1. Outsourcing and Imported Inputs in the U.S. Economy Insights from Integrated Economic Accounts R. Yuskavage, E. Strassner, and G. Medeiros World Congress on National Accounts and Economic Performance Measures for Nations May 15, 2008

2. www.bea.gov 2 Motivation  Size and Growth of Outsourcing  Domestic outsourcing  Imported inputs  Annual Industry Accounts  Recent enhancements  Analytical framework

3. www.bea.gov 3 Key Findings  Domestic Outsourcing  One-fourth of intermediate inputs  Nearly one-half of purchased services  Growing fast in real terms  Imported Inputs  More than half of all U.S. imports  Nearly 11 percent of intermediate inputs  Substitution for domestic materials

4. www.bea.gov 4 Definition of Outsourcing  No consensus in economics profession  International guidelines largely silent  NAPA study identified two types  Business process  Business relocation  Establishment-based production focus

5. www.bea.gov 5 Composition of Outsourcing

6. www.bea.gov 6 Outsourcing in Economic Statistics  Company vs. Establishment  Industry Classification  Advantages of NAICS  Treatment of auxiliaries  Economic Census Source Data  Input-Output Definitions & Conventions

7. www.bea.gov 7 Input Category Disaggregation E (pub) Dom (unpub) S (pub) M (pub) Imp (unpub) Dom (unpub) Imp (unpub) Dom (unpub) Imp (unpub) Each category includes nominal values, price indexes, and quantity indexes Disaggregation performed for each of 65 industries for each year 1997-2006

8. www.bea.gov 8 Purchased Services Disaggregation S (pub) Outsourcing (unpub ) Other Services Imp (unpub) Utilities Telecomm Financial Rental & Leasing Aggregation of 30 4-digit commodities Dom (unpub)

9. www.bea.gov 9 Purchased Services Shares

10. www.bea.gov 10 Energy and Materials Shares

11. www.bea.gov 11 Import Share of Intermediate Inputs

12. www.bea.gov 12 Import Shares by Input Category

13. www.bea.gov 13 Input Intensity: Private Industries

14. www.bea.gov 14 Import Intensity of Intermediates

15. www.bea.gov 15 Summary  Domestic outsourcing is large  Imported inputs are growing fast  Data are gradually improving  Improvements are still needed

16. www.bea.gov 16 Recommendations  Better Data  Fewer assumptions  Greater reliability  More Guidance  Less uncertainty  Better research

17. www.bea.gov 17 Better Data  Imports by Industry  Expanded/Improved Price Indexes  Domestic services  Imported goods and services  Annual Inputs by Industry  Interagency Integration  Capital services  Occupation by industry

18. www.bea.gov 18 More Guidance  Definition of Outsourcing  Unit of Analysis  Distinguishing Outsourcing from  Services growth  Technological change  Special Issues  Leasing of assets and employees  Capitalized services

19. www.bea.gov 19 Input-Output Use Table

20. www.bea.gov 20 Input Intensity: Private Industries