15Th Meeting of The

DMES/2016/12-04

15th Meeting of the

Directors of Macro-Economic Statistics

Luxembourg, 14 –15 December 2016

Impact of globalisation and multinational enterprise activities on macroeconomic statistics – an issue paper

Items 3.2 and 3.3 on the Agenda

The revisions to key macroeconomic data (both national accounts and balance of payments statistics) presented by Ireland are a timely reminder of how large the impacts of globalisation can be on headline macroeconomic data, and how challenging it can be to communicate these impacts to users.

The revisions in Ireland have been made in line with ESA 2010 and BPM6, and following the elaborated approaches set out in the UNECE Guide on measuring global production. Applying the principles of economic ownership when companies relocate across borders, and particularly when huge amounts of Intellectual Property are involved, requires a significant degree of expertise and data access. The article attached at Annex 1 – which is a personal note to be published in a forthcoming issue of European National Accounts journal (EURONA) – provides a broader overview, as background.

It is therefore becoming increasingly clear that compilation of data on globalised multi-national enterprises cannot stop at the country border, but also relies on cooperation between countries. Relocation of such enterprises between countries impacts the statistics of all countries involved.

There has been substantial work on globalisation issues in Europe and internationally over recent years, focused on trade and business statistics. Among the various initiatives, the 2014 Riga Memorandum ("Towards global business statistics") in particular set out important principles and areas for further work of the ESS. The Irish revisions show us the need to take forward that agenda in an accelerated and practical way, for example through:

• Have a better understanding of large and complex multinationals using "profiling" techniques both at national and European level, through the use of the Euro Groups Register and Eurostat advice and assistance where needed. This may include working with global initiatives mentioned below.

• Promote unique business identifiers for European legal units, including dialogue with organisations taking forward global business identifier initiatives.

• Better (re)use of data by taking forward microdata exchange in a cost-effective way (e.g. the EGR) whilst respecting data protection and quality and by considering a supranational approach when statistics on global value chains is concerned.

• Consider the opportunity to design good communication strategies to explain to users the implications of globalisation in statistics, including the structured presentation of accounts to show what happens at the domestic territory separately from the underlying globalisation effects.

• Consider the opportunity to design an ex-ante communication system to inform about upcoming major revisions caused by globalisation events to allow Eurostat to support the methodological approach and assure comparable treatment across Member States.

• Mapping of the consistency and divergence issues in the methodological guidance for business statistics and national accounts, for example with regard to the application of the principle of economic ownership.

In addition, there are European (IGA, FIGARO[1]) and global initiatives (led by the UNSD and OECD) to prepare integrated accounts across regions and worldwide. Compilation of these accounts will require the resolution of globalisation effects in data sources to ensure consistency and completeness, and reduce the asymmetries.

It is indispensable that the work is taken forward jointly by both business statisticians and national accountants. To this end, the ESSC meeting on 17 November 2017 discussed the next steps, and were favourable to asking the BSDG and DMES to establish a specific Task Force of a limited number of volunteer countries at Director-level from both groups. The Task Force would make a stock-taking of progress in implementing the Riga Memorandum, based on responses to a questionnaire targeted on globalisation, and discuss further initiatives, including a possible acceleration of those ongoing activities that are linked to the issue. The ESSC acknowledged that the Task Force's work would need to take account of the resources involved when analysing potential actions, and an analysis of user needs to guide prioritisation of the follow-up work.

Given the importance of this issue and the possibility of similar events happening anytime in any Member State or between them and its cross-cutting nature, the ESSC welcomed the opportunity to take this work forward and supported a dedicated seminar, alongside one of its future meetings.

In order to take this work forward, both the DMES and BSDG are invited to discuss the issues involved and to agree to the creation of a Task Force of 8-10 Directors in total, with representatives from both Groups, to take forward the development of the issues described above. The first meeting of the Task Force, likely in the second half of January, would undertake a stocktaking and elaborate on the topics which could be brought to the ESSC seminar on the basis of the discussion at the next Partnership Group.

[1] Updates on progress in these projects are provided in Annex 2.