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C.  Selecting data sources

15.14.        Data sources for FATS are described in chapters 5, 6 and 10. Comparison of data sources is shown in chapter 11. To select data sources when beginning FATS compilation, one should take into consideration the fact that mode 3 supply of services, as measured through FATS, is most likely to occur in the context of multinational groups, in particular those with important and numerous FDI relationships. In other words,  on the outward side, in particular, large companies are more likely to be the most important players for supplying services abroad. As a starting point, it may, therefore, be useful to consider focusing on larger services companies or those with important FDI transactions and positions, which could provide an intermediate low-cost solution for compilation. However, one should not underestimate the role of smaller companies because (a) in the context of inward FATS, foreign affiliates of large multinational groups may not necessarily be large themselves and (b) in the context of outward FATS, the international role of small and medium enterprises is becoming increasingly important. That means that although such an intermediate solution may be useful in the short run, in the longer run, compilers should consider compiling a FATS dataset representative of the entire population. In the context of employment, it is also important to note that larger services companies/affiliates are more likely to recruit non-resident employees (i.e. from the perspective of the compiling economy) or have important intracorporate movements of their personnel.

15.15.        Collecting source data and compiling FATS imply the need for various stakeholders to cooperate. For compiling FATS, as is done in many economies, the data sources should be used in a complementary way, in particular for inward FATS. For example, although the main data source for collecting data may be a survey under the responsibility of one agency (e.g. the statistical office or the central bank), often the information relating to the identification of the population, or the part of the population, to be covered and/or the UCI is available from another data source (e.g. other surveys or enterprise registers) that might be under the responsibility of another agency (e.g. the central bank or another administrative body). In addition, in many economies, the collection of data from financial institutions is conducted by the central bank, whereas the collection of data of other types of units is conducted by the statistical office.

15.16.        It is, therefore, good practice to assess whether the cooperation of various stakeholders is necessary and, if so, to identify possibilities and responsibilities for linking information (e.g. a common identifier in registers and administrative sources) before beginning FATS compilation. That process has been implemented by many economies, and often enables the compilation of FATS with little or no additional burden for reporters or work for compiling agencies. Information on legal frameworks and institutional arrangements is provided in chapters 2 and 3, respectively. If there is a difference in statistical units underlying (a) information on ownership or financial information at the enterprise level and (b) operational data at the establishment level, then compilers must account for that difference in their compilation procedures.

Which data source to choose? 

15.17.        A comparison of data sources for FATS is shown in chapter 11.   Chapter 6 provides more detail on the information that should be sought from those data sources and how they could be used.

15.18.        Inward FATS variables can in general be obtained from four main sources:

(a) A survey used to collect information on a compiling economy’s business structure, identifying the foreign-controlled population of firms, as well as the country of the UCI. That information could be sourced from the survey itself by including the appropriate items, or by cross-referencing with information available from other sources (e.g. a business register or an FDI register). Coverage of services activities is an important consideration when choosing such a source, as in many cases it covers only business activities, i.e. excluding education, health, recreational service activities and agricultural and mining activities);

(b) A survey used to collect FDI information, in which questions would be included to identify the variables of interest. Again, it would be necessary to identify within the population of FDI enterprises those that are foreign-controlled, as well as the economy of the UCI;[1]

(c) A dedicated FATS survey;

(d) Administrative sources, including business registers, tax return or regulatory reports, such as those for banks or insurance companies or, more generally, reports on foreign investment or privatization monitoring.

15.19.        For economies with business statistics,  that source may be preferred for inward FATS. That option has been implemented by many economies. Others have preferred using existing FDI surveys to collect FATS. In fact, that may be an interesting solution as the FATS population may be relatively easy to isolate (directly from the survey, or from the register used for establishing the FDI survey). But one needs to keep in mind the need not to overload an FDI survey, in particular if it needs to be run with a quick turnaround.

15.20.        Outward FATS characteristics are usually collected on the basis of (a) FDI surveys and (b) dedicated FATS surveys. Outward FATS information is believed to be more difficult to obtain, as it relates to the activities of firms established outside the compiling economy. As a starting point, it may be useful to consider using an FDI survey to obtain data on outward FATS, keeping in mind the advantages and disadvantages of using such a source. A number of economies have chosen that option, particularly when starting to collect the most important outward FATS characteristics. Alternatively, a FATS survey could be developed.[2] In general, it is advisable to conduct a periodic census for outward FATS,  including all units identified as belonging to the target population of reporting units. Between censuses, sample surveys could be conducted.  Administrative data could also be considered for compiling outward FATS, if the data include relevant variables.

15.21.        For some of the variables, supplementary sources may be needed, such as merchandise trade statistics or BOP data on goods or services for the trade variable, research and development surveys for relevant variables or administrative or other sources for data for some specific services activities, such as finance, insurance, oil, mining and other major industries). If needed, compilers may also refer to other sources to gather information on structures or operations of multinationals, such as industry associations, free-zone authorities, stock exchange and securities commissions; special registers of foreign companies, such as those maintained by international organizations (e.g. the United Nations Conference on Trade and Development (UNCTAD), OECD, Eurostat) or private companies (e.g. Dun and Bradstreet); the Internet; and partner country statistics. Again, compilers need to be cautious of how all that information, including the data collected, aligns with the FATS recommendations. Those sources could also be useful for verifying or validating some of the compiled FATS information. For counterpart statistics, it is important to note that the information is likely to be confidential and should not be able to provide information on individual businesses. Aggregate information may be available, but care should be taken in the interpretation of concepts and with the implications of different compilation methods.

15.22.        Although not advised, some countries apply cut-off thresholds. For practical reasons (reduction of cost and burden), such thresholds can, nevertheless, be considered acceptable as long as they are kept to a minimum and estimations are provided for the population under the threshold.

15.23.    To summarize, compilers may have multiple options for sourcing their data for compiling FATS, and the choice will depend on the situation in each country. However, the following recommendations should be noted:

(a) For inward FATS, it may be preferable to consider sourcing data from business statistics, keeping in mind that such statistics may need to be complemented for activities that they may cover, e.g. agricultural activities or various types of social services. Another solution, at least as a starting point, could be to consider an existing inward FDI survey;

(b) For outward FATS, an FDI or dedicated FATS survey could be used, although the former may be easier to implement as a first solution;

(c) If an FDI survey is used, response burden should be considered, particularly if the survey is conducted with a quick turnaround and because a portion of FDI firms are not part of the FATS universe (i.e., firms with influence relationships, but not control);

(d) The link with FDI, in particular to identify the statistical population, is an important point that should be considered when choosing a data source and when identifying the population to be covered and the UCI.

 

Include pages:

Country experience: Austria (Chapter 15)

Country experience: Spain (Chapter 15)

 

Next: D. General compilation issues



[1] The identification of the ultimate controlling unit (UCI) is discussed in sections F.4.

[2] For example if the foreign direct investment (FDI) survey needs to be run on a quick turnaround, or if compilers do not want to unduly overburden FDI firms that are not part of the population to be covered by FATS.