Accounting for heterogeneity:

Possibilities of using TEC to extend supply & use tables

Fabienne Fortanier Head of Trade Statistics OECD

Accounting for heterogeneity

• Key assumption in TiVA: homogeneous industries – all firms allocated to a particular industry have the same ‘

production’ function – That for a given product, imports by industries (firms) are

sourced from the same mix of countries

• Key challenge: taking the GVC beyond the industry level: accounting for firm heterogeneity – Not all firms in each industry are equally (or similarly) involved in

GVCs – Extent of GVC involvement is correlated with virtually all

dimensions of GVC impact, including value added, productivity, technology, size, growth, survival rate

Accounting for heterogeneity

• To what extent can we capitalize on existing statistics, including TEC, STEC, FATS, “TEC+”, to • a) improve our estimates (of e.g. the import content of exports)

and

• b) develop new, ‘richer’ indicators on GVCs (how, where, who)

• These statistics are policy relevant in their own right and for integration within TiVA framework

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This presentation

• Highlights the importance of heterogeneity (using TEC) • Explains more about TEC & how the data are compiled • Lists the ‘ideal’ additional data needs for breaking down

SUTs by enterprise characteristics – Requires combination of TEC and additional business statistics

(including SBS and FATS)

• Illustrates its possible uses in breaking down supply and use tables and challenges to overcome

• Gives an overview of current steps taken by the OECD to further this research agenda

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Trade is concentrated among a few enterprises

0%10

0%

LUX

HU

N

FIN

NZL

*

SVK

EST

SWE

DN

K

CA

N*

GR

C

SVN

GB

R

AU

T

PRT

FRA

DEU NLD CZE

ESP

POL

TUR

*

USA

*

ITA

Top 5 Top 10 Top 20 Top 50 Top 100

(% of total* export accounted for by top # enterprises)

* For EU countries, data refer to extra-EU exports instead of total

Exporting firms are responsible for the majority of imports (1)

6

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Exporting firms' weight in total imports

Exporting firms are responsible for the majority of imports (2)

7

0

1000

2000

3000

4000

5000

6000

Value of imports per firm (exporters) Value of imports per firm (non exporters)

The value of imports per firm are on average 20 times greater for exporters than for non-exporters

Size matters (2)

Trade is concentrated among large firms (export value by firm size class in employees)

0%10

0%

SWE

DN

K

AU

T

EST

GB

R

TUR

*

FRA

NLD ES

P

SVN

SVK

USA

*

GR

C

FIN

HU

N

PRT

LUX

CA

N*

DEU IT

A

POL

CZE

0-9 emp. 10-49 emp. 50-249 emp. 250+ emp. Confidential or unknown

Ownership matters (1)

Very few firms are foreign owned, but… (foreign owned firms and foreign affiliates, as % of all enterprises)

0%

1%

2%

3%

4%

AU

T

CZE FI

N

FRA

DEU

HU

N

IRE

ITA

NLD

NO

R

PRT

SVK

SVN

ESP

SWE

GB

R

foreign owned enterprises foreign affiliates abroad

Ownership matters (2)

foreign owned enterprises account for ~ 1/3 of turnover, 1/5 of employment and 1/4 of value added in OECD countries…

(% of turnover, employment and value added by foreign owned enterprises)

0%

20%

40%

60%

AU

T

CZE FI

N

FRA

DEU

HU

N

IRE

ITA

NLD

NO

R

PRT

SVK

SVN

ESP

SWE

GB

R

Turnover Number of employees Value added at factor cost

Ownership matters (3)

…and for at least 1/3 of international trade

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0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Foreign controlled as % of firms % exports % imports

Trade by Enterprise Characteristics (TEC)

• All these presented examples are based on TEC data (OECD/Eurostat): – Trade by Size Classes & Economic Activity – Trade by Economic Activity & Top Enterprises – Trade by Economic Activity & Partner Zones – Trade by Economic Activity & Number of Partner

Countries – Trade by Economic Activity & Commodity Group – Trade by Type of Ownership & Economic Activity

• Domestically controlled enterprises (with or without own affiliates) • Foreign controlled enterprises

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TEC coverage and compilation

About the OECD-Eurostat TEC database: • Covers 33 countries (6 non-OECD) from 2005

onwards, up to 2 digit level of ISIC rev 3 & 4 • Based on trade statistics linked to the business

register • Matching rates excellent to perfect • But some issues remain

– e.g. non-resident trade – overemphasis of wholesalers – Confidential data

Use Table

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ExporterNon-

ExporterExporter

Non-Exporter

ExporterNon-

ExporterExporter

Non-Exporter

ExporterNon-ExporterExporter Non-ExporterExporterNon-ExporterExporterNon-ExporterTaxes on ProductsSubididies on Products

Total Domestic intermediate Consumption

Total importsTotal intermediate ConsumptionValue-Addedof which Mixed Income Compensation of Employees Gross Operating Surplus Other Taxes on Production Other Subsidies on Production

Total Outputof which own-account production of software own-account prodduction of R&D other own-account production

of which - non-

residents expenditure

Industry 1 Industry 2Foreign Domestic Foreign Domestic HHFC GGFC GFCF

Changes in

Inventories

Vauables Exports of which re-exports

Industry 1

Industry 2

Foreign

Domestic

Foreign

Domestic

Accounting for heterogeneity in SUTs

A strongly simplified example (1 industry)

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Homogeneous (now)

Heterogeneous (future)

All Industry ‘Domestic’ ‘Trader’ Imports 25 0 25 Domestic purchases 30 15 15

Value added 45 15 30

Total output 100 30 70

Export 60 0 60 Domestic sales 40 30 10

Import content of export:

25% (25 / 100)

36% (25 / 70)

Information needs

For a breakdown between exporting / non exporting firms: • Geographical breakdown (e.g. main trading partners, regions) of

imports and exports (by exporting / non-exporting firms) • Purchases, output, value added (employment if possible), by

industry, broken down by exporting vs non-exporting firm • link TEC with SBS For a breakdown with (also) foreign ownership: • (Same as above) + exports by ownership, industry and foreign

ownership • link TEC with FATS

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Feasibility of ‘macro-linking’

• Use the information from the three different data sources at the ISIC 2-digit industry level

• Illustrates (again) the importance and relevance of accounting for heterogeneity

• BUT: highlights also some problems that can only be solved at micro level

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Examples of ‘Macro-linking’ (1)

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Foreign-controlled enterprises are more export intensive

Export to turnover ratios, total economy (2011)

0

10

20

30

40

50

60

70

Domestic Foreign

19

Value added over turnover ratio tends to be higher for domestic firms

Value added/Turnover by firm ownership, total economy (2011)

0%

5%

10%

15%

20%

25%

30%

35%

foreign controlled domestic

Examples of ‘macro-linking’ (2)

Challenges (1): wholesale is treated very differently across data sources

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0%

10%

20%

30%

40%

50%

% S/U table proportional allocation intermediate in TEC

Correlation S/U and proportional allocation: 0.8 Correlation S/U and TEC intermediate imports: 0.55

Imported intermediates / total intermediates: comparing SU table, proportional allocation and TEC data (Italy 2010 )

Challenges (2): Populations are inconsistent across data sources

21

0

2

4

6

8

10

12

14

16

AU

TB

EL

BG

RD

EU

EST FIN

FRA

GB

RH

UN

IRL

ITA

LTU

LUX

LVA

POL

PRT

RO

USV

KSV

NSW

EU

SA

0_9 employees 10_49 50_249 250

Number of 2 digit industries where the number of exporters in TEC is larger than the number of enterprises in SBS, by size, 2011

Challenges (3): Variable values are inconsistent across data sources

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012345678

0_9 employees 10_49 50_249 250

Number of industries for which exports (from TEC) are larger than turnover (SBS) (by firm size, 2011)

Challenge (4): Inconsistencies between TEC and FATS

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Differences in the share of imports of foreign-controlled firms as measured in TEC and in FATS (Italy 2011)

Pharmaceutical products

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

FATS TEC

Current activities at the OECD

• Increase country coverage in TEC data • Investigate methodological improvements

– Better explanation of matching rates (non-resident trade); – Better assignment of trade accounted for by retailers and wholesalers to

underlying economic activities; – Explore if confidentiality issues can be overcome by deciding on

(harmonized) aggregation of certain items;

• Include services (STEC) • Add to visibility: e.g. website on TEC : http://oe.cd/tec

with country notes (forthcoming) • Continue with feasibility studies re. heterogeneity in SUTs

(including work with individual countries who can provide data)

• Institutional: WPTGS; Expert Group on Extended SUTs

Thank you

Contact:

Fabienne Fortanier fabienne.fortanier@oecd.org Head of Trade Statistics

TEC : http://oe.cd/tec

TiVA : http://oe.cd/tiva

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