1. Global Production Mark de Haan

2. Global Production 1 Content presentation 1.Background 2.Changes 2008 SNA 3.Discussion points a. Conceptual b. Measurement related 4.Way forward

3. Global Production 2 1. Background Changes 2008 SNA Globalisation guide Global manufacturing (or production more generally) as cross cutting issue (chapter 8) Further investigation of unsolved issues

4. Global Production 3 2. Key changes 2008 SNA and BPM6 No exceptions to recording transactions on basis of economic ownership Implications recording of processing, merchanting, intra-company trade..

5. Global Production 4 2. Key changes 2008 SNA and BPM6 Principal Processor 1993 SNA recording (‘gross’): 2008 SNA recording (‘net’): (G) 50 (G) 80 Processor (S) 30

6. Global Production 5 2. Key changes 2008 SNA and BPM6 No exceptions to recording transactions on basis of economic ownership Implications recording of processing, merchanting, intra-company trade R&D capitalization → Capital flows → Capital services flows

7. Global Production 6 3a. Conceptual discussion points Categorisation of global production arrangements Factory-less producers..

8. Global Production 7 3. Conceptual issues Principal (domestic economy) Processor (abroad) Production abroad Material inputs Material outputs = information = products turnoverproduction cost = money

9. Global Production 8 3. Conceptual issues Principal (domestic economy) Processor (abroad) Production abroad Material inputsMaterial outputs = information = products turnoverproduction cost = money Process fee

10. Global Production 9 3. Conceptual issues Principal (domestic economy) Contract producer (abroad) Production abroad Material inputs Material outputs Blueprints of production = information = products turnoverproduction cost = money

11. Global Production 10 3. Conceptual issues Principal (domestic economy) Contract producer (abroad) Production abroad Material inputs Material outputs Blueprints of production = information = products turnoverproduction cost fee or purchase of products? economic ownership of material inputs? = money

12. Global Production 11 3. Conceptual issues Principal (domestic economy) Contract producer (abroad) Production abroad Material inputs Material outputs Blueprints of production = information = products turnoverproduction cost fee or purchase of products? economic ownership of material inputs? = money Trader or Manufacturer?

13. Global Production 12 3a. Conceptual discussion points Categorisation of global production arrangements Factory-less producers Identifying economic ownership within the multinational Multi-territory enterprises (pro-rating) such as construction companies and project vendors Recording intra company R&D flows

14. Global Production 13 3b. Measurement issues Merchant trade statistics based on cross border registration (processing, merchanting) Measuring inventories abroad (idem) Asymmetry outward processing..

15. Global Production 14 Principal-processor relationships in the Netherlands of 35 selected companies, turn over in billion € Increase (passive) Decrease (active) Total Domestic+ 1.4- 7.8- 6.5 Abroad+ 4.8-6.9- 2.0 Total+ 6.2-14.7- 8.5 3b. Measurement issues Remark: the -6,5 billion € production value adjustment should not show up in macro totals

16. Global Production 15 3b. Measurement issues Merchant trade statistics based on cross border registration (processing, merchanting) Measuring inventories abroad (idem) Asymmetry outward processing Intellectual property (legal versus economic ownership) Big and complex cases units (…, Ireland, Netherlands, Norway, Sweden, …): determining the domestic economic activities of multinationals

17. Global Production 16 Current and further work in this area Eurostat taskforce on goods for processing building on the globalisation guide CES working group global production (to be expected) ESSnet project on measuring global value chains (a micro level research) IARIW Conference 2012 session (8a) – ‘How to capture multinationals in national accounts?’

18. Global Production 17 Thank you!