
ESPCHN
ESPCZEESPDEU
ESPFRA
ESPGBR
ESPHUN ESPIND
ESPITAESPMEX
ESPNLD
ESPPOL
ESPPRT
ESPROM
ESPSVK
ESPSVN
ESPSWE
ESPTUR
ESPUSA
ESTFIN
ESTLTUESTLVA
ESTRUS
FINAUSFINAUT
FINBEL
FINBRA
FINCAN
FINCHE
FINCHN
FINDEU
FINDNKFINESP
FINESTFINFRA
FINGBR
FINHKG
FINHUN
FININD
FINIRL
FINITA
FINJPN
FINKORFINLTUFINLVA
FINMEX
FINMYS
FINNLD
FINPOL
FINPRT
FINROM
FINRUS
FINSGP
FINSVK
FINSWE
FINTHA
FINTUR
FINUSAFRAAUS
FRAAUT
FRABEL
FRABGR
FRABRA
FRACAN
FRACHE
FRACHN
FRACZE
FRADEU
FRADNK
FRAESP
FRAEST
FRAFIN
FRAGBR
FRAGRCFRAHKG
FRAHUN
FRAIDN
FRAIND
FRAIRL
FRAITA
FRAJPNFRAKOR
FRALTU
FRALUX
FRALVA
FRAMEX
FRAMYS
FRANLD
FRAPOL
FRAPRT
FRAROMFRARUS
FRASGP FRASVK
FRASVN
FRASWE
FRATHAFRATUR
FRAUSA
GBRAUS
GBRAUT
GBRBEL
GBRBGR
GBRBRAGBRCAN
GBRCHN
GBRCZE
GBRDEU
GBRDNK
GBRESP
GBREST
GBRFIN
GBRFRA
GBRHKG
GBRHUNGBRIDN
GBRIND
GBRIRL
GBRITA
GBRJPN
GBRKOR
GBRLTU
GBRLVA
GBRMEX
GBRMYS
GBRNLD
GBRPHL
GBRPOL
GBRPRT
GBRROM
GBRRUS
GBRSGPGBRSVK
GBRSVN
GBRSWE
GBRTHA
GBRUSA
GRCAUT
GRCBGR
GRCCANGRCCZE
GRCDEU
GRCESP
GRCFRAGRCGBR
GRCHUN
GRCITAGRCPOL
GRCPRT
GRCROM
GRCRUS
GRCSVK
GRCTUR
GRCUSA
HKGAUTHKGCZE
HKGDEU
HKGITAHKGPRT
HKGROM
HUNBGR
HUNCZE
HUNDEU
HUNITA
HUNROMHUNSVK
INDUSA
IRLAUT
IRLBEL
IRLCAN
IRLCZE
IRLDEU
IRLDNK
IRLESP
IRLFRA
IRLGBR
IRLHUN
IRLITA
IRLNLD
IRLPOL
IRLPRT
IRLROM
IRLUSA
ITAAUS
ITAAUTITABEL
ITABGR
ITABRA
ITACANITACHE
ITACHN
ITACZE
ITADEU
ITADNK
ITAESP
ITAFIN
ITAFRA
ITAGBR
ITAGRC
ITAHKG
ITAHUN
ITAIND
ITAIRL
ITAJPN
ITAKORITALTUITALUX
ITALVA
ITAMEX
ITAMYS
ITANLD
ITAPOL
ITAPRT
ITAROM
ITARUSITASVK
ITASVNITASWE
ITATHA
ITATUR
ITAUSA
JPNAUS
JPNAUT
JPNBEL
JPNBGR
JPNBRA
JPNCAN
JPNCHE
JPNCHN
JPNCZEJPNDEU
JPNDNK
JPNESP
JPNFIN
JPNFRAJPNGBR
JPNHKG
JPNHUN
JPNIDN
JPNIND
JPNITA
JPNKORJPNMEX
JPNMYS
JPNNLD
JPNPHL
JPNPOL
JPNPRT
JPNROM
JPNRUS
JPNSGP
JPNSVK
JPNSVN
JPNSWE
JPNTHA
JPNTWN
JPNUSA
KORUSA
LTULVA
LTURUSLUXAUT
LUXBEL
LUXBGR
LUXCZE
LUXDEU
LUXESPLUXFRALUXGBR
LUXHUN
LUXIRL
LUXITA
LUXLTU
LUXLVA
LUXNLD
LUXPRT
LUXROM
LUXSVK
LUXSWE
LVAEST
LVALTU
LVARUS
LVASVK
MEXUSA
NLDAUT
NLDBEL
NLDBGR NLDCAN
NLDCHN
NLDCZE
NLDDEU
NLDDNK
NLDESP
NLDEST
NLDFIN
NLDFRA
NLDGBR
NLDHUNNLDIDN NLDIND
NLDIRL
NLDITA
NLDLTU
NLDLVA
NLDPOL
NLDPRT
NLDROMNLDSVK
NLDSWE
NLDTUR
NLDUSA
POLBGR POLCHN
POLCZE
POLDEU
POLFRAPOLITA
POLLTU
POLLVA
POLROMPOLRUS
POLSVK
POLSWE
POLUSA
PRTBGR
PRTBRA
PRTCZE
PRTDEUPRTESP
PRTFRA
PRTHUN
PRTITAPRTPOLPRTROM
PRTUSA
ROMDEU
ROMITA
RUSAUT
RUSBGR
RUSCZE
RUSDEURUSFRA
RUSITA
RUSLTU
RUSLVA
RUSROM
SGPUSA
SVKAUT
SVKCZE
SVKDEU
SVKHUN SVKPOL
SVKROM
SVNAUT
SVNBRA
SVNCHE
SVNCHNSVNCZE
SVNDEU
SVNITA
SVNKOR
SVNPOL
SVNROM
SVNRUS
SVNSVK
SVNTUR
SVNUSA
SWEAUS
SWEAUT
SWEBEL
SWEBGR
SWEBRA
SWECAN
SWECHE
SWECHN
SWECZE
SWEDEU
SWEDNK
SWEESPSWEEST
SWEFIN
SWEFRA
SWEGBR
SWEHUN
SWEIND
SWEIRL
SWEITA
SWEJPN
SWELTUSWELVA
SWEMEX
SWEMYSSWENLD
SWEPOL
SWEPRT
SWEROM
SWERUS
SWESVKSWETUR
SWEUSA
TURBGR
TURDEU
TURITA
TURROMTWNUSA
USAAUS
USAAUT
USABEL
USABGR
USABRAUSACAN
USACHE
USACHN
USACZE
USADEU
USADNK
USAESP
USAFIN
USAFRAUSAGBR
USAGRC
USAHKGUSAHUNUSAIDN
USAIND
USAIRL
USAITAUSAJPN
USAKOR
USALTU
USALUX
USALVA
USAMEX
USAMYS
USANLDUSAPHL
USAPOL
USAPRT
USAROM
USARUSUSASGP
USASVKUSASWE
USATHA
USATURUSATWN
05
1015
FA
TS
0 5 10 15Orbis
Slope of the fitted line = 0.80 (s.e. = 0.03)
R-squared = 0.73
Introduction Data Ownership-based indicators Conclusions
Correlation between FATS and ORBIS: Log sales
AUSCZE
AUSDEU
AUSGBR
AUSIRL
AUSITA
AUSNLD
AUSROM
AUSSWE
AUSUSA
AUTBEL
AUTBGR
AUTBRA
AUTCAN
AUTCHE
AUTCHN
AUTCZE
AUTDEU
AUTDNK
AUTESP
AUTFIN
AUTFRA
AUTGBR
AUTHUN
AUTIND
AUTIRL
AUTITA
AUTKOR
AUTLUX
AUTLVA
AUTMEX
AUTMYS
AUTNLD
AUTPHL
AUTPOL
AUTPRT
AUTROMAUTRUS
AUTSVK
AUTSVNAUTSWE
AUTTHA
AUTTUR
AUTUSA
BELAUS
BELAUT
BELBGR
BELBRA
BELCHN
BELCZE
BELDEU
BELDNK
BELESP
BELFIN
BELFRA
BELGBR
BELGRC
BELHUN
BELIND
BELIRL
BELITA
BELJPN
BELKOR
BELLTU
BELLUX
BELMEX
BELMYS
BELNLD
BELPOL
BELPRTBELROM
BELRUS
BELSVK
BELSWE
BELTHA
BELTUR
BELUSABRAUSA
CANAUT
CANBEL
CANBGR
CANCZE
CANDEU
CANESP
CANFIN
CANFRA
CANGBR
CANIRL
CANITA
CANLTU
CANNLD
CANPRT
CANROM
CANUSA
CHEAUT
CHEBEL
CHEBGR
CHECZE
CHEDEU
CHEDNK
CHEESP
CHEEST
CHEFRACHEGBR
CHEHUN
CHEIRL
CHEITA
CHELTUCHELVA
CHENLDCHEPOL
CHEPRTCHEROMCHESVKCHESVN
CHESWE
CHEUSA
CHNDEU
CHNFRA
CHNGBR
CHNHUN
CHNITACHNNLD
CHNPOL
CHNROM
CHNUSA
CZEBGR
CZEDEU
CZEPOL
CZEROM
CZESVK
DEUAUS
DEUAUTDEUBEL
DEUBGR
DEUBRA
DEUCAN
DEUCHE
DEUCHN
DEUCZE
DEUDNK
DEUESP
DEUEST
DEUFIN
DEUFRA
DEUGBR
DEUGRC DEUHKG
DEUHUN
DEUIDN
DEUIND
DEUIRL
DEUITADEUJPN
DEULTU
DEULUX
DEULVA
DEUMEX
DEUMYSDEUNLD
DEUPHL
DEUPOL
DEUPRTDEUROM
DEURUS
DEUSGP DEUSVK
DEUSVN
DEUSWEDEUTUR
DEUUSA
DNKAUTDNKBEL
DNKBGR
DNKCZE
DNKDEU
DNKESP
DNKEST
DNKFIN
DNKFRA
DNKGBR
DNKHUNDNKITA
DNKLTU
DNKNLD
DNKPRT
DNKROM
DNKSVK
DNKSWEDNKUSA
ESPAUT
ESPBEL
ESPBGR
ESPBRA
ESPCHNESPCZE
ESPDEU
ESPFRA
ESPGBR
ESPHUN
ESPIND
ESPITA
ESPMEX
ESPNLD
ESPPOL
ESPPRT
ESPROMESPSVK
ESPSVN
ESPSWE
ESPTUR
ESPUSA
ESTFINESTLTU
ESTLVA
ESTRUS
FINAUSFINAUT
FINBEL
FINBRA
FINCAN
FINCHE
FINCHN
FINCZE
FINDEU
FINDNKFINESP
FINEST
FINFRAFINGBRFINHUN
FININD
FINIRL
FINITA
FINJPN
FINKORFINLTU FINLVAFINMYS
FINNLD FINPOL
FINPRT
FINROM
FINRUS
FINSGP
FINSVKFINSVN
FINSWE
FINUSAFRAAUS
FRAAUT
FRABEL
FRABGR
FRABRA
FRACAN
FRACHN
FRACZE
FRADEU
FRADNK
FRAESP
FRAEST
FRAFIN
FRAGBR
FRAGRC
FRAHUN
FRAIND
FRAIRL
FRAITA
FRAJPN
FRAKOR
FRALTU
FRALUX
FRALVA
FRAMEX
FRAMYS
FRANLD
FRAPOL
FRAPRT
FRAROM
FRARUSFRASGP
FRASVK
FRASVN
FRASWE
FRATHA
FRATUR
FRAUSA
GBRAUS
GBRAUT
GBRBEL
GBRBGR
GBRBRA
GBRCAN
GBRCHN
GBRCZE
GBRDEU
GBRDNK
GBRESP
GBREST
GBRFIN
GBRFRA
GBRHKG
GBRHUN
GBRIDN
GBRINDGBRIRL
GBRITA
GBRJPN
GBRKOR
GBRLTUGBRLVA
GBRMEXGBRMYS
GBRNLD
GBRPHL
GBRPOL
GBRPRTGBRROM
GBRRUS
GBRSVK
GBRSVN
GBRSWE
GBRTHA
GBRTUR
GBRUSA
GRCAUT
GRCBGR
GRCCAN
GRCDEU
GRCESP
GRCFRA
GRCGBR
GRCHUN
GRCITA
GRCPOL
GRCPRT
GRCROM
GRCRUS
GRCTUR
GRCUSA
HKGAUTHKGCZE
HKGDEUHKGITA
HKGNLD HKGPRT
HKGROMHUNBGR
HUNCZE
HUNITA
HUNROM
HUNSVKINDUSA
IRLAUT
IRLBEL
IRLCAN
IRLCZE
IRLDEU
IRLDNK
IRLESP
IRLFRAIRLGBR
IRLHUN
IRLITA
IRLNLD
IRLPOL
IRLPRT
IRLROM
IRLUSA
ITAAUSITAAUT
ITABEL
ITABGR
ITABRA
ITACANITACHE
ITACHN
ITACZE
ITADEU
ITADNK
ITAESP
ITAFIN
ITAFRA
ITAGBR
ITAGRC
ITAHKG ITAHUN
ITAIND
ITAIRL
ITAJPN
ITAKOR
ITALTU
ITALUX
ITAMEX
ITAMYS
ITANLD
ITAPOL
ITAPRT
ITAROM
ITARUSITASVK
ITASVN
ITASWE
ITATHA
ITATUR
ITAUSA
JPNAUS
JPNAUT
JPNBEL
JPNBGR
JPNBRAJPNCAN
JPNCHE
JPNCHN
JPNCZE
JPNDEU
JPNDNK
JPNESP
JPNFIN
JPNFRA
JPNGBRJPNHKG
JPNHUN
JPNIDN
JPNIND
JPNITA
JPNKOR
JPNMEX
JPNMYS
JPNNLD
JPNPHL
JPNPOL
JPNPRT
JPNROM
JPNRUS
JPNSGP
JPNSVK
JPNSVN
JPNSWE
JPNTHA
JPNTWN
JPNUSA
KORUSA
LTULVA
LTURUS
LUXAUT
LUXBEL
LUXBGR
LUXCZE
LUXDEU
LUXESPLUXFRA
LUXGBR
LUXHUN
LUXIRL
LUXITA
LUXLTU
LUXPRT
LUXROM
LUXSVK
LUXSWE
LVAESTLVALTU
NLDAUT
NLDBEL
NLDBGR
NLDCAN NLDCHN
NLDCZE
NLDDEU
NLDDNK
NLDESP
NLDEST
NLDFIN
NLDFRANLDGBR
NLDHUNNLDIDN
NLDINDNLDIRL
NLDITA
NLDLTU
NLDPOL
NLDPRTNLDROM
NLDSVK
NLDSWENLDTUR
NLDUSA
POLBGR
POLCHN
POLCZE
POLDEU
POLFRAPOLITA
POLLTU
POLROMPOLRUS
POLSVK
POLSWE
PRTBGR
PRTBRA
PRTCZE
PRTDEU
PRTESP
PRTFRA
PRTHUN
PRTITA
PRTPOLPRTROM
ROMITA
RUSAUT
RUSCZE
RUSDEU
RUSITA
RUSLVA
RUSROM
SGPUSA
SVKAUT
SVKCZE
SVKDEU
SVKHUN
SVKPOL
SVKROM
SVNAUT
SVNBRA
SVNCHN
SVNCZE
SVNDEU
SVNITA
SVNKOR
SVNPOL
SVNROM
SVNRUS
SVNSVK
SVNTUR
SVNUSA
SWEAUS
SWEAUT
SWEBEL
SWEBGR
SWEBRA
SWECAN
SWECHE
SWECHN
SWECZE
SWEDEU
SWEDNK
SWEESPSWEEST
SWEFIN
SWEFRA
SWEGBR
SWEHUN
SWEIND
SWEIRL
SWEITASWEJPN
SWELTUSWELVA
SWEMEX
SWEMYS
SWENLDSWEPOL
SWEPRT
SWEROM
SWERUS
SWESVK
SWETUR
SWEUSA
TURBGR TURDEU
TURFRA TURITA
TURROM
TWNUSA
USAAUS
USAAUT
USABEL
USABGR
USABRA
USACAN
USACHE
USACHN
USACZE
USADEU
USADNK
USAESP
USAFIN
USAFRA
USAGBR
USAGRC
USAHKGUSAHUN
USAIDN
USAIND
USAIRL
USAITAUSAJPN
USAKOR
USALTU
USALUX
USAMEX
USAMYS
USANLD
USAPHL
USAPOL
USAPRT
USAROM
USARUS
USASGP
USASVK
USASVN
USASWE
USATHA
USATUR
USATWN
05
1015
FA
TS
0 5 10 15Orbis
Slope of the fitted line = 0.81 (s.e. = 0.04)
R-squared = 0.75
Introduction Data Ownership-based indicators Conclusions
‘Tax havens’ and profits of MNEs
Share of FDI income in ‘tax havens’ (2008-2012)Country % in ‘tax havens’
USA 51.0BEL 49.0ITA 42.5GBR 40.3DEU 34.4ESP 24.0SWE 23.9FRA 23.5AUT 15.8
Source: Eurostat and Zucman (2014). Balance of payments data, total economy. Tax
havens: Ireland, Luxembourg, Netherlands, Switzerland, Offshore countries.
Introduction Data Ownership-based indicators Conclusions
BoP data on FDI
BoP data underestimate FDI in the manufacturing sector (esp. on the outwardside), due to the recording of the immediate counterpart (often holdingcompanies)
Share of manufacturing in FDI stocks (BoP data, 2012)Country Outward FDI Inward FDI
Germany 16.5 10.2Spain 22.2 31.1France 5.4 7.0Italy 24.2 29.9United Kingdom 18.7 20.9
Source: Eurostat.
Introduction Data Ownership-based indicators Conclusions
Value-added approach to exports vs FDI
Define Yi as value added to serve foreign markets, either viaexports or foreign affiliates
Yi = VAXi + VAFAi (4)
VAXi = value added in exports (GDP in exports) VAFAi =value added of foreign affiliates
Fully comparable and non-duplicative metric (Baldwin andKimura 1998)
Implicit assumptions (which reflect data issues)Value added of foreign affiliates entirely serves foreign marketsAn ownership-based measure would exclude exports offoreign-owned companies (second term below)
Yi = VAXi ,i +∑j 6=i
VAXi ,j + VAFAi (5)
Introduction Data Ownership-based indicators Conclusions
World market shares on exports and FDI
World market share in terms of VAXi
SHVAXi =VAXi∑i VAXi
(6)
World market share in terms of Yi (VAXi + VAFAi )
SHYi =(VAXi + VAFAi )∑
i (VAXi + VAFAi )(7)
Manufacturing sector only for both VAXi and VAFAi
Introduction Data Ownership-based indicators Conclusions
Comparing world market shares (2011)
What happens to world market shares on VA in exports if weinclude the VA of foreign affiliates?
-30
-20
-10
010
2030
GBR USA JPN FRA DEUKOR ITA CAN IND ESP MEX BRA RUSCHN IDN
15 largest countries in terms of manufacturing VA
30% increase for UK and US, 10% increase for France and Japan
no change for Germany, 7% decrease for Italy
up to 20% decrease for large emerging countries
Introduction Data Ownership-based indicators Conclusions
Comparing changes in world market shares (2004-2011)
What happens to changes in world market shares on VA inexports if we include the VA of foreign affiliates?
-30
-25
-20
-15
-10
-50
510
1520
USA ESP DEU ITA JPN FRA GBR CAN
G7 economies + Spain
VA in exportsVA in exports + VA of for. affiliates
Japan’s loss of market share becomes only 13% (from 23%)
Similar pattern for France, Italy (Chrysler effect) and UK