Traditional boundaries of countries are disappearing because of the interconnectivity of the global production processes. The concept of country of origin has become questionable in terms of value-added of trade, and the distinction between goods and services is blurred. The main challenge for statisticians is to measure the global production process including all services, which include also the impact of trade on employment.
Generally, we should make everyone aware of the fragmentation of the production process and move the measurement of it forward. Researchers, who use the conceptual framework of “global value chains”, need better industry-specific classifications for final and intermediate goods trade and need data on business practices at the level of the outsourcing of business functions. The way forward will require new methods for using existing data, improvements to existing data collection programs, especially for trade in services, and the deployment of novel enterprise-level surveys focused on outsourcing and off-shoring.
China Customs explained that more than half of China’s exports comes from inward processing, under which procedure goods are intended for manufacturing, processing or repair and subsequent exportation. Further, 94% of China origin goods are imported through HK, since products distribution of multinational enterprises are centralized in Hong Kong and since goods coming from inward processing need to leave China first to benefit from tax exemptions, see picture below
According to Statistics Iceland, 10% of Iceland’s exports of finished processed goods come from processing on contract. This represents about 25% of the export of services if the processing fee (of manufacturing services on physical output owned by others) would be included in trade in services. Explaining such break in series when switching to the new BOP recommendations, will be a challenge. In this respect, the Handbook on the Impact of Globalization on National Accounts presents some views on Multinational enterprises, Trade in goods and services, Global manufacturing, and Household-related issues. Specific country experiences are presented as annexes to the chapters, and an addendum deals with the impact of the financial crisis.
Statistics Denmark researched what the impact is of international sourcing on the competitiveness of job losses. The study distinguished core business function, such as production of final goods or services yielding income, and support business functions, carried out in order to facilitate production, such as distribution and logistics, marketing, sales and after sales services, ICT services, administrative and management functions, and research & development. The results showed that many core functions were outsourced to South East Asia, whereas support functions were outsourced to, for instance, the United States, which in turn outsourced some of the functions to Asia.