What can we learn from the link between Trade and Business statistics? The Italian experience Stefano Menghinello, Filippo Oropallo, Marco Giorcelli National Institute of Statistics – Italy Agenda item 7, Friday 4 Feb 2011, Morning Session, 9: :30 Global Forum on Trade Statistics 2-4 February 2011 Geneva, Switzerland at WTO

Issues covered by this presentation Users of Trade statistics nowadays address new questions Business analysts and policy makers want to know more about key actors and competitiveness drivers of Global trade How trade statisticians should react to this demand shift? A substantial change from a product based toward a business oriented perspective is needed in the compilation of trade statistics How can trade statisticians successfully manage it? The set up of a new statistical frame based on the link between Trade and Business statistics at the enterprise / trade operator level Which sort of “New Trade Figures” can be obtained from the link between Business and Trade Statistics? First type of output : Figures based on the ID code of trade operators Second type of output : Figures based on the link with the BR Third type of output : Figures and analytical analysis based on the full integration of trade statistics with business surveys Conclusions

The demand driven shift from a product oriented toward a business perspective in the compilation of trade statistics OLD QUESTIONS What is traded? Where is traded? NEW QUESTIONS Who trades what where? Are exporting companies leading productivity growth? Which is the contribution of foreign MNEs to national trade? Which companies are engaged in Global Value Chains? OLD STATISTICAL FRAME Product based approach independent from the link with business statistics NEW STATISTICAL FRAME Enterprise oriented approach based on the full integration with business statistics

The link between the list of trade operators and the Business Register is the GATEWAY to any new and successful developments in trade statistics The set up of a new statistical frame based on the integration at the enterprise level between Trade and Business statistics List of Trade operators Trade flows micro-data Business Register Business surveys Administrative and fiscal data Special surveys on Globalisation: MNEs and international sourcing “ new figures” based on the count of trade operators, for instance by products and markets “new figures” on the business characteristics of exporting and importing enterprises “new figures” and analysis based on the full integration between Trade and Business Statistics FIRST TYPE OF OUTPUT SECOND TYPE OF OUTPUT THIRD TYPE OF OUTPUT

The Italian experience in the production of new statistics based on the link between Trade and Business statistics  ISTAT has a consolidated experience in the production of new trade statistics of Type One and Type Two A large set of tables on trade operators and exporting and importing companies is included in the Foreign Trade Statistics Yearbook, jointly published by ISTAT and the National Agency promoting firms internationalisation (ICE) since the late ’90s. They are also available in the on line database COEWEB As a result, the business structure of our exporters community is well known to national analysts and policy makers  ISTAT has developed new statistics on the spatial distribution of exports, on the contribution of foreign MNEs to national trade figures and, more recently, analytical analyses on trade firms Figures and analysis show strong evidence on the superior performance of exporting companies as compared to other businesses  ISTAT is setting up an in-depth integration between Trade statistics and Business surveys (including MNEs) finalised to new statistics on the population of exporting companies (SBS variables) and on intra-firm trade by products Micro-level complex data warehousing

Unit value export growth Unit value import growth Total NegativePositive Negative20,623,544,1 Positive28,127,855,9 Total48,751,3100,0 Both Italian and Chinese suppliers increase unit values Competitiveness Strengthening? Both Italian and Chinese suppliers decrease unit values Competitiveness reduction or costs seeking strategy? An example of new trade Statistics – Output Type One The “competitive” position of Italian firms and their Chinese suppliers during the recovery phase of Italian exports 1th Semester 2010/ 1 th Semester 2009

Italian medium and large size firms potentially engaged in Global Value Chains TOTAL= Around large and medium size exporting companies Share in % of medium and large size companies potentially engaged in Global Value Chains An example of New Trade Statistics – Output Type Two

An example of New Trade Statistics: Output Type Three Performance gap between exporting and non exporting manufacturing firms by employment class - year 2008 LEGENDA: 1=equal performance >1 superior performance of exporting firms over non exporting ones

Taxonomy and performance of exporting enterprises by total factor productivity (TFP) intensity Empirical analysis based on a micro level panel dataset TFP quantiles Performance indicators BEFORE ( ) and DURING ( ) the GLOBAL CRISIS High TFP Highest growth ( ):Export +70.2%,Employment +12.4% Labour productivity +20%, Control of the fall of profitability ( ): (-5%) Highest resistance ( ): Export -24.2%, Employment -2.6% Medium- high TFP Medium-high growth ( ): Export +49.5%, Employment +6.6% Labour productivity +18.7% Loss in profitability: (-16.7%) Low resistance ( ) Export -30.7%, Employment -5.7% Medium- low TFP Medium-low growth ( ):Export +27.2%, Employment +3.7% Labour productivity +17%, High loss in profitability (-30.9%) Low resistance ( ) Export -32.6% Employment -8.9% Low TFP Low growth ( ):Export +1.7%, Employment -3.7%, Labour productivity +12.2%, Highest loss in profitability ( ): (-63.2%) Worse resistance ( ) Export -38.3% Employment -14.2% An example of New Trade Analysis: Output Type Three

Future developments by ISTAT: the set up of an integrated firm level data warehouse for the to analysis of complex internationalisation behaviour  Motivations: Businesses, and especially fast growing firms, adopt complex internationalisation strategies, which include the contextual presence of arms-length transactions, as well as cooperation and ownership linkages  Data sources: A number of national surveys, including foreign trade in goods and Outward and Inward MNE data, and international databases will be fully integrated at the firm level in order to effectively monitor the behaviour of firms deeply engaged in globalisation  ISTAT firm level data warehouse on Globalisation: ISTAT is setting up a micro-level data warehouse which integrates all these sources, from which empirical analysis and queries can be carried out at the product, enterprise, and enterprise group level.  This is a major IT project: Oracle relational database optimised for micro- level data analysis  This is a major statistical project: Product based and enterprise based surveys are not fully harmonised. Benchmarking and calibration with respect to different target populations is needed.  Accessibility of the data warehouse by national or international researchers, given confidentiality constraints, is a goal of this project.

11 Conclusions  A substantial change in the approach to compile trade statistics - notably from a product based to an enterprise oriented perspective - is needed to successfully face a substantial shift in users demand  The link between the list of trade operators and the national Business Register is essential to obtain further developments in this area. In effect the BR is the GATEWAY to any substantial innovations in this area.  A wide range of outputs can be obtained from the integration of trade and Business statistics, staring from business characteristics of exporting and importing enterprises to more complicated analysis on enterprise performance and internationalisation patterns.  Surprisingly enough, these new statistics can be developed at zero costs for respondents (no additional statistical burdens)  The set up of a micro-level data warehouse including all relevant globalisation related surveys is crucial to develop complex statistical products and empirical analysis, given micro-data accessibility rules