Statistics for economic analysis and policy making in Europe Part 5 CONTRACTOR IS ACTING UNDER A FRAMEWORK CONTRACT CONCLUDED WITH THE EUROPEAN COMMISSION

Analysis of growth and structural change – Overview Introduction - Theoretical background Structural business statistics (SBS) Business demography Foreign Affiliates Statistics (FATS) Foreign direct investment (FDI) Statistics Statistics on trade by enterprise characteristics Statistics on science and technology Innovation statistics Statistics on the information society

Introduction Analytical orientation Analysis of the economic structure in many dimensions such as type of activity, region, size class. Analysis of the changes in the structure, including business demography. Measurement of the factors of production used. Providing information on key factors influencing competitiveness and economic growth. Meeting the needs of national accounts.

Introduction Common characteristics Enterprise as the central statistical unit used. Core concepts are derived from national accounts. Reference period usually the calendar year. Data provision annually or multi-annually. Timeliness is not the first priority.

A synoptic overview – coverage of selected annual statistics

A synoptic overview – coverage of selected annual statistics

A synoptic overview – selected annual statistics, breakdown by NACE Rev. 2

External study on detail evaluation of the legal acts in the areas of statistics which were identified by member states as areas to revision A synoptic overview – selected annual statistics, breakdown by NACE Rev. 2 Source of the last few slides: Josef Richter, Christian Engelage, Peter Thomas External study on detail evaluation of the legal acts in the areas of statistics which were identified by member states as areas to revision; Luxembourg 2010

A synoptic overview – selected annual statistics, breakdown by size classes Structural business statistics: Annexes I to IV: Size classes of number of persons employed Annex IX: Size class of number of employees ICT: Number of persons employed Innovation and R&D: Number of employees Labour cost statistics: Vocational Training Statistics: Number of persons employed

Structural business statistics Structural business statistics (SBS) can be seen as the core of the system of economic units oriented statistics. Organised as a common module and a number of branch-specific additional modules. Main primary data sources: accounting data, information on employment. Information on the national and (some) data on the regional level.

Structural business statistics Common module – national level Statistical unit: Enterprise (market sector only) Scope: NACE Rev. 2 B to S except O Reference period: year Periodicity: annually Transmission of preliminary results also required Breakdown by: Economic activity according NACE Rev. 2 Size classes

Structural business statistics Common module – national level – variables: Structural data Number of enterprises Accounting data Turnover Production value Value-added at factor cost Gross operating surplus Total purchases of goods and services Purchases of goods and services purchased for resale in the same condition as received

Structural business statistics Common module – national level – variables: Accounting data Payments for agency workers Personnel costs Wages and salaries Social security costs Data related to the capital account Gross investment in tangible goods Data on employment Number of persons employed Number of employees Number of employees in full-time equivalent units

Structural business statistics Common module – regional level Statistical unit: Local unit Scope: NACE Rev. 2 B to S except O Reference period: Year Periodicity: Annually Variables: Wages and salaries, employment only Breakdown by: Economic activity according NACE Rev. 2 NUTS 2

Structural business statistics Industry module – national level Statistical unit: Enterprise (market sector only) Scope: NACE Rev. 2 B to E Reference period: Year Periodicity: Annually, Multi-annually Transmission of preliminary results also required Breakdown by: Economic activity according NACE Rev. 2 Size classes

Structural business statistics Industry module – national level Additional information such as: Breakdown of turnover by type of activity Purchases of energy products Total current expenditure on environmental protection Investment in equipment and plant for pollution control, and special anti-pollution accessories (mainly end-of-pipe equipment) Investment in equipment and plant linked to cleaner technology (integrated technology) Payments to subcontractors

Structural business statistics Construction module – national level Statistical unit: Enterprise (market sector only) Scope: NACE Rev. 2 F Reference period: Year Periodicity: annually, multi-annually Transmission of preliminary results also required Additional branch specific variables Breakdown by: Economic activity according NACE Rev. 2, size classes

Structural business statistics Trade module – national level Statistical unit: Enterprise (market sector only) Scope: NACE Rev. 2 G Reference period: Year Periodicity: annually, multi-annually Transmission of preliminary results also required Additional branch specific variables Breakdown by: Economic activity according NACE Rev. 2, size classes

Structural business statistics Trade module – regional level Statistical unit: local unit Scope: NACE Rev. 2 G Reference period: Year Periodicity: annually, multi-annually Additional branch specific variables such as turnover, sales space Breakdown by: Economic activity according NACE Rev. 2, NUTS 2

Structural business statistics Business services – national level Statistical unit: Enterprise (market sector only) Scope: NACE Rev. 2 58.2, 62, 63.1, 69.1, 69.2, 70.2, 71.1, 71,2, 73.1, 73.2, 78, thresholds Reference period: year Periodicity: annually, multi-annually Additional branch specific variables Breakdown by: Economic activity according NACE Rev. 2

Business demography Business demography is the only statistical project within the system of business statistics directly dealing with the dynamics of the economic process over a longer period directly. Business demography aims at a detailed analysis of the population of active enterprises, enterprise births, enterprise deaths and the survival of newly born enterprises and the related effects on the structure, activity and the evolution of the business population.

Business demography Data on births and deaths of enterprises and their life expectancy are increasingly requested by policy makers but also by economists. Some of the results are directly used for the calculation of the indicators measuring the progress towards the goals as defined in the in the Growth and Jobs Strategy (The Lisbon Strategy 2005).

Business demography The comparability of demographic events and in particular of relative indicators such as birth and death rates are very dependent on the standards of the statistical business registers and to which extent the delineation of enterprises is harmonised between countries.

Business demography Basic characteristics Statistical unit: enterprise Scope: NACE Rev. 2 sections B to N with the exception of NACE Rev.2 group K 64.2, sections P, Q, R and S. Reference period: year Periodicity: annually Breakdown by: Economic activity according NACE Rev. 2 Size classes, legal form

Business demography Variables include: Structural data (for time period t) Population of active enterprises in t Number of births of enterprises in t Number of deaths of enterprises in t Number of enterprises newly born in t-1 having survived to t Number of enterprises newly born in t-2 having survived to t Number of enterprises newly born in t-3 having survived to t Number of enterprises newly born in t-4 having survived to t Number of enterprises newly born in t-5 having survived to t

Business demography Variables include: Data on employment for the populations of active enterprises, enterprise births, enterprise deaths and enterprise survivals. Derived variables of special importance are Survival rate of newly born enterprises Average survival rates High growth enterprises Gazelles

Foreign AffiliatTes Statistics (FATS) Foreign AffiliatTes Statistics (FATS) provide data on enterprises in the compiling country which are controlled by institutional units abroad and data on (foreign) enterprises which are controlled by resident institutions. Control means the ability to determine the general policy of an enterprise by choosing appropriate directors, etc. In this context, enterprise A is deemed to be controlled by an institutional unit B when B controls, whether directly or indirectly, more than half of the shareholders’ voting power or more than half of the shares.

Foreign AffiliatTes Statistics (FATS) The quality of the EuroGroups Register (EGR), is of crucial importance for carrying out and coordinating survey frames for statistics on global business activities, like FATS and Foreign direct investment statistics (FDI).   The EGR is the statistical business register of multinational enterprise groups (MNEs) having at least one enterprise in the territory of the EU.

Foreign AffiliatTes Statistics (FATS) The EGR contains information on the following units and characteristics: legal units: identification, demographic, control and ownership characteristics; enterprises: identification and demographic characteristics, activity code (NACE), number of persons employed, turnover, institutional sector; enterprise groups: identification, demographic characteristics, the structure of the group, the group head, the country of global decision centre, activity code (NACE), consolidated employment and turnover of the group.

Inward FATS Inward FATS describe the overall activity of foreign affiliates resident in the compiling economy. A foreign affiliate is an enterprise resident in the compiling country over which an institutional unit not resident in the compiling country has control. Inward FATS are usually compiled in the framework and on the basis of results of the SBS in combination with register data on foreign ownership and control. Inward FATS provide the same kind of structural annual information as SBS.

Inward FATS Basic characteristics Statistical unit: enterprise (market sector only) Scope: NACE Rev. 2 B to S, except O which are foreign affiliates Reference period: year Periodicity: annually The list of variables is a subset of the list of the common SBS Module Breakdown by: Economic activity according NACE Rev. 2

Inward FATS - example

Inward FATS - example

Inward FATS - example

Outward FATS Outward FATS describe the activity of foreign affiliates resident abroad controlled by the compiling country. A foreign affiliate within the terms of Outward FATS is an enterprise not resident in the compiling country over which an institutional unit resident in the compiling country has control. Outward FATS provide data of the economic impact of investments abroad.

Outward FATS Outward FATS data are usually collected in the framework of FDI Statistics or as stand-alone surveys possibly linked to SBS or FDI, but certainly based on enterprises resident in the compiling economy. Outward FATS is limited to affiliates resident in non-EU countries that are controlled by an institutional unit resident in a Member State of the EU.

Outward FATS Basic characteristics Statistical unit: enterprise (market sector) Scope: NACE Rev. 2 B to S, except O which control ‘foreign affiliates’ abroad. Reference period: year Periodicity: annually Short list of variables Breakdown by: Economic activity according NACE Rev. 2 Geographical breakdown

Foreign direct investment statistics Foreign direct investment (FDI) statistics are part of Balance of Payments statistics but go beyond Balance of Payments Statistics. FDI Statistics are one of the few examples in business statistics which cover flows and stocks (in this case termed ‘positions’). FDI statistics contains inward and outward investment. The EGR or the system of interoperable statistical business registers should identify the relationships between the institutional units by providing information about the chain of ownership in the MNEs.

Foreign direct investment statistics Basic characteristics Statistical unit: enterprise Scope: All resident units in all sectors of the economy As regards control direct or indirect ownership of 10% or more of the voting power of an enterprise resident in one economy by an investor resident in another economy. Reference period: year for flows, end of the year for stocks

Foreign direct investment statistics Basic characteristics Periodicity: annually Very specific list of variables Breakdown by: Economic activity according NACE Rev. 2 Geographical breakdown

Trade by enterprise characteristics Statistics on international trade by business characteristics are based on the product oriented Extrastat and Intrastat results. For the purpose of this project the trade specific register needs to be fully integrated in the statistical business registers. This bridge to activity oriented statistics allows for the provision of results in an activity classification of the actors involved and in a breakdown by size classes.

Trade by enterprise characteristics This project provides an outstanding example for the possibility to reuse data primarily collected for a different purpose for additional analytical goals in an integrated system centred on (integrated or at least linked) statistical registers. New types of analyses become possible, for example the analysis of enterprises involved in international trade, without imposing new statistical requirements on reporting companies.

Trade by enterprise characteristics Basic characteristics Statistical unit: enterprise Scope: NACE Rev. 2 A to U Reference period: year Periodicity: annually Breakdown by: Economic activity according NACE Rev. 2 Trading partners Size classes, etc.

Statistics on science and technology Statistics on science and technology are relevant for the formulation and assessment of science and technology policies in the increasingly knowledge-based economies. Statistics on science and technology covers quite distinct statistical projects: Research and development (R&D) statistics which is devoted to measuring R&D inputs; Government budget appropriations or outlays for R&D; Other statistics on science and technology.

Statistics on research and development New growth theory stresses the relevance of research and development efforts. Data are needed for the formulation and assessment of science and technology policies in the increasingly knowledge-based economies. Special attention is paid to the work carried out in cooperation with or by the OECD. R&D statistics rest on a definition of research and development which is difficult to be defined in an unambiguous way.

Statistics on research and development Basic characteristics Statistical unit: enterprise, local unit Scope: NACE Rev. 2 A to U, R & D performing units, not limited to the market sector Reference period: year Periodicity: annually Breakdown by: Economic activity according NACE Rev. 2 Size classes, type of R&D, classification by occupation etc.

Statistics on research and development Variables include: Number of R & D personnel in head count (HC) Number of researchers in head count (HC) Number of R & D personnel in full-time equivalent (FTE) Number of researchers in full-time equivalent (FTE) Intramural R & D expenditure

Innovation statistics The central role of innovation for economic growth was already a topic in the historical school of economics and in particular in the work of Schumpeter. Innovation policy can be seen as an amalgam of science and technology policy and industrial policy. Innovation is at the heart of the ‘knowledge-based economy’. Innovation indicators seek to meet the information needs of policy makers and analysts.

Innovation statistics Innovation statistics rest on a definition of innovation (product innovation, process innovation) which – by the nature of the phenomenon – cannot be defined in such an unambiguous way as other economic variables. The number of innovation active enterprises is a key variable. Like many other statistical projects Innovation statistics started in manufacturing.

Innovation statistics Basic characteristics Statistical unit: enterprise Scope: not the entire scope of the common module of SBS; threshold Reference period: year Periodicity: annually Breakdown by: Economic activity according NACE Rev. 2 Size classes Types of innovation, etc.

Statistics on the information society Statistics on the information society (ICT Statistics) are required for monitoring the progress towards the most competitive and dynamic knowledge-based economy in the world. In particular the progress with respect to the flagship initiatives under the umbrella of the Europe 2020 strategy has to be monitored. ICT statistics are also needed for calculating structural indicators.

Statistics on the information society ICT statistics covers two different subprojects. Only the first deals with enterprises and the information society. The task of the second subproject are individuals, households and the information society. A very specific characteristic of ICT statistics is that the framework regulation is implemented by annual Commission regulations. Characteristics, coverage, deadlines are defined in annual implementing regulations.

Statistics on the information society Because of the annual implementation of the regulations about 40% of variables change annually. ICT statistics cover quantitative (background) variables as well as qualitative variables. The quantitative variables refer to the previous year, the qualitative variables to the reference year. In a rapidly changing environment, priority is given to up-to-date information.

Statistics on the information society Basic characteristics Statistical unit: enterprise Scope: not the entire scope of the common module of SBS; threshold Reference period: year Periodicity: annually Breakdown by: Economic activity according NACE Rev. 2 Size classes

Concluding remarks At present the closely related annual activity oriented statistics are organised in different domains. The need to use the results jointly asks for an integrated system of business statistics in which the various blocks of information can be combined in a meaningful way. Compatible national accounts can not be compiled on the basis of incompatible business statistics.

Concluding remarks The vision of an integrated system Full consistency has to be guaranteed with respect to Statistical units Link to the central statistical business registers; use of the same vintage (version) of the registers Reference period Core definitions Coverage (at least for big subsets) Breakdown (at least for detailed common denominators)

Concluding remarks The vision of an integrated system Common concepts are a necessary but not a sufficient criterion. Coherence and comparability call for a harmonisation in the implementation of the concepts. Coherence and comparability will only be given in the case of a certain harmonisation of processes. Of particular importance: Identification of units Process of classifying units Maintenance of the statistical business registers

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