Nadim Ahmad, Head of Trade and Competitiveness Statistics Division Trade in value added and beyond: developing integrated international economic accounts New Techniques and Technologies for Statistics: Satellite event on challenges in measuring productivity, growth and intangibles Brussels: 17 March, 2017 nadim.ahmad@oecd.org Nadim Ahmad, Head of Trade and Competitiveness Statistics Division

What is TiVA and why is it useful? A response to the ‘distortion’ caused by international fragmentation of production ..that decomposes trade flows by the sources of value-added they embody

…blurring policy making Export driven growth strategies may target the wrong sectors Competitiveness: Bilateral trade positions: Protectionist policies can hurt domestic upstream industries and competitiveness Systemic risks - impact of macro-economic shocks on supply-chains (lack of) integration of emerging economies in GVCs

Providing new insights into GVCs..

And trade relationships US trade deficit with selected partners, 2011: USD billion

..and implications for policy making Mexico’s exports by origin of value-added, 2011: the feedback loop

% of total intermediate trade But not all regions are equal: The scale of integration varies significantly, espcially within regions (hubs) Extra-regional and intra-regional trade in intermediates, selected regions, 2014 % of total intermediate trade Regional and mega-regional agreements, 2016

And integration generates spillovers Increase in foreign content of exports 1995-2011 Improvement in EC Ranking, 1995-2014

But TiVA only scratches the surface Investment Trade Production Jobs Actors - SMEs Inequalities

Distributional aspects

Widening income inequality Growth in real disposable income   Source: Unweighted average over 17 countries ; OECD Income Distribution Database

Especially important given the growing importance of MNEs Contribution of foreign affiliates to domestic value added in exports, 2009. Particularly because trade between affiliates is not always recorded consistently - services and income flows are becoming increasingly blurred.

Global production requires that we put ‘global’ at the heart of national But with a granularity that provides insights on the actors and their heterogeneity Improving our understanding of interconnectedness and benefits, challenges and consequences of globalisation Whilst also improving GDP

Extended Supply-Use Tables An Interconnected (Fragmented) World requires an Interconnected (Integrated) approach Extended Supply-Use Tables An approach to bring together ‘disparate’ statistics under a common coherent umbrella A mechanism to respond to policy demands related to globalisation Without increasing response burdens By capitalising on existing data sources FATS, SBS, TEC To develop indicators that can respond to the globalisation agenda, and at the same time improve the quality of current TiVA estimates.

Domestically owned MNE Extended? Foreign Owned Domestically owned MNE Domestic Owned With high Export orientation ‘Exporters’ With low Export orientation ‘Non-Exporters’ Low import orientation High import orientation S M L

Providing new insights on inclusiveness SME share of total domestic value added of exports of transport eqpt, 2009

And the role of MNEs…. Shares of firms in gross exports and in exported value added, 2013

…and SMEs… … particularly dependent SMEs… Shares of firms in gross exports and in exported value added, 2013

…around 30% of jobs depend on foreign markets… Employment embodied in exports, by firm type, as share of total employment

…and up to 20% even in firms with no direct exports…. Share of employment that is embodied in exports, by firm type, 2013

ESUTs Provide scope for improved integrated economic accounts - that respond to the global production-trade-investment agenda. But they also provide basis for improved: productivity analysis (world KLEMS) improved quality in GDP and Trade stats (especially services) better understanding of GDP/GNI wedges IPP intra-firm transactions

Extensions to the extensions Work is on-going to develop national ‘investment flow’ matrices that can be integrated with ICIO to provide deeper insights into the contribution of capital exporting countries within GVCs and capital stock estimates for MFP by industry.

What are we doing? EGExSUTs – around 15 countries exploring feasibility Expanding the ICIO – mainstreaming the initiative in collaboration with regional partners – FIGARO, APEC, ESCWA, ECLAC, ECA – and mainstreaming the development of ESUTS at the national level.

Thankyou