OECD World Forum onon Key Indicators OECD World Forum Key Indicators Statistics, Statistics,Knowledge Knowledgeand andPolicy Policy Palermo, 10-13 November 2004 Palermo, 10-13 November 2004 OECD World Forum “Statistics, Knowledge and Policy”, Palermo, 10-13 November 2004 1 Use of Economic Indicators in Business Decision-Making Emilio Rossi Managing Director European Consulting Global Insight OECD World Forum “Statistics, Knowledge and Policy”, Palermo, 10-13 November 2004 2 Globalisation Greater Need for Indicators Corporations use indicators in many aspects of their decision-making process Corporations’ use of data depends on many factors Long-term planning Market planning Company size Company’s sector Company’s end- markets Selection of foreign investments Budget Treasury, etc. OECD World Forum “Statistics, Knowledge and Policy”, Palermo, 10-13 November 2004 3 Features of Data and Indicators Indicators MUST be: accessible timely trustworthy easy to use easy to understand scientifically sound… …but companies need order of magnitude OECD World Forum “Statistics, Knowledge and Policy”, Palermo, 10-13 November 2004 4 Structure of Country Risk Analysis Overall Country Risk • Overall Index-Weighted Measurement • Application of Indicators Specific to Company Segments Investment Modules Country Risk Events • Economic: Domestic Demand, Currency, Inflation, Interest Rates, Taxes, etc. • Non-Economic: Political Stability, Education, Crime, etc. Global Background Risks • Economic: Growth, Oil Prices, Exchange Rates, etc. • Non-Economic: Wars, Terrorism, etc. OECD World Forum “Statistics, Knowledge and Policy”, Palermo, 10-13 November 2004 5 Risk and Reward Trade-off: Selected Countries A composite measure of risk facing companies selling to consumer markets High risk markets offering poor growth Risk vs. Reward comfort level? 70 Iran Consumer Market Risk (1=least risky) 60 Turkey Saudi Arabia Russia South Africa 50 Indonesia S. Korea 40 Thailand Germany 30 Lower risk, high opportunity markets Japan Chile India UK USA 20 10 0% 5% 10% 15% 20% 25% Forecast Growth in Nominal Spending - Product XYZ OECD World Forum “Statistics, Knowledge and Policy”, Palermo, 10-13 November 2004 6 B2B & Consumer Goods Industries Use Different Indicators Macroeconomic Analysis Analysis of Business Activity End-User Segmentation Household Demographics Consumer Segmentation B2B & Consumer Market Demand Database integration, statistical analysis, and econometric modelling help to capture the complex relationships between market characteristics and market size. OECD World Forum “Statistics, Knowledge and Policy”, Palermo, 10-13 November 2004 7 DuPont Market Index (DMI) A Step Beyond GDP Sale Shares of Product XYZ by Segment AR BZ CA CH EE FR GE HK ID IN IT JA KO Etc. Vehicles Chems.l Textiles Life Scic Paper Etc…… Total .15 .15 .1 .1 .15 .15 .15 .1 .1 .2 .15 .15 .2 .2 .11 .11 .05 .25 .09 .09 .09 .25 .15 .2 .09 .1 .25 .2 .26 .26 .21 .1 .23 .23 .23 .1 .15 .1 .23 .12 .05 .1 .02 .02 .05 .3 .09 .09 .09 .3 .25 .25 .09 .25 .28 .25 .03 .03 .05 .05 .16 .16 .16 .05 .05 .05 .16 .05 .02 .05 .15 .15 .05 .05 .1 .1 .1 .05 .1 .05 .1 .1 .05 .05 1 1 1 1 1 1 1 1 1 1 1 1 1 1 Note: Numbers for illustrative purposes only OECD World Forum “Statistics, Knowledge and Policy”, Palermo, 10-13 November 2004 DMI ties Indicators of endmarkets with the share of sales by segment DMI allows to articulate alternative scenarios The reliability of DMI depends on how granular the end-market breakdown can be 8 Corporations Hunting for Data & Indicators Corporations often have to rely on Industry Associations or Private Data Providers Own Sector Use own Data - Level of detail unrealistic target for Statistical Institutes End-market Sectors the more granular the better Industry Association Data only for members, use different classifications Private Data Providers affordable only for large companies Main Issues: Non-OECD Countries Geographical Disaggregation (Regional, City, etc.) Service Sectors Breakdown Specific Sectors (Construction, Packaging, Finance, Tourism, etc.) OECD World Forum “Statistics, Knowledge and Policy”, Palermo, 10-13 November 2004 9 How to Make Business Count ? Private-Public Partnership ? Should Statistical Institutes gather new data for new Indicators ? Deeper Sector / Geographical Breakdown Leading indicators Company information Financial market data, etc. Technology may give access to as yet untapped databases – private and public Chambers of Commerce Tax Files Stock Exchanges Industry Associations, etc. OECD World Forum “Statistics, Knowledge and Policy”, Palermo, 10-13 November 2004 10