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Issues and challenges for measuring intra-firm trade. Rainer Lanz and Sébastien Miroudot OECD Trade and Agriculture. Working Party on International Trade in Goods and Trade in Services Statistics 6 October 2010. Trade Committee reports on trade and activities of MNEs.

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issues and challenges for measuring intra firm trade

Issues and challenges for measuring intra-firm trade

Rainer Lanz and Sébastien Miroudot

OECD Trade and Agriculture

Working Party on International Trade in Goods and Trade in Services Statistics

6 October 2010

trade committee reports on trade and activities of mnes
Trade Committee reportson trade and activities of MNEs
  • Vertical trade, trade costs and FDI [TAD/TC/WP(2008)23/FINAL]
  • Trade in intermediate goods and services [TAD/TC/WP(2009)1/FINAL]
  • Intra-firm trade: a work in progress [TAD/TC/WP(2010)27]
  • Trade in tasks: a scoping paper [TAD/TC/WP(2010)]
data used to analyse intra firm trade
Data used to analyse intra-firm trade
  • Activities of Multinational Enterprises (AMNE) Statistics
    • OECD Activities of Foreign Affiliates (AFA) Database – 7 countries
  • Firm level data
    • ORBIS Dataset (Bureau Van Dijk) – 43 countries
  • Goods Trade Statistics from Customs Authorities
    • Related party database from the US Census Bureau
  • Services Trade Statistics from Balance of Payments
    • US cross-border trade
  • Do other countries collectintra-firm tradedata in theirgoodsorservicesstatistics?
amne statistics vs us goods trade statistics
AMNE statistics vs. US goodstradestatistics
  • Ownership thresholds
    • AMNE statistics: 50%
    • US goods trade statistics: 10% for exports and 6% for imports
  • Identification of the parent and affiliate firm
    • Inward AMNE: Trade of domestic affiliates (with foreign parents)
    • Outward AMNE: Trade of domestic parents (with foreign affiliates)
    • US goods trade statistics do not identify whether the US firm or the foreign firm is the parent
  • Industry versus product classification
  • Coverage: survey versus entire population
coverage of intra firm trade according to inward amne statistics in the oecd afa database
Coverage of intra-firm trade according to inward AMNE statistics in the OECD AFA database
  • Very few countries report data on intra-firm trade
  • Partner and industry coverage is limited
  • Trade in services is not covered
share of intra firm and affiliate exports in total exports for 7 oecd economies
Share of intra-firm and affiliate exports in total exportsfor 7 OECD economies

Notes: Data are for the year 2007 for the US, Japan, Italy and Poland; 2006 for Finland; 2002 for Sweden and the Netherlands; 1994 for Canada. Data for Poland refer to the manufacturing sector only.

Source: OECD AFA Database, Statistics Finland.

total us goods trade and share of intra firm trade bill usd 2002 2009
Total US goods trade and share of intra-firm trade(Bill. USD, 2002-2009)

Source: US Census Bureau, Related Party Database

share of intra firm exports in private services exports for the us
Share of intra-firm exports in private services exports for the US

Source: US Bureau of Economic Analysis

estimating intra firm trade using firm level data from the orbis dataset
Estimating intra-firm trade using firm level data from the ORBIS dataset?

Methodologyfollows Alfaro and Charlton (2009)

Idea: Intra-firm tradeoccurs in thecase of vertical FDI, i.e. theforeignaffiliateproduces an inputfortheparent

  • Identifyforeignaffiliatesandtheirparents in ORBIS
    • Parent company = global ultimateowner (>50% of equityalongtheownershipchain)
  • Categoriseparent-affiliatelinkagesas horizontal, verticalorcomplex FDI
    • Compare 6-digit NAICS industrycodes of parentandaffiliate
    • Useinput-linkagesfromdetailed US input-outputtabletodetermineverticalrelationship
  • Usesales of verticalaffiliatesasestimateforintra-firm tradebetweentheaffiliateandtheparent
intra firm trade why is it relevant
Intra-firm trade: why is it relevant?
  • Protectionism in the context of intra-firm trade: “Beggar Thy Neighbour is Beggar Thyself”
  • Impact on the political economy of trade policy: Optimal tariff lower when there is trade with domestically-owned affiliates
  • New issue in trade policy making: the buyer-supplier relationship
  • Impact on growth: additional productivity gains with the fragmentation of production and vertical specialisation
  • Impact on labour markets: relocation of production and shift in value-added
  • Impact on tax policy: transfer pricing
  • Macro-economic impact: role of MNEs in the transmission of macro-economic shocks
to conclude a question for discussion
Toconclude: a questionfordiscussion
  • Analysing intra-firm trade helps to understand operations of MNEs and is of great importance to policymakers
  • Only few data are available
  • What are the prospects for more data on intra-firm trade and where could these data come from?
    • AMNE statistics
    • Goods trade statistics (customs)
    • Balance of payments
    • Micro-data
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