UNECE – Group of Experts on National Accounts, 9 May 2014, Item 7: Global Production Mark de Haan US, Mexico & Hong Kong Czech Republic US, Mexico & Hong Kong and a contributed paper from Czech Republic Introduction of four papers:

Three papers on global production 1.Data collection on factoryless goods producers and global production United States Bureau of Economic Analysis Global manufacturing production: main results for Mexico National Institute of Statistics, Geography and Informatics of Mexico 3.Compiling trade in goods and services statistics of Hong Kong using the change of ownership principle Census and Statistics Department of Hong Kong 2

Contributed paper from Czech Republic: Quantification of property income of non-residents Focus on 2008 SNA and BPM6 harmonization: –Recording of dividends arising from the hidden economy obtained by residents and non-residents; –Reinvested earnings on direct foreign investment. Paper addresses challenges in ensuring conceptual compliance between national accounts and balance of payments: exhaustiveness versus targeting. 3

1. US BEA paper Main features –Key focus on feasibility of data collection of factoryless goods producers (FGPs); –Two surveys are extended with FGP related questions:  2009 Benchmark Survey of U.S. Direct Investment Abroad (BE-10)  2011 Benchmark Survey of Transactions in Selected Services and Intellectual Property Products with Foreign Persons (BE-120) –Added questions concentrate on measuring Contract Manufacturing Services (CMS) 4

1. US BEA paper (preliminary) Findings/conclusions: –Number of CMS purchasing enterprises is significant (23%), particularly in Manufacturing (39%) and Wholesale trade (30%). –State of data collection with respect to FGP activities will be further assessed (implementation foreseen in 2017) Questions: –Does the supplier under a FGP arrangement produce a CMS (relevance of ownership of inputs criterion)? –Will the CMS purchasing wholesalers be reclassified as manufacturers? 5

2. Mexico INEGI paper Main features –Starting point: 2008 revision of Mexican national accounts (implementation of 2008 SNA). –Main goal: developing indicators measuring the size of global production (relative to total exports) –Perspective is that of the contract manufacturers (with the principals situated abroad). –Focus on criteria for identifying companies engaged in global production. 6

2. Mexico INEGI paper (preliminary) Findings/conclusions: –Value added content of global production equals 37% of total manufacturing output. –Automotive industry is the most significant contributor to global production Questions: –Would a value added share relative to total value added (or GDP) not be a better measure? –The VACGME = ICP + GVA is a partial approach. Could this analysis also be integrated into a TiVA / WIOD type of framework? 7

3. Hong Kong C&SD paper Main features –Hong Kong is an exceptional case of a globalized economy:  Merchandize trade value to GDP is 360% in 2013;  Exports of goods without passing Hong Kong are higher than exports shipped from Hong Kong. –Processing arrangements, particularly with mainland China, have been in existence since the 1990s. –Availability of refined statistics (e.g. OP, QSMTA surveys) separating various global production arrangements e.g. processing, merchanting, GFP:  Processing and assembling (P&A);  Processing with imported materials (PIM) ≈ FGP? 8

3. Hong Kong C&SD paper (preliminary) Findings/conclusions: –Changing from 1993 to 2008 SNA:  Upward adjustment of exports of goods (from 492 to 509 US$);  2008 SNA definitions lead to steeper export growth path;  Trade balance, goods versus services, shows a very different picture. Questions: –Does PIM refer to FGP arrangements as addressed in the Global Production Guide? –Could this paper be used for a country case study in the Global Production Guide? 9

10 Thank you!