Economic Globalization and Global Production 9 June 2017 - - PowerPoint PPT Presentation

▶
economic globalization and global production
SMART_READER_LITE
LIVE PREVIEW

Economic Globalization and Global Production 9 June 2017 - - PowerPoint PPT Presentation

Nov 24, 2022 111 likes •499 views

Economic Globalization and Global Production 9 June 2017 Association de Comptabilit Nationale, Paris Michael Connolly CSO National Accounts Integration and LCU www.cso.ie 1 1.Globalisation 2.Impact of 1.Globalisation 2.Impact of in

slide-1
SLIDE 1

Economic Globalization and Global Production

9 June 2017 Association de Comptabilité Nationale, Paris Michael Connolly CSO National Accounts Integration and LCU

www.cso.ie

1

slide-2
SLIDE 2

www.cso.ie

2

1.Globalisation in the Standards 1.Globalisation in the Standards 2.Impact of R&D 2.Impact of R&D

  • 3. ESRG
  • 3. ESRG
  • 4. Alternative

approach & Conclusions

  • 4. Alternative

approach & Conclusions

slide-3
SLIDE 3

Key Issues from SNA 2008 BPM6

  • Research and

development

  • Change of economic
  • wnership
  • Predominant centre
  • f economic interest
  • Global Production
  • Goods sent abroad for

processing

  • Merchanting

www.cso.ie

3

slide-4
SLIDE 4

Guide to Globalization in National Accounts

  • MNEs and allocation
  • f value added
  • MNEs and FDI
  • SPEs
  • Goods for Processing
  • Merchanting
  • IPP Transactions
  • Global Manufacturing

www.cso.ie

4

slide-5
SLIDE 5

Guide to Measuring Global Production

  • Typology of Global

Production

  • Economic Ownership

in general and IP

  • Measuring Global

Production

www.cso.ie

5

slide-6
SLIDE 6

Globalisation Measurement Challenges

  • Centre of economic interest (resident units)

–Corporate Relocations - of assets, particularly intellectual property (IP) –Headquartering: re-domiciled firms & corporate inversions

  • Change of economic ownership

–Contract Manufacturing, significant MNE activity, but also carried out by domestic firms –Aircraft leasing

www.cso.ie

6

slide-7
SLIDE 7

Irish Case

  • Published NIE 2015 – July 12, 2016
  • GDP Constant Prices – growth 26.3%
  • GNP Constant Prices – growth 18.7%
  • Represented a level shift in our figures

www.cso.ie

7

slide-8
SLIDE 8

Some details

  • National Accounts data related to relocations

were based on hard data from respondents

  • Important role of CSO’s Large Cases Unit (LCU) –

quality and consistency across macro and business statistics

  • Changes driven by globalisation activities
  • Ongoing trend – but scale was different
  • Significantly - a small number of entities involved
  • Figures compiled in compliance with ESA 2010
  • Figures were verified by Eurostat

www.cso.ie

8

slide-9
SLIDE 9

Results 2015 Year-on-Year Growth Rates

GDP + 26.3% (+7.8%) GNP + 18.7% (+5.7%)

Previous provisional estimate in brackets

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 100000 120000 140000 160000 180000 200000 220000 240000 260000 9

www.cso.ie

slide-10
SLIDE 10

MNE vs Domestic

www.cso.ie

10

slide-11
SLIDE 11

www.cso.ie

11 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 20 40 60 80 100 120 0,02 0,04 0,06 0,08 0,1 0,12 0,14 0,16 GDI PCE Saving Ratio EU Saving Ratio

€billions

Ratio

slide-12
SLIDE 12

www.cso.ie

12

1.Globalisation in the Standards 1.Globalisation in the Standards 2.Impact of R&D 2.Impact of R&D

  • 3. ESRG
  • 3. ESRG
  • 4. Alternative

approach & Conclusions

  • 4. Alternative

approach & Conclusions

slide-13
SLIDE 13

www.cso.ie

13 1000 2000 3000 4000 5000 6000 7000 8000 9000 10000 1436 3585 1367 1618 1256 1353 1658 1791 1960 2045 2331 2368 3711 5228 6002 4760 2979 9455 2881

€ms

Quarterly Imports of R&D 2012 – 2016

slide-14
SLIDE 14

2011 2012 2013 2014 2015 200 400 600 800 1000 1200 676 696 714 748 1054 €billion 14

www.cso.ie

slide-15
SLIDE 15

Impact of relocations on GDP – GNI transition

  • BOP Entrepreneurial income is calculated

after depreciation

  • Impact of additional depreciation

www.cso.ie

15

Year GDP Depreciation Net Factor Flows GNI NNI 2014 193,160 30,891

  • 29,715

161,759 130,868 2015 255,815 61,558

  • 53,173

200,762 139,204 Diff 62,655 30,667

  • 23,458

39,003 8,336 Change 32.4% 24.1% 6.4%

slide-16
SLIDE 16

www.cso.ie

16 Total Gross Profit from Admin and Survey Sources, €65m Net Profit and PIM CFC, €65m 10 20 30 40 50 60 70 10,01 €m

Profits and Depreciation - Operating Surplus and Net Factor Income from Abroad

slide-17
SLIDE 17

www.cso.ie

17

1.Globalisation in the Standards 1.Globalisation in the Standards 2.Impact of R&D 2.Impact of R&D

  • 3. ESRG
  • 3. ESRG
  • 4. Alternative

approach & Conclusions

  • 4. Alternative

approach & Conclusions

slide-18
SLIDE 18

European Statistical System Framework

Managing the balance between: European Statistics Code of Practice

  • Principle 11: Relevance
  • Principle 15: Accessibility and Clarity

and

  • Principle 5: Confidentiality

www.cso.ie

18

slide-19
SLIDE 19

ESRG – Summary of Terms of Reference

  • Provide direction to the CSO on how best to meet user

needs for greater insight into Irish economic activity

  • A focus on measures additional to the CSO’s legal

requirement to produce national accounts and balance

  • f payments statistics
  • New presentations of existing information to improve

understanding

  • Recommendations to be feasible, consistent over time,

cover short- and long-term initiatives

www.cso.ie

19

slide-20
SLIDE 20

Expert Group

  • Increasingly difficult to represent the complexities of

Irish economic activity using single headline indicators such as GDP or GNP

  • Expert group focus on recommendations for the

improvement and development of indicators and analyses giving additional insight to the domestic economy

  • First meeting of the group September 19th and the

group met six times between mid-September and November 2016

  • Group reported to the Director General of CSO on 23

December 2016

slide-21
SLIDE 21

Update – Expert Group Membership

  • High-level cross-sector consultative group
  • Philip Lane (Chair) - Central Bank Of Ireland
  • Alan Barrett - ESRI
  • Seamus Coffey - UCC
  • Thomas Conefrey - IFAC
  • John Fitzgerald - TCD and Irish Times
  • John McCarthy - Department of Finance
  • Dan O'Brien – IIEA, Irish Independent
  • Fergal O'Brien - IBEC
  • Frances Ruane - TCD, ESAC
  • Marie Sherlock - SIPTU
  • Rossa White - NTMA
  • Jennifer Banim and Michael Connolly - CSO
  • Eurostat and IMF - International observers
slide-22
SLIDE 22

ESRG – Main findings

  • 13 recommendations across 5 main themes

– Level Indicators: modified measure of the size or level of economy to support additional analysis – “denominator issue” – Structural Indicators: understand the MNE vs Domestic structure of the economy – Cyclical Indicators: to provide additional detail on what is happening domestically (focus on expanded component analysis of Expenditure side of National Accounts) – Communications – Co-operation

  • Focus on insight into domestic activity

www.cso.ie

22

slide-23
SLIDE 23

Level Indicator

  • Gross National Income* (GNI*)

– GNI adjusted for retained earnings of re-domiciled firms and depreciation on foreign-owned domestic capital assets

  • Modified measure of the size or level of economy
  • Additional and useful input to economic modelling

and analysis, including use “under the line” for ratio analysis

  • Top-down approach to developing GNI*

‒ Annual series initially in mid-2017, with focus on re- domiciled firms and depreciation related to intellectual property products

www.cso.ie

23

slide-24
SLIDE 24

Level Indicator - Illustration

2014-Q1 2014-Q2 2014-Q3 2014-Q4 2015-Q1 2015-Q2 2015-Q3 2015-Q4 2016-Q1 2016-Q2 2016-Q3 2014-Q1 2014-Q2 2014-Q3 2014-Q4 2015-Q1 2015-Q2 2015-Q3 2015-Q4 2016-Q1 2016-Q2 2016-Q3

  • 40000
  • 20000

20000 40000 60000 80000 20000 40000 60000 80000 100000 120000 140000 GDP NFF LCU GNI* GDP

slide-25
SLIDE 25

Structural Indicators MNE vs Domestic

  • Foreign-owned vs domestic view of economic structure
  • Initially use LCU firms as basis for split
  • Ultimately build up from the micro (company) data for all

foreign-owned firms

www.cso.ie

25

Total Gross Value Added (€bn) Foreign-owned firms (€bn) Domestic firms (€bn) % Foreign-

  • wned

177 42 (LCU firms) 135 24.0% 177 58 (LCU + all other firms with foreign marker) 119 32.9% Estimated split of foreign/domestic value added (2014) based on sources of foreign marker

slide-26
SLIDE 26

Example: Extended Sector Accounts

S11 Non- Financial Corporations S11 Non- Financial Corporations S12 Financial Corporations S12 Financial Corporations S13 Government S13 Government S1M Households and NPISH S1M Households and NPISH S2 Rest of World S2 Rest of World S11 Foreign-

  • wned

MNEs

  • incl. Large

Case firms S11 Foreign-

  • wned

MNEs

  • incl. Large

Case firms S11 Domestic

  • incl. Irish

MNEs S11 Domestic

  • incl. Irish

MNEs

www.cso.ie

slide-27
SLIDE 27

Cyclical Indicators

  • Expanded component analysis of Expenditure side of

National Accounts

– Additional detail on globalisation-related activities

  • To support development of additional measures of

underlying investment, additional detail in mid-2017

  • n

– Intellectual property product relocations – Aircraft leasing – Re-domiciled firms – Contract manufacturing in Exports and Imports data

  • With the Structural Indicators, will give good information
  • f effect of globalisation on Irish economy
  • Longer-term work: annual and quarterly Net National

Product (NNP) at current and constant and prices

www.cso.ie

27

slide-28
SLIDE 28

Introduce new classifications

www.cso.ie

28

  • Aircraft leasing
  • Re-domiciled firms
  • Foreign owned multi national corporations-

non financial

  • Financial Corporations
  • Irish Corporations
slide-29
SLIDE 29

Extend existing classifications

www.cso.ie

29

  • Help develop a more developed

understanding of Nat Acc and BOP

  • Extend presentation on Sector

Accounts of Non-Financial Corporations to show domestic and foreign owned sectors

  • Extend from Gross aggregates to Net
  • NDP, NNP and NNI
slide-30
SLIDE 30

Extend existing classifications

  • Publication of supplementary monthly

industrial production and turnover (IPT) data adjusted for the impact of foreign MNE-related activity

  • Alternatively-weighted IPT indices, using

sectoral manufacturing wages rather than gross value added as fixed base weights.

www.cso.ie

30

slide-31
SLIDE 31

MNE & LCU Dominance 2015 Data

www.cso.ie

31 Turnover Goods Exports Goods Imports Services Exports Services Imports 0,1 0,2 0,3 0,4 0,5 0,6 0,7 0,8 0,9

slide-32
SLIDE 32

Net National Product

www.cso.ie

32 20000 25000 30000 35000 40000 45000 50000 55000 60000 NNP Total Economy GNP Total Economy

slide-33
SLIDE 33

Key Messages

  • Focus of the ESRG - analyses or indicators

that would provide a better understanding

  • f the domestic components of highly

globalised Irish economy

  • GDP and GNP continue to be the

international standard indicators

  • GNI* proposed to address the specific

nature of the Irish economy

  • Additional structural and cyclical measures

recommended to give users more broad- based information on the Irish economy

www.cso.ie

33

slide-34
SLIDE 34

Implementation

  • Multi-year programme to deliver recommendations

– Short-term (during 2017) and longer-term deliverables

  • CSO will take incremental approach – initial

development, focusing on annual analyses and then review

  • Focus in 2017 will be on:

– Modified Gross National Income indicator GNI* – Large Case vs Other firms view in Sector Accounts – Additional detail on intellectual property products (IPP), aircraft leasing & contract manufacturing

www.cso.ie

34

slide-35
SLIDE 35

www.cso.ie

35

1.Globalisation in the Standards 1.Globalisation in the Standards 2.Impact of R&D 2.Impact of R&D

  • 3. ESRG
  • 3. ESRG
  • 4. Alternative

approach & Conclusions

  • 4. Alternative

approach & Conclusions

slide-36
SLIDE 36

Alternative Approach

  • Record cross border inter affiliate IP

transactions as financial assets

  • Could be thought of as securitized assets
  • Impact on Capital Balance sheet and

capital account removed

  • Financial Account and Balance Sheet (IIP)

would be balanced

  • All income would be attributed to Foreign

Direct Investor

www.cso.ie

36

slide-37
SLIDE 37

Summary

  • R&D in context of SNA 2008 (ESA 2010)
  • Changed regulatory environment – BEPS

etc.

  • Unanticipated consequences of inter

affiliate cross border IP transactions and relocations – depreciation

  • GNI* and cyclical and structural indicators
  • Alternative approach - financial asset

www.cso.ie

37

slide-38
SLIDE 38

michael.connolly@cso.ie