Identifying Heterogeneity in the Production Components of Globally Engaged Business Enterprises in the United States

Fetzer, James; Straßner, Erich

doi:10.2139/ssrn.2657672

Cited by 7 publications

(12 citation statements)

References 8 publications

(9 reference statements)

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“…First, there are on-going efforts at the level of national statistical offices and within international organisations involved in statistics to provide more data on the activities of foreign-owned firms in the context of national accounts. As illustrated by Fetzer and Strassner (2015) for the United States, the ownership dimension could be more systematically incorporated in national accounts. Access to such data could solve the two main issues we have encountered in this work: (i) the lack of information on the output and value-added of foreign-owned and domestic-owned firms and (ii) the discrepancies between output as measured in AMNE statistics and in national accounts.…”

Section: Discussionmentioning

confidence: 99%

“… The surveyed unit is also an important concern when it comes to ownership. For instance in the United States, Fetzer and Strassner (2015) compare the BEA MNE data with Statistics on Income as they are both at the firm level. An establishment is a single physical location with a main production activity while a firm can be an establishment or a set of establishments: it can encompass several sectors.…”

Section: Reconciling Amne Data With the Icio Framework: Output Valuementioning

confidence: 99%

“…For example, Koopman et al (2008) find much lower ratios of domestic value-added in the exports of foreignowned firms in the People's Republic of China (hereafter "China"). Fetzer and Strassner (2015) highlight that there are differences in the composition of output among domestic firms, comparing those that are part of a multinational enterprise and those that are part of an enterprise entirely located in the United States.…”

Section: Introductionmentioning

confidence: 99%

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Multinational enterprises and global value chains: the OECD analytical AMNE database

Cadestin

Backer

Desnoyers-James

et al. 2018

OECD Trade Policy Papers

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This paper is published under the responsibility of the Secretary-General of the OECD. The opinions expressed and the arguments employed herein do not necessarily reflect the official views of OECD countries.The publication of this paper has been authorised by Ken Ash, Director of the Trade and Agriculture Directorate Comments are welcome and should be sent to tad.contact@oecd.org. © OECD (2018)You can copy, download or print OECD content for your own use, and you can include excerpts from OECD publications, databases and multimedia products in your own documents, presentations, blogs, websites and teaching materials, provided that suitable acknowledgment of OECD as source and copyright owner is given. All requests for commercial use and translation rights should be submitted to rights@oecd.org.In order to better understand the interdependencies between trade and investment in global value chains (GVCs), the OECD has developed a new dataset on the Activities of Multinational Enterprises (AMNE). This dataset starts from official AMNE statistics and combines the information with Inter-Country Input-Output (ICIO) tables to provide new insights on the trade-investment nexus in GVCs. This dataset allows the contribution of domestic firms, multinational enterprises (MNEs) and their foreign affiliates to global trade and production to be assessed. This paper details the methodology that was used to create the data, as well as the main assumptions and challenges in the work. EXECUTIVE SUMMARYIn order to better understand the interdependencies between trade and investment in global value chains (GVCs), the OECD has developed a new dataset on the Activities of Multinational Enterprises (AMNE). This dataset starts from official AMNE statistics and combine the information with Inter-Country Input-Output (ICIO) tables to provide new insights on the trade-investment nexus in GVCs. This dataset allows assessing the contribution of domestic firms, multinational enterprises (MNEs) and their foreign affiliates to global trade and production. It brings to MNE analysis the same conceptual shift introduced by TiVA (Trade in Value-Added statistics) in trade analysis.While the ultimate goal of the project is to fully split a world input-output table according to the ownership of firms (domestic-owned versus foreign-owned), the project involves the construction of a full matrix of the output of foreign affiliates in 43 countries plus the rest of the world, as well as similar matrices for value-added, exports and imports. These matrices are already useful tools to carry out analysis on the role of MNEs in GVCs.Adding an ownership dimension allows us to revisit TiVA statistics to show the contribution of foreignowned firms to exports and domestic sales. Following the same methodology, a third category of firms, the domestic MNEs -as opposed to domestic firms with no foreign affiliate-is added for a sub-set of countries for which data are available over the years 2011-2014.

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Section: Discussionmentioning

confidence: 99%

Section: Reconciling Amne Data With the Icio Framework: Output Valuementioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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Multinational enterprises and global value chains: the OECD analytical AMNE database

Cadestin

Backer

Desnoyers-James

et al. 2018

OECD Trade Policy Papers

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“…To tackle this issue, an OECD Expert Group has recently started working on a core statistical response through the development of what have become known as extended SU tables to be generated within national statistical production systems that could then be merged to allow for inter-country analyses (Ahmad & Ribarsky, 2014). Although a number of countries such as the US (Fetzner & Strassner, 2015), the Netherlands (Chong, Van Beveren, Verbiest, & Van der Wal, 2016), Mexico (INEGI, 2017), and Costa Rica (Saborío, 2015) have made significant advances on this front, with plans to mainstream these activities in their regular statistical production systems, for many other countries it may still take some time before they will be able to generate such tables.…”

Section: Research Tools Used For Measuringmentioning

confidence: 99%

Accounting for firm heterogeneity in global value chains

et al. 2019

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The growing interest in global value chains (GVCs) has been paired with a greater appreciation of the need for better measurement methods, as reflected by recent initiatives from academia and leading international organizations. This research note focuses on one method to measure GVCs that has been recommended in recent scholarly work, namely input-output models, but goes beyond the industry level of analysis by introducing intra-industry firm heterogeneity. Our illustrative application to multinational enterprises (MNEs) versus domestic firms' participation in GVCs enhances our understanding of their specific role in GVCs and how such engagement varies across countries and industries. While showing that MNEs' contribution to value-added exports is considerably smaller than what is suggested by traditional trade statistics, our findings also, interestingly, document that the higher import content of exports of MNEs can go hand in hand with the creation of local backward linkages as a function of their much higher specialization in only parts of the production process vis-à-vis domestic firms. By answering relevant questions on MNEs' engagement in GVCs that have hitherto been impossible to address comprehensibly and in a cross-country comparative setting, this application illustrates how the methodology has great potential for international business research. Journal of International Business Studies

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“…Recent papers suggest supplementing supply and use tables compiled from the SNA goods and services account with breakdowns on domestic‐ and foreign‐owned resident entities (Ahmad and Ribarsky, ; Fetzer and Strassner, ) or supplementing the SNA primary income accounts with separate statistics on foreign direct investment income flows (Harrison, ). In addition, the BPM and the BD recommend measures that are designed to provide insight into the role of pass‐through funds and special purpose entities in official statistics but that are not included in the SNA framework.…”

Section: Introductionmentioning

confidence: 99%

Improving the SNA Treatment of Multinational Enterprises

Rassier

2017

Review of Income and Wealth

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Core measures in the System of National Accounts (SNA) may reflect distortions based on the treatment of multinational enterprises (MNEs) under the residence concept, which is effectively a legal concept rather than an economic concept for special purpose entities that lack production. This paper suggests an improvement to the SNA treatment of MNEs by proposing an SNA framework that offers a dual presentation of measures on operating entities and measures on special purpose entities. A dual presentation adds information to better understand the role of MNEs and special purpose entities in national accounts. Nevertheless, the proposal also yields a meaningful departure from current SNA recommendations and current practice by statistical compilers, which requires careful consideration of practical matters before implementation is feasible.

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Identifying Heterogeneity in the Production Components of Globally Engaged Business Enterprises in the United States

Cited by 7 publications

References 8 publications

Multinational enterprises and global value chains: the OECD analytical AMNE database

Multinational enterprises and global value chains: the OECD analytical AMNE database

Accounting for firm heterogeneity in global value chains

Improving the SNA Treatment of Multinational Enterprises

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