Trade and business statistics: use of administrative data

Lunch Seminar

Enrico GiovanniniItalian National Statistical Institute (ISTAT)

New York, February, the 27th, 2013

44TH SESSION OF THE UN STATISTICAL COMMISSION

Outline of the presentation

The converging pattern between Business and International Trade statistics

ISTAT experience in developing: an integrated framework between Foreign trade data and the Business

Register: approach, process and main outputs an integrated framework for the production of Structural Business

Statistics (SBS) as well as new indicators for statistics on international trade by business characteristics: approach and expected results

a micro-level database for analytical purposes integrating international trade and FATS statistics with administrative data (balance sheets variables and indicators): approach and main results

Conclusions

TRADE AND BUSINESS STATISTICS: USE OF ADMINISTRATIVE DATAATISTICAL COMMISSION

DRIVERS Demand side: Shift in foreign trade statistics from “product-market” oriented questions toward key business related questions: Who is exporting what where? Which is the performance gap between exporting and non exporting firms? Why exporting firms outperform non exporting ones?

Supply side: Technological innovations in the management of large databases, availability of census-like administrative data that allow to measure business performance (key business variables and performance indicators from balance sheets data)

OPPORTUNITIES Large benefits from firm level integration of multiple data sources in terms of better data quality, reduction of the statistical burden on companies and dissemination - at virtually zero costs - of new indicators as well as standard variables according to fine grain strata or new target populations: exporting firms

POSSIBLE DRAWBACKS Problems of data consistency within but especially across different statistical domains. Potential diffusion of misleading aggregated figures and/or biased inference from firm micro-data.

THE CONVERGENCE BETWEEN BUSINESS AND TRADE

POSSIBLE AVENUES IN THE PROCESS OF CONVERGENCE

CONVERGING PATTERN BETWEEN BUSINESS AND TRADE

International trade data

Administrative data: Balance

sheets

Business register

Structural Business data

Full coverage but lack of consistency with SBS data

Limited coverage but consistency with SBS data

The integration between the Italian BR and the register of foreign trade operators was developed by ISTAT at the beginning of ’90s as a one way process (variables from the BR were included in foreign trade data with limited benefit for the BR)

At the end of ’90s, the foreign trade register was fully integrated in the process of

set up and yearly upgrade of the Italian business register. Two-way process: foreign trade data contribute to define the state of activity of enterprises in BR

Since the year 2000 production of a full set of figures on the business structure of Italian exporting firms published in the “Statistical Yearbook on Foreign Trade Statistics and Enterprise International Activities” edited by ISTAT and ICE

Last decade: The register on trade operators was increasingly used for analytical purposes (panel datasets, integration with other surveys and administrative data)

Current decade: Use of the foreign trade register to identify target populations for the Business Census 2011 as well as to identify “outlier” business units in the BR (Special purpose entities)

FOREIGN TRADE AND BR: APPROACH, PROCESS AND OUTPUTS

The Italian frame for the compilation of Structural Business statistics is based on a census survey for large firms and upon a random sample for SMEs. Given the presence in Italy of a very large number of small businesses (95% of 4,4 millions of firms active in 2010 employ less than 10 person employed ), the stratified random sample used to collect business data for SMEs includes 97.000 firms

Administrative data – balance sheets data for firms with a company legal status and fiscal data for small businesses – cover only partially the target population and are plagued by different sources of measurement errors

From 2011 as reference year, the new approach for the estimation of SBS variables is based upon a firm level database which integrates all statistical and administrative sources. In particular, for each firm in the BR a minimum set of key economic variables will be made available based on data integration, validation or estimation. This new “frame” will be available by mid-2013

This new “frame” will make possible the dissemination of new statistics on key business variables with a fine grain detail or across different types of business population. In particular, it will generate new indicators or business variables for the population of exporting enterprises as well as for other target business populations of firms engaged in globalization in a fully consistent way with respect to all estimation strata considered by SBS

INTEGRATED APPROACH FOR STRUCTURAL BUSINESS DATA

Firms engaged in globalization usually adopt multiple internationalization strategies: export of final goods, import of intermediate goods, set up of a production plan in a country, set up of a wholesale company in another country

The “internationalization profile” of an enterprise, especially its impact on employment and economic performance, cannot be assessed using micro level data from a single statistical domain (stovepipe approach)

Multiple statistical sources focusing on globalization should be integrated and linked to business data in order to identify a firm “internationalization profile” and measure the effects in terms of profitability and productivity

Based on the informative needs of multiple national and international stakeholders (WPGI OECD), a firm level dataset which integrates international trade data, FATS data with balance sheet information from an administrative data source was set up in 2012

This experimental database has already been successfully used to support applied economic analysis. Preliminary results were just published in the first issue of the Italian Report on Industry and enterprise competitiveness

FIRM LEVEL DATASETS WITH TRADE, FATS AND ADMIN DATA

FIRM LEVEL DATASETS WITH TRADE, FATS AND ADMIN DATA

The firm level integration between international trade and FATS data allowed to identify a very interesting taxonomy of enterprise “internationalization profile” across all business units included in the

Italian Business Register

BUSINESS REGISTER ADMINISTRATIVE DATA

Balance sheets data were used to build productivity and profitability indicators

FIRM LEVEL DATASETS WITH TRADE, FATS AND ADMIN DATA

Business characteristics and key performance indicators by type of enterprise internationalisation profile

Taxonomy of enterprise internationalization profile

Number of firms

(absolute value)

Number of firms (share in

%)

Number of persons

employed

Average size (numer of

person employed)

Labour productivity

Profitability Export

propensity

Firms under foreign control 4.261 4,7 936.749 219,8 103,9 34,8 23,3Domestic multinational enterprises 3.133 3,4 647.232 206,6 86,0 34,8 39,1Global markets enterprises 10.467 11,4 933.482 89,2 65,5 35,4 47,8Firms engaged in both export and import 28.176 30,8 992.827 35,2 62,7 40,3 20,9Firms engaged in the import of intermediate goods 13.608 14,9 412.095 30,3 60,9 43,6 0,0Firms engaged in the import of other goods 7.605 8,3 143.983 18,9 54,3 50,0 0,0

Firms engaged in export activity only 24.168 26,4 323.776 13,4 46,6 41,4 17,7

Total 91.418 100,0 4.390.145 48,0 60,5 40,9 19,0

91.000 limited firms resident in Italy in 2010 were engaged in international activities. They employed 4,4 millions of people 30% of them were engaged in both export and import, more than 10% were “global” exporters, indeed they exported goods in more than 5 geographical areas outside the EU

Labor productivity and export propensity (export over turnover) seem to be positively correlated with more complex forms of enterprise internationalization

FIRM LEVEL DATASETS WITH TRADE, FATS AND ADMIN DATA

Transition Matrix of enterprise internationalisation profile from 2007 to 2010 (share in %)

Firms under foreign control

Domestic multinational enterprises

Global markets enterprises

Firms engaged in both export and import

Firms engaged in the import of intermediate goods

Firms engaged in the import of other goods

Firms engaged in export activity only

Total

Firms under foreign control 95,1 0,3 1,4 1,6 0,8 0,4 0,5 100Domestic multinational enterprises 1,1 74,1 10,2 9,9 1,3 0,8 2,6 100

Global markets enterprises 1,1 3,5 74,0 15,7 0,1 0,0 5,7 100Firms engaged in both export and import 0,8 1,4 7,4 72,0 6,5 2,4 9,6 100Firms engaged in the import of intermediate goods 0,8 0,5 0,2 29,0 60,0 6,1 3,4 100Firms engaged in the import of other goods 0,5 0,4 0,3 24,7 18,6 49,1 6,5 100Firms engaged in export activity only 0,2 0,5 4,2 24,6 2,9 1,7 65,9 100

Internationalization profile in 2007

Internationalization profile in 2010

A limited but significant share of internationalized firms seem to have evolved in time from “basic” to more complex internationalization profiles In particular, almost 30% of all firms engaged in the import of intermediate goods in 2007 became in 2010 firms active in both the export and the import of goods

Firm level integration between foreign trade data and the business register paves the way to further linkages with multiple statistical and administrative data sources. This approach is very likely to generate great benefits “at virtually zero costs” in terms of new statistical indicators and new firm level databases for the analysis of globalization

Firm level integration across multiple statistical and administrative data sources can be achieved following different avenues. Each avenue presents specific informative benefits, but is also plagued by potential threats

The integration of international trade data with administrative data allows to achieve great coverage and very interesting informative gains in the short- medium term, but it also suffers because of inconsistency problems with SBS data

The full integration between SBS statistics, international trade and administrative data is only feasible in the medium-long term. Nevertheless it can provide more stable and reliable results, since they are fully consistent with official business figures across all possible classification domains

The integration between FATS and international trade data at the firm level allows to identify a taxonomy of enterprise internationalization profiles and to assess their heterogeneous impact on firm performance

CONCLUSIONS