D. Foreign Affiliates Statistics
1.19. MSITS 2010 focuses on the foreign-controlled affiliates subset. The key concepts of FATS, as described in MSITS 2010, chapter IV, involve foreign direct investment relationships and control, are in line with those specified in BPM6, OECD Benchmark Definition of Foreign Direct Investment, 4th edition[1] and Measuring Globalization: OECD Handbook on Economic Globalization Indicators.[2] Details of FATS collection and compilation are discussed in chapters 5, 6, 10, 11, 13 and 15 of the present Guide.
1.20. A number of variables are recommended for compilation: sales/turnover or output, employment, value added, trade and number of enterprises, etc. Output is the variable recommended for measuring the supply of services through mode 3, but sales or turnover can be used in the absence of data on output. Variables should be broken down to the extent possible into the following categories: type of service provided (if possible, using a classification compatible with EBOPS 2010 definitions and identifying the provision of services in the country of operations); main economic activity; and country of operation of affiliates for outward FATS and country of the ultimate controlling institutional unit (UCI) for inward FATS. The basic concepts of BPM6 also apply to FATS: residence; determining control, which is necessary for determining the FATS universe; and the recording of information on an accrual basis and for monetary information valuation at market prices. The valuation of transactions between affiliated firms may not represent market prices. That question is discussed further in box 1.3.
1.21. Given that at the time of writing of the present Guide, FATS was still a relatively new statistical domain, it is suggested that compilers develop a FATS compilation system in stages. MSITS 2010 recommends, as an initial priority, that FATS be compiled on an activity basis, both because that is required for the compilation of some variables and because data are currently most widely available on that basis. However, since the compilation of data on a product basis is recognized as a longer-term goal, compilers are encouraged to work towards providing product detail for the variables that lend themselves to that basis of attribution, namely, sales/turnover and/or output, as well as exports and imports. If such specificity cannot be achieved, compilers may wish to disaggregate data on sales or output in each industry into the subcategories of sales/output of goods and sales/output of services, as a first step towards achieving a product basis.
1.22. Inward FATS often appear in structural business statistics (SBS), traditionally compiled by national statistical offices, but they can also be collected in the same manner as foreign direct investment (FDI) statistics, or in conjunction with those, such as a dedicated survey. Outward FATS can be produced within the scope of FDI statistics or a dedicated survey. FATS can also be compiled from administrative records of a public agency that deals with economic or commercial issues related to FDI. For both inward and outwards FATS, analysing the relationships among different data collection and compilation options yields a number of advantages, including increased cost effectiveness and the reduction of the reporting burden. Compilers of FATS may also consider accessing surveys, prepared by supranational bodies, based on frameworks taken from the business registers of international groups.[3] The current interest in the phenomenon of economic globalization and the new approach of international trade statistics, in terms of value added, and their relationship to global value chains, has revealed the importance of reinforcing such statistics.
Next: E. Additional indicators for analysing the international supply of services
[1] MSITS 2010 and the present Guide adopt the definition of foreign direct investment as provided in the Organization for Economic Cooperation and Development (OECD), OECD Benchmark Definition of Foreign Direct Investment. Available from www.oecd.org/fr/daf/inv/statistiquesetanalysesdelinvestissement/fdibenchmarkdefinition.htm.
[2] These definitions are further described and adapted to the European Union context in Eurostat Foreign Affiliates Statistics (FATS) Recommendations Manual, Eurostat Methodologies and Working Papers (Luxembourg, Publications Office of the European Union, 2012). Available from http://ec.europa.eu/eurostat/en/web/products-manuals-and-guidelines/-/KS-RA-12-016.
[3] See, for example, the Eurostat EuroGroups Register.