globalisation and national statistics robin lynch uk office for national statistics
TRANSCRIPT
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Globalisation and national statistics
• Why is globalisation happening?
• Transport is easier
• Barriers are lower
• Information is accessible (Internet)
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Globalisation and national statistics
• Transport is easier
• Bigger ships
• More flights
• Cheaper tickets
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Globalisation and national statistics
• Barriers are lower
• Less trade taxes
• Shared regulations (WTO)
• Information access allows management at a distance
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Globalisation and national statistics
• What effect does it have?
• More international transactions
• Global business
• Vertical as well as horizontal business structures
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Globalisation and national statistics
• International firms take advantage
• Organised to make good use of labour markets
• Capital markets
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Globalisation and national accounts
• National accounts aim to measure the economic activities of a nation
• Multi-national activities are a measurement problem for national accountants
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Globalisation and national accounts
• Once upon a time
– People lived in a sovereign country – a country
– People worked in the country
– All of production was in the country
– Output was sold mostly in the country
– people bought domestic produce
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Globalisation and national accounts
• People lived in a country
But now
• People leave their country (migration)
• People have second homes (residency)
• People live abroad some of the time
• People holiday and spend a lot of money abroad
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Globalisation and national accounts
• People worked in the country
But now
• People work abroad
• People send back money
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Globalisation and national accounts
All of production was in the country
But now
• Multinational companies span the world
• Design centre in UK• Production in Eastern Europe• Marketing in United States• Financial centre in The Netherlands
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Globalisation and national accounts
• Output was sold in the country
But now
• Output is sold abroad more
• Output is sold to foreign tourists
• Output is sold on the world wide web
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Globalisation and national accounts
• consumers bought local produce
But now
• We buy from abroad more
• We buy as we travel abroad
• We buy on the internet
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Globalisation and national statistics
• Some statistics are affected
• Population – migration statistics (EU)• Income – workers’ remittances• Expenditure – Household spending• GDP – value added• Profits• Return on capital
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Globalisation and national statistics
• There is a single market for economic activity
• Policy issues
• Multinationals use least cost options
• Can move production base quickly, according to cost
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Globalisation and national accounts
• Intellectual property – a special challenge
• Created on site
• Shared amongst many
• Can we measure a capital service between countries?
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Globalisation and national accounts
• National business surveys can no longer collect market sales and costs
• Transfer pricing to minimise global tax burden undermines traditional methods
• How can we retain the status quo?
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Globalisation and national accounts
• Ask firms to estimate an “arms-length” value for non-marketed internationally traded goods and services within the multinational
• Use these values to produce a traditional production accounts for the national activity
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Globalisation and national accounts
Are we attempting the impossible?
• Do national production functions mean anything?
• Can we measure productivity for national economic activity?
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Globalisation and national accounts
• Can we collect the necessary data?
• Will multi-nationals cooperate (and so reveal their tax engineering activities)?
• Even if they wanted to, how can they estimate the value of non-market transactions?
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Globalisation and national accounts
• What’s the alternative?
• Use the income approach
• Measure the employment income of the activity
• Estimate the operating surplus as the sum of returns to capital assets plus the “entrepreneurial turn”
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Globalisation and national accounts
• GDP through expenditures
• Reduce business surveys and use consumer surveys and other demand sources
• Make more use of administrative sources (often tax sources)
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Globalisation and national accounts
• The way ahead for business statistics
• Use multi-national supply-use frameworks to ensure consistency
• Cut this up to get country pictures, rather than building the international picture like a jigsaw of country estimates
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Globalisation and national accounts
• In the mean time, what can be done?
• Large business units
• International cooperation
• Focus on business profit centres
• Transfer pricing – standard methods