D. Foreign affiliate statistics and the international supply of services
6.93. Section D deals with the collection of data necessary for FATS through surveys of enterprises. For most countries that are compile FATS, business surveys are the most reliable and cost-effective means of obtaining the information needed to provide meaningful FATS. The elements for data collection detailed in the present section focus on the specific aspects of services. The main definitions of the FATS conceptual framework are briefly described in chapter 1 of the present Guide, whereas more details on the definitions of some of the variables are provided in chapter IV of MSITS 2010. Compilation requirements are described in chapter 15 of the present Guide. Since most of the variables are drawn directly from the collected data, it is important to consider those definitions when designing the survey form and the accompanying explanatory notes.
6.94. There are two basic approaches to collecting FATS through enterprise surveys. The two approaches are not necessarily mutually exclusive. The first approach, which can be used only for inward FATS, identifies from existing data on resident enterprises the subset that is foreign-controlled. The second approach entails conducting surveys that request information directly on the operations of resident affiliates of foreign enterprises and foreign affiliates of domestic enterprises (either through a dedicated survey, that can be specially tailored to respond to needs, or through an existing FDI survey, which offers more limited options as to the information that can be requested). MSITS 2010 recognizes the advantages and disadvantages of each approach and the need for compilers to demonstrate flexibility in adapting FATS data collection to each country’s statistical infrastructure, while maximizing the use of existing data.
6.95. A usual precondition for the establishment of a foreign affiliate is the development of investment flows leading to an FDI relationship. An understanding of the FDI universe provides a strong basis for developing an understanding of the FATS universe and ensuring a sound data collection mechanism for FATS. The FDI universe of enterprises has broader coverage than the FATS universe, but a data collection program for FDI statistics can provide a base for a data collection program for FATS, either directly or indirectly. The direct use of such data collection is that key FATS variables might be incorporated into existing FDI surveys. Alternatively, if the information is not available from the FATS data source itself, links to existing data on FDI could be used (a) for inward FATS, to identify the data of interest in existing sources of information on resident enterprises (i.e. to identify the foreign controlled subset of firms) or (b) for both inward and outward FATS, to identify foreign-controlled affiliates for which FATS variables could be collected on a separate survey. Finally, it is important to note that in the case of regional headquarters that report data on behalf of affiliates further down the chain and located in various countries, the respondent should be required to report the data on a non-consolidated basis, i.e., allocating the variables describing the operations of the affiliates to the affiliates’ actual country of location.
6.96. Three types of surveys are particularly useful for compiling FATS: structural business statistics surveys, FDI surveys and specific FATS surveys. The three types are discussed in more detail below. It should be noted that the collection of FATS does not need to be a stand-alone exercise, and that compilers can choose to collect FATS data and other information in a single survey, as described C.7 and C.8 of the present chapter.