Activities of multinational enterprises –Eurostat’s approach
Szymon Bielecki
European Commission
Eurostat, Unit G2 Structural Business Statistics
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Outline
AMNE and FATS – general concepts
FATS compilation and dissemination in the European Union
Broader context of EU-FATS
AMNE and FATS – general concepts
What are FATS and AMNE?
FATS: In the past: Foreign Affiliates’ Trade in Services Now: Foreign AffiliaTes Statistics
statistics describing the overall operations of foreign-controlled affiliates (direct investment enterprises)
a ‘bridge’ between business statistics and FDI/BoP part of AMNE statistics (Activities of MultiNational Enterprises) traditional focus on services, now also manufacturing included mode 3 of international supply of services chapter IV of MSITS 2010, consistent with international
standards (BPM6, BD4, SNA2008)
Inward vs. Outward FATS
Resident enterprise
Inward FDI >50%
Non-Resident enterprise
Non-Resident enterprise
Outward FDI >50%
Resident enterprise
TurnoverEmployment
Number of enterprises
TurnoverEmploymentValue added
Number of enterprises etc.
Compiling economy
Inward FATS
Outward FATS
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Statistical unit vs. reporting unit
Inward FATS: …we ask a resident enterprise being an affiliate of a foreign
enterprise group about its own characteristics
THUS: statistical unit = reporting unit
Outward FATS:…we ask a resident enterprise being head of an enterprise
group about characteristics of other enterprises (its foreign affiliates)
THUS: statistical unit ≠ reporting unit
FATS vs. AMNE
Resident enterprise
(controlled)
Non-Resident enterprise
Inward FDI
Non-Resident enterprise
Resident enterprise
(controlling)
Outward FDIOutward
FATS
Resident enterprises(no links)
X
Inward FATS
Compiling economyAMNE
Rationale for compiling FATS
extend the information provided by international trade statistics, FDI statistics and business statistics
describe international commercial presence of enterprises
measure the real economic impact of direct investment flows
complement the information on economic links between countries
very relevant for research on economic globalisation – both in terms of reasons and effects/impacts
policy relevant – GATS, taxation, movement of capital
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Dimensions of FATS
1. Economic activity of the foreign affiliate MSITS: ISIC (ICFA groupings, focus on services) EU: NACE (EU implementation of ISIC, goods and services)
2. Partner country Inward FATS: country of the (ultimate) controlling investor Outward FATS: country of residency of the foreign affiliate
3. Characteristics (variables)
4. Compiling country
FATS variables (MSITS, SNA)
Basic measures:– sales (turnover) and/or output– employment– value added– exports and imports of goods and services– number of enterprises (affiliates)
Additional measures: assets, compensation of employees, net worth, net operating surplus, gross fixed capital formation, taxes on income, research and development expenditures, purchases of goods and services (intermediate consumption)
FATS compilation and disseminationin the European Union
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Common legal framework of FATS in the EU
Regulation (EC) No 716/2007 of the European Parliament and of the Council of 20 June 2007 on Community statistics on the structure and activity of foreign affiliates
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2007:171:0017:0031:EN:PDF
Implementing regulations of the European Commission on derogations, definitions, classifications, quality reporting
FATS Recommendations Manual 2009 editionhttp://epp.eurostat.ec.europa.eu/cache/ITY_OFFPUB/KS-AR-09-014/EN/KS-AR-09-014-EN.PDF
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Obligatory FATS characteristics (variables)
Number of enterprises Turnover Number of persons employed
Value added at factor cost Gross investment in tangible goods Personnel costs Production value Total purchases of goods and services Purchases of goods and services for resale Total intra-mural R&D expenditure Total number of R&D personnel
Inward & Outward FATS
Inward FATS
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Data requirements
Periodicity: annual (first compulsory reference period 2007)
Timeliness: t+20 months
Classification: NACE (Rev. 2 in the course of implementation)
Dimensions:
– Inward FATS: 1) 26+14 main partners x detailed activities
2) all partners x total economy (sections B-N excl. K)
– Outward FATS: 1) 9 main partners x detailed activities
2) 24 other partners x 17 main activities
3) all partners x total economy (sec. B-S excl. O)
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Limitations and challenges
complexity, intransparency and dynamics of large multinationial corporations’ structures
data completeness – population frame, sampling, size thresholds, response rate, estimations and imputation
consolidated reporting (turnover, trade variables)
confidentiality – level of detail for economic activity, links to other statistical domains (SBS), size of the economy
asymmetries Inward vs. Outward FATS – international cooperation very useful
lack of data cross-checking possibilities
Outward FATS data – some figures…
country variable
No. of enterprises (x1.000)
Turnover (bn €)
Employment (x1.000)
Germany 11.3 682 2309
France (2007) 10.3 443 1785
Italy 7.8 142 739
Netherlands 6.1 295 666
Sweden 4.2 88 568
Denmark 2.9 n.a. 250
Finland 1.5 67 214
Slovenia 1.5 3 47
Belgium 1.2 19 110
Austria 1.0 35 153
(Note: UK and Spain not available)
2008 data, total of non-EU affiliates, total economic activity
…and interesting facts
Germany is the biggest contributor in all 3 variables and almost all destinations
the highest employment per affiliate: Cyprus (510) 41% of ‘German’ turnover recorded by US affiliates US affiliates very important also for the Netherlands, Italy,
Sweden, Finland and Belgium Italy particularly present in Africa, Netherlands in S-E Asia 21% of turnover for the Netherlands recorded by affiliates
resident in offshore financial centres other specific strong links: NL→CH, SE→NO, AT→HR,
NL→RU, FI→RU, SE→UA, IT→KZ, FI→CN, IT→IL, NL→AE, IT→SA, NL→CA, NL→AR, IT→BR, IT→VE, PT→KY, PT→AO
Inward FATS data overview
variable country
No. of enterprises (x1.000)
Turnover (bn €)
Employment (x1.000)
UK 11.2 775 1824
Germany 10.3 577 1429
Italy 5.3 189 473
Hungary 4.7 44 180
Bulgaria 3.8 8 63
Sweden 3.8 84 244
Austria 2.4 60 116
Netherlands 2.1 189 274
Portugal 1.7 15 64
Spain 1.6 98 295
2007 data, total of affiliates controlled from outside the EU, total econ. activity
(Note: France not available)
Some IFATS related facts and interpretations
for most of the EU countries the US parent companies play the most important role (in Cyprus 70%, in the Netherlands 67% of total turnover in non-EU controlled enterprises)
Germany, Hungary and the UK attractive for companies from S-E Asia; Bulgaria for Russia, Ukraine and countries of Central Asia and Middle East
large turnover of Swiss-controlled affiliates in Romania and Slovenia Portugal with 17.5% of affiliates controlled from offshore financial centres 32% of Slovak employment in foreign controlled companies, 50% of Slovak
and Hungarian turnover affiliates controlled from another EU member more numerous than those
controlled by non-EU countries (except for UK) the most important destinations inside the EU: Germany, Hungary, UK,
Italy and Bulgaria; importance of neighbours’ links some other interesting links: UA→HU, IL→HU, SC→HU, AU/NZ→UK,
CA→UK, ZA→UK,
Broader context of EU-FATS
Links of FATS with other statistical domains
FATS extend the information provided by international trade in goods and services statistics (transactions), FDI statistics (flows, stocks, income) and business statistics (characteristics of resident enterprises)
data can and should be analysed in the context of the other statistical domains
the same classification used for FATS, FDI and SBS (economic activity), but different for international trade
trade variables (intra-firm, goods/services) would be very interesting but seem unfeasible in FATS
Relation between FDI statistics and FATS
FDI – cross-border capital links between enterprises FATS – real economic activity of the capital located abroad
(extension of the information provided by FDI)
FDI – 10% or more of voting power in the FDI enterprise (ownership)
FATS – concept of control over the affiliate (e.g. ‘power to name the majority of its directors or otherwise to legally direct its actions’ (MSITS); in practice 50%+ voting power)
FDI – statistics according to individual country shares FATS – affiliate’s characteristics attributed as a total
FATS vs. other statistics
Resident enterprise
(controlled)
Non-Resident enterprise
Inward FDI
Resident enterprise
(controlling)
Outward FDIOutward
FATS
Resident enterprise(no links)
X
Inward FATS
StructuralBusinessStatistics
Non-Resident enterprise
ITG
All non-residententerprises
(and consumers)
ITS
Data collection links to FDI and SBS
FATS variables defined like in the SBS framework Commonly used synergies in data collection:
– Inward FATS: business registers, business statistics surveys
– Outward FATS: FDI registers, FDI surveys (as an annex) Two basic approaches to developing FATS:
1. directly request information from enterprises via surveys (Inward FATS – affiliates, Outward FATS – parents)
2. (Inward FATS only) identify the foreign-controlled subset of the existing data on resident enterprises (SBS)
Advantages of separate FATS surveys (approach 1): – possibility of tailoring the requested data (variables,
classifications) and survey periodicity to data compiler’s needs and data reporters’ capacities
– no automatic use of SBS/FDI size thresholds
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EuroGroups Register Register of multinational corporations active in the EU
Ongoing project, 5000 biggest groups, soon 10000
Corporate structures, ID numbers, key characteristics (where available), UCI, SPE…
integration and cooperation between business statistics and investment statistics
Source: commercial databases (Bureau van Dijk, Dun&Bradstreet), combined by Eurostat, verified and completed by national statistical data compilers
Access restricted to EU NSIs and (soon) NCBs
Main users: FATS and FDI statisticians
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Thank you very much
for your attention!
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