UNITED NATIONS ECONOMIC COMMISSION FOR EUROPE ECONOMIC GLOBALISATION: A CHALLENGE FOR OFFICIAL STATISTICS Proceedings of the 2007 Joint EFTA/UNECE/SSCU Seminar UNITED NATIONS New York and Geneva, 2OO8 Note The views expressed herein are those of the authors and do not necessarily reflect the views of the United Nations. The designations employed and the presentation of the material in this publication do not imply the expression of any opinion whatsoever on the part of the Secretariat of the United Nations concerning the legal status of any country, territory, city or area or of its authorities, or concerning the delimitation of its frontiers or boundaries. This publication was originally produced in English by the UN Economic Commission for Europe, European Free Trade Association and the State Statistical Committee of Ukraine. The UNECE secretariat disclaims responsibility for the accuracy of any translations that might be made of this work into other languages. FOREWORD In recent years, many concerns have been raised that the traditional methods of measuring the national economy are not suitable in the increasingly globalised world. A seminar on Economic Globalisation: A Challenge for Official Statistics, organised jointly by the United Nations Economic Commission for Europe (UNECE), the European Free Trade Association (EFTA) and the State Statistics Committee of Ukraine (SSCU) in Kiev (3-6 July), was the first of its kind, providing national statistical offices with a forum to share ideas and discuss approaches to cope with the distortions caused by the activities of multinational enterprises on the production of statistics. The seminar addressed globalisation in the context of national accounts and the effect on gross domestic product, gross national income and other parts of the accounts. It also looked into classification issues, data collection methods, price indices and methodological guidelines. The seminar was composed of two modules. The first included a discussion with the main users of statistics to raise awareness of the role of statistics in decision-making and the challenges that statisticians face due to globalisation, for example the reflection in national statistics of the activities of multinational or of “virtual” enterprises, which play a growing role in most countries. The second module targeted the producers of statistics. It dealt with the practical problems associated with globalisation, and pointed at possible solutions, for example how to derive national accounts or balance of payment statistics in the conditions of increasing international trade and production activities organised across countries. The seminar was considered as a first event in a series of meetings where representatives of national statistical services can discuss the main distortions in the compilation of national accounts and related source statistics caused by globalisation, and will propose approaches and guidance on how to tackle these distortions. Presentations at the seminar were provided by the Organisation for Economic Co-operation and Development (OECD), Eurostat, UNECE, Canada, Ireland, Netherlands, Norway, Slovenia, Switzerland, Ukraine and United Kingdom. More than 25 foreign participants from international organizations and national statistical offices also attended, together with representatives of different Ukrainian ministries, government agencies, research institutes and universities. The seminar was regarded as very useful and fruitful and the participants recommended the publication of the proceedings. This publication includes the papers that were presented at the meeting. In addition, several PowerPoint presentations were made that were not accompanied by papers. These are listed in the Annex. iii Table of contents INTRODUCTION by Gabriel Gamez, Statistical Office of EFTA.......................................... 7 SESSION WITH MAIN USERS: THE ROLE OF STATISTICS IN AN OPEN MARKET ECONOMY................................................................................................................................... 9 1. Summary of the session......................................................................................................... 10 2. The role of statistics in a globalised world: the case of development of Slovene official statistics........................................................................................................................................ 11 Keynote speech by Irena Križman, Statistical Office of the Republic of Slovenia 3. European statistical cooperation.......................................................................................... 19 by Inna Steinbuka, Eurostat 4. Globalisation and official statistics....................................................................................... 26 by Robin Lynch, Office for National Statistics, United Kingdom 5. Global development challenges for the new market economies in the XXI century: view from Ukraine............................................................................................................................... 41 by V.M. Geyets and V.P. Sidorenko, National Academy of Sciences of Ukraine SESSION I: ECONOMIC GLOBALISATION: A CHALLENGE FOR OFFICIAL STATISTICS............................................................................................................................... 53 1. Summary of the session......................................................................................................... 54 2. The Internationalization Monitor: the Dutch implementation of the OECD Handbook of Globalization Indicators………………………………………………………………………..58 by Fabienne Fortanier, Statistics Netherlands 3. New challenges to national statistics of Ukraine under the globalisation processes........ 59 by Nataliya Vlasenko, SSCU SESSION II: IMPACT OF GLOBALISATION ON THE PRODUCTION OF ECONOMIC STATISTICS....................................................................................................... 65 1. Summary of the session......................................................................................................... 66 2. Data issues on integrative trade between Canada and the U.S. Measurement issues for supply chains ............................................................................................................................... 68 by Art Ridgeway, Statistics Canada 3. Dealing with complex and changing company structures and trading practices in compiling foreign direct investment and balance of payments related statistics in Ireland 82 by John Fitzpatrick, Central Statistics Office (CSO), Ireland iv SESSION III: COUNTRIES’ INITIATIVES...........................................................................97 1. Summary of the session..........................................................................................................98 2. Statistics Canada programs addressing globalisation.........................................................99 by Art Ridgeway, Statistics Canada 3. The Irish approach towards treatment of merchanting and related transactions.........106 by John Fitzpatrick, Central Statistics Office (CSO), Ireland 4. Globalisation and the effect on national accounts: practices ...........................................112 by Nico van Stokrom, Frank Bonger, Leslie Nootenboom, Wim Tebbens, Statistics Netherlands 5. Mirror and reconciliation exercises for external trade statistics between Norway and Ukraine .......................................................................................................................................129 by Statistics Norway (SSB), State Statistics Committee of Ukraine (SSCU) and State Customs Authority of Ukraine SESSION IV: REVISED INTERNATIONAL STATISTICAL STANDARDS, CLASSIFICATIONS AND GUIDELINES.............................................................................163 1. Summary of the session........................................................................................................164 2. The revision of ISIC and NACE: implications for national accounts .............................167 by Tihomira Dimova, UNECE 3. Implementation of the revised classifications of economic activities (ISIC and NACE) in business registers .......................................................................................................................181 by Fabio Tomasini, Swiss Federal Statistical Office, Switzerland 4. Benchmark Definition of Foreign Direct Investment, 4th edition. OECD revises international standards for foreign direct investment statistics ...........................................189 by Ayse Bertrand, OECD 5. Compilation of Consumer Price Indices (CPIs).................................................................213 by Carsten Hansen, UNECE 6. Compilation of Producer Price Indices ..............................................................................229 by Carsten Hansen, UNECE ANNEX.......................................................................................................................................245 v ECONOMIC GLOBALISATION: A CHALLENGE FOR OFFICIAL STATISTICS 7 INTRODUCTION By Gabriel Gamez, Statistical Office of the European Free Trade Association (EFTA) Impartial and reliable statistical data are a prerequisite for a democratic society and a necessary condition for the smooth running of a competitive market economy. Statistics are: • Important for policy making in a modern society; • Vital for monitoring the effects of policies;