Economic globalization has created new opportunities for businesses to organize their production chains more efficiently. This has increased the complexity of compiling economic statistics, as it is more difficult to break down production activities on a country-by-country basis. There is a need to understand the cross country benefits and risks by being able to “look through” the global firms in the global value chains (GVCs) and see their contributions in the production networks of resident enterprises in multiple countries. These emerging global production arrangements pose challenges to macroeconomic and business statistics, including the supporting business registers. The challenges include the choice of the statistical unit, the classification of the (global value chain satellite) accounts, the implementation of the principle of economic control and ownership, and the recording of domestic and cross-border transactions and positions in national accounts and balance of payments statistics.
In its decision 46/107, the Statistical Commission established the Expert Group on International Trade and Economic Globalization Statistics to address these measurement challenges. The main task of the Expert Group is to develop a handbook that will account for the measurement of GVCs, as described in various reports to the Commission on this topic in the past five years. Both the GVC perspective and the perspective of the national data compiler are fundamental to understanding the composition of the handbook. However, with the realization of the cross-country impact of GVCs on the economic structure of partner countries, a multi-country perspective for those national industries that are included in major GVCs is encouraged in the handbook.
The GVC approach builds on the integrated collection of business statistics from large global enterprises (across countries) for a select set of GVC-related economic activities, including trade in intermediate goods and services and foreign direct investments. In addition, inter-country supply and use tables, as well as inter-country input-output tables, can help to chart and understand relations at a macroeconomic level. To properly and correctly measure the cross-border statistics, some data-sharing with important economic partner countries may be necessary. The Commission also agreed with the development of a global enterprise group register to help national statisticians better understand business strategies and the relations between enterprises in various economies.
On 12 April 2010, Pascal Lamy (at that time the Director General of the World Trade Organization, WTO) delivered a speech at the Paris School of Economics in which he debunked some economic myths, among others Fallacy #2: "It is unhealthy for trade to grow faster and faster compared to output". Under this point he addresses the main problems of trade statistics due to the fragmentation of the production process. The speech can be found here.
The following year, UNSD organized a larger statistical event together with colleagues of Eurostat and WTO at the WTO premises in Geneva with the theme of "Measuring global trade: Do we have the right numbers?" (and see here).
This event contained already all the measurement issues, which are still on the table, such as presentations by Prof. Gary Gereffi of Duke university and by Tim Sturgeon of MIT on Measuring Global Value Chains, the international sourcing of Business Functions (Peter Nielsen, Statistics Denmark), the impact of globalisation on National Accounts (Tihomira Dimova, UNECE), Multi-National Enterprises and Foreign Affiliates, an integrated approach of trade in goods and services and business statistics (Stefano Menghinello, ISTAT), and Trade in Value-Added (Andreas Maurer, WTO).
In subsequent years this topic was introduced into the official work programme of the UN Statistical Commission (UNSC) with reports to the Commission from 2013 onwards. In 2013, the Commission agreed to the creation of a “friends of the chair” group tasked with preparing a concept paper on the scope and content of the framework. In 2015, this group delivered its final report in which it recommended the drafting of a handbook on the measurement of international trade and economic globalization, which would cover the measurement issues of global enterprise groups, firm heterogeneity for global value chain purposes, the classification for business functions, micro-data linking, bilateral trade and investment asymmetries, and (iv) multi-country supply and use tables.
The UN expert group started its work in 2015 and met twice in New York, namely in January and November of 2016. The Seminar in Luxembourg is the third meeting of the members of this group. Links to the reports of the various meetings are provided below.