PROVIDING NEW EVIDENCE ON TOURISM TRADE IN VALUE-ADDED Jane Stacey, Head of Tourism Unit, OECD 15th Global Forum on Tourism Statistics, 28-30 November 2018, Cusco

Why is measuring tourism trade in value added important for policy? Tourism is one of the main economic sectors benefitting from globalisation - however, tourism trade flows are not well captured by current tourism statistics Need new indicators better tuned to the reality of globalisation, to Understand how much tourism adds to economies, and how Better capture the role of tourism services in international trade and the risks from global value chains Support the national and international policy debate (e.g. Tourism Committee, trade discussions, T20)  Growing fragmentation of international production means that only using gross trade flows (including, equivalently, gross non-resident expenditures) gives an incomplete picture of globalization TiVA aims to increase our understanding of the process of globalization by providing insights into the value added created by each country in the production of goods and services that are traded and consumed worldwide How much value added is created by trade – directly and indirectly – and where? Role of services in international trade Better understanding of risks (in GVCs) and impact of policy measures

Tracing the value added content of tourism exports – an example Tourism exports in country A may be dominated by large tour operators with a high level of foreign content Package tour may require significant parts – transport, food and beverages, travel agency services – produced in other countries These countries will use intermediate inputs imported from other countries to produce the parts exported to “A” =>The TiVA approach traces the value added by each industry and country in the production chain and allocates the value-added to these source industries and countries ….. leading to a significant fall in its domestic value added

Non-resident expenditure Analysing domestic value added at national level – the case of Canada and UK Domestic value added content Imported value added content Domestic value added content of non- resident expenditure is higher compared with overall exports Exports Non-resident expenditure In Canada, 1 CAD of non-resident expenditure generates 81 cents of value added (exports generate 71c) In the UK, 1 GBP of non-resident expenditure generates 82 pence of value added (exports generate 74p)

Industries breakdown in gross v value added terms – Canada and the UK Importance of selected industries in non-resident expenditures and value added terms CANADA UNITED KINGDOM Gross expenditure Value added Gross expenditure Value added

Tourism indirectly generates domestic value added in upstream industries CANADA In Canada, each CAD of direct value added generated by non-resident expenditure generates an additional 70 cents of upstream value added UNITED KINGDOM In the United Kingdom, each GBP of direct value added generated by non-resident expenditure generates an additional 48 cents of upstream value added

Analysing domestic value added at international level using the ICIO Sources of value added in non-resident expenditure Domestic value added shares of non-resident expenditure and total exports Source: OECD Inter-Country Input-Output, 2018 (forthcoming, December 2018).

Upstream impacts of tourism expenditure On average, 1 € of VA in tourism related industries results in 61 cents VA in upstream industries, distributed as follows Source: OECD Inter-Country Input-Output, 2018 (forthcoming, December 2018).

Foreign value added by source region in non-resident expenditure Across OECD countries, around 11% of tourism expenditures result in value created in other countries (i.e. imported value added) Source: OECD Inter-Country Input-Output, 2018 (forthcoming, December 2018).

Limitations and challenges Non-resident expenditures do not fully align with inbound tourism expenditures in the TSA and IRTS 2008 Business tourism expenditure is not captured, as it is a component of intermediate (not final) consumption Domestic tourism estimates challenging, as difficult to isolate expenditure by residents on tourism Breakdown of non-resident expenditure by product not available in supply-use or input-output tables in most countries TSA data can be used to estimate this breakdown – but level and detail of expenditure data in TSA not sufficient Coverage and completeness of national statistics varies considerably

Toward better measuring tourism trade in value added Clear opportunities exist to expand work to bring new insights on the direct and indirect economic impact of tourism Strong engagement indicates the topic is of high interest to many countries, but there are data and resource challenges Realising this potential will require action at both national and international level to improve the statistical framework Important scope for additional analysis – but this requires more detailed information consistent with national accounts Impact on jobs and wages, role of SMEs and domestic/ foreign owned businesses in GVCs, carbon emissions from tourism trade Raising awareness of the opportunities which exist will be important to secure necessary support and resources

Statistical work needed to make progress Greater granularity in national supply and use tables including improvements in the breakdown of non-resident expenditure by product Improvement of the coverage and quality of the Travel item in Trade in Services statistics including more detailed service category breakdowns, full partner country details, address trade asymmetry for travel Improvement of the TSA data including more detailed statistics on expenditures by product and ISIC classification breakdown Better alignment and timeliness of various data sources

Issues for discussion Is there interest to develop a longer term statistical agenda on this, and what is feasible? What type of analysis would be of most use to policy makers? What role is there for the OECD to support this? How to mobilise the necessary political support and resources?