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A.  Summary of good practices

15.2.         FATS describe the activities of foreign-owned or foreign-controlled enterprises in host economies. Those statistics relate to commercial presence in GATS (mode 3), but they are more broadly of interest in the context of globalization.[1]As described in MSITS 2010, FATS  focus particularly on variables related to the supply of services. The present Guide provides advice on compilation issues in relation to FATS and provides more details on items for which services measurement deserves more attention. Partial information on the presence of natural persons may also be obtained in the process of FATS compilation, if data on employment by foreign affiliates is collected and if the foreign employees (such as corporate transferees) can be separately identified.  For such purposes, FATS are of interest in their own right, but it will often only be possible to ascertain their full significance when they are viewed in conjunction with other information, such as comparable information on total investor-country or host-country economic activity and on services supplied through modes other than commercial presence.

15.3.        Consequently, the collection of data based on balance sheet information and activity measures, such as sales, employment, imports, exports or value added figures, provide a more complete picture of the international supply of services. While the production and use of services provided by foreign affiliates are part of the national accounts of the host country (including exports of such services to other countries), those measures do not appear in the national accounts of the investing country.

15.4.        Good practices  Given the complexity of the FATS compilation framework, the following step-by-step approach is advised:

(a) While setting up the FATS compilation programme, a thorough analysis of data needs for FATS must be conducted in the context of various possible options for the organization of data collection and the data compilation process. Given that inward FATS are generally easier to obtain than outward FATS, and that this information is directly connected to international negotiations, it is good practice for countries to concentrate first on the compilation of inward FATS;[2]

(b) A review of all available sources should be conducted (e.g., FDI statistics, enterprise surveys, registers and administrative sources). Procedures for the identification of the relevant population, either directly or through linking exercises, should be developed and tested. The identification of the ultimate controlling institutional unit (UCI) is particularly important for compiling FATS;

(c) A list of the most important variables for compilation must be established early on  the basis of the list of core (and eventually additional variables) identified in MSITS 2010. The present Guide suggests, as a starting point, to concentrate on sales/turnover or output (the latter being the preferred measure out of the two), employment and number of enterprises;

(d) The choice of the statistical unit must be made, although in many cases, it will be determined by the existing definitions used in other domains of national economic statistics (e.g., for business statistics, the unit will be defined by national accounts concepts);[3]

(e) Ideally, data should be compiled annually and, if possible, on a calendar year basis;

(f) The compilation of data broken down by economic activities is advised  for all activities, with sufficient detail to respond to the needs related to services negotiations (see International Standard Industrial Classification of All Economic Activities (ISIC), revision 4 Categories for Foreign Affiliates in services (ICFA rev.1) in MSITS 2010). For output or sales/turnover, the feasibility of disaggregation into total sales/output of goods and total sales/output of services for each activity should be investigated to respond better to  information needs relating to the measurement of the international supply of services;

(g) Given the complexity of the FATS framework and the often high level of detail in the collected information, compilers should pay particular attention to ensuring data confidentiality when cross-classifying information by activity/product and partner country; proper procedures for evaluating what data can be publicly disseminated should be developed and systematically applied.

 

Next: B. General Description



[1] See chapter 1.

[2] It is important to note that a country’s outward foreign affiliates statistics (FATS) should match conceptually its partner's inward FATS.

[3] Compilers should note that this may differ between inward and outwards FATS (see section D.1).