Globalization: A Progress Report For Information AEG Meeting January 30-February 8, 2006

2 Introduction December 2004 AEG –Expressed interest in including a discussion of the statistical challenges of multinational enterprises within the context of globalization in the updated SNA –Work to be carried forward by a subgroup Group on Globalization met in Bangkok, aiming toward a modest amount of new text drawing on evolving literature

3 Toward an outline A draft annotated outline was circulated within the Group The attached outline is the current state of thinking The outline will evolve: –Comments by AEG –One-day session at the joint national accounts meeting in Geneva, April 25-28, 2006 –Ongoing work on the Benchmark Definition of Foreign Direct Investment

4 Draft outline Definition and characterization of globalization, with key role of multinational enterprises Challenge of globalization to NAs: –Accounting: complexity of recording a variety of stocks and flows and relating them to units, using examples such as goods for processing, merchanting, SPEs, non-permanent workers –Source data issues: for example, transfer pricing, multinationals, free zones, with general concern about consistency of the several sets of data

5 Draft outline (2) Challenges of globalization to NAs: Conceptual issues: examples –Globalization points to the analytical usefulness of ownership- or control-based statistics to supplement traditional statistics on cross-border transactions and positions. –R&D: accounting is complex in a closed economy, but the complexity is multiplied in an international context

6 Questions to the AEG 1.Does the draft outline capture the main topics for a modest amount of new text in Rev. 1 about globalization in general and multinational enterprises in particular? What is missing? What should be added? 2.If two, perhaps three, issues dealt with in the SNA Update were to be described briefly to illustrate the accounting challenges stemming from globalization (see section II.A), which should they be? 3.Is it appropriate to mention ownership- or control-based statistics as complements of traditional statistics on cross-border flows and positions such as balance of payments and the external sector of national accounts?

7 Thank you Contact::