C.2. Resident/non-resident trade in services data by mode of supply: a simplified allocation
14.380. Given that the compilation of resident/non-resident trade in services data broken down by mode of supply is a relatively new area of data compilation, and given that amending existing data collection mechanisms or creating new ones may be difficult, it is recommended to adopt a step-by-step approach for compiling such a breakdown. In the absence of relevant data, or if only some sporadic information is available, it is first proposed that compilers conduct a simplified allocation of existing statistics, as given in table V.2 in MSITS 2010. That method consists of attributing EBOPS service categories to either one dominant mode or to several modes using a distribution, on the basis of an assumption of how specific EBOPS 2010 service items are most probably supplied by exporters (or to importers) of the economy.
14.381. That method provides a first set of estimates on modes of supply comparable at the international level (which also could be disseminated in a common manner; see chapter 20 for more information). Such an allocation has the advantage of being a relatively low-cost solution, as the compiler can start working with the available BOP services data and gradually build his/her knowledge of how services are supplied internationally. However, compilers should treat such an allocation only as a first rough approximation of resident/non-resident services transactions by mode of supply as the technique has important limitations. The present Guide strongly encourages compilers to undertake efforts to develop more precise estimation procedures at a later stage.
14.382. Using table V.2 in MSITS 2010, compilers are advised to make the allocation in three steps: (a) allocate (b) evaluate and (c) refine, as described below.
14.383. Firstly, compilers can allocate each service item to one of the columns identified in the table on the basis of an assumption of how a specific service item is most probably supplied by exporters (or to importers) of the economy. In order to provide a first approximation in a comparable way, all compilers are strongly encouraged to conduct such a generic allocation.
14.384. Secondly, compilers should evaluate if the "generic" allocation as conducted at the first step is relevant for their economy, and review results accordingly. For example, it may be worthwhile for the compiler to discuss with the institution in charge of trade in services negotiations if the results reflect their knowledge of how services are supplied abroad and to their national economy, as far as it relates to transactions recorded in the BOP.
14.385. Thirdly, and based on the results obtained in the second stage, compilers can refine their allocation by gathering additional information to improve the knowledge of some specific service sectors. Such additional information can be gathered in cooperation with the institution in charge of trade in services negotiations and might validate the assumptions made earlier by statisticians or negotiators.
14.386. Various ways of gathering more information may be envisaged, such as contacting major services providers or trade or consumer associations, conducting qualitative interviews with one or two relevant services providers in a specific sector (e.g., legal services, computer services, consultancy, construction, etc.) or conducting interviews with employment agencies that have international services transactions with clients abroad. Compilers can also approach relevant ministries, in particular for sectors in which internationalization is known to be important (e.g., the ministries of industry, education or health), or approach compilers in other statistical domains to obtain further information on particular sectors and to adjust the allocation if needed (e.g., through microdata linking).
14.387. When making refinements to the initial allocation, compilers should also consider such other factors as the business structure of the compiling economy (e.g., the dominance of large enterprises or small and medium-sized enterprises/microenterprises), the type of service traded (some specific or technical services require the physical presence of the service provider), the geographical location of the compiling country and/or the distance to the trading partner (i.e., the less distant the partner, the more likely trade in modes 2 or 4 can occur), language barriers, the evolution of business strategies and tradability over time (e.g., technological advances).
Limitations to the simplified allocation
14.388. The compiler should always keep in mind that table V.2 of MSITS 2010 and the methods described above are simply theoretical guides for classifying resident/non-resident services transactions according to the most likely predominant modes of supply. In each specific economy, other modes than those indicated may be involved for some specific services categories, considering their nature. For example, in table V.2, personal, cultural and recreational services are shown as deemed to be provided or consumed through modes 1 (cross-border) or 4 (temporary presence of service provider, either himself/herself, if self-employed, or his/her employee). However, in the case of countries that are important destinations for the shooting of films, mode 2 (presence of consumer abroad to consume services) may also need to be considered. In other words, such assumptions may need to be reviewed to identify how well they respond to national needs. It would also be useful to conduct some analysis of contracts for specific groups of persons to better understand how they operate in the context of trade in services.
14.389. There are also other shortcomings to be considered when following the procedures outlined above. Compilers should ask themselves such questions as the following: How is the most significant mode allocated? Regarding enterprises that report their main economic activity, how should secondary economic activities be treated? Regarding manufacturing enterprises that also provide production services or services packages relating to high-value goods, how should such services be treated? Even if the proposed framework provides an approach for a first rough measurement of trade in services by mode of supply with a minimum use of resources, relevant qualitative background information and research are needed. Compilers need to consider such aspects when performing the conceptual allocation.
14.390. Compilers are encouraged to make use of their own information about modes of supply and other possible country-specific distributions among services beyond the general allocations. Allocations to the modes may be based on the knowledge compilers have about the provision of services from their close contact with respondents or on the basis of their knowledge of the business structure gained in the enterprise survey design process. More generally, such an exercise is encouraged for improving the knowledge of compilers with respect to the international supply of services.