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
1. Vertical trade, trade costs and FDI
[TAD/TC/WP(2008)23/FINAL]
2. Trade in intermediate goods and services
[TAD/TC/WP(2009)1/FINAL]
3. Intra-firm trade: a work in progress
[TAD/TC/WP(2010)27]
4. Trade in tasks: a scoping paper
[TAD/TC/WP(2010)]
OECD Trade & Agriculture
2
Data used to analyse intra-firm trade
•
Activities of Multinational Enterprises (AMNE) Statistics
–
•
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
–
•
OECD Activities of Foreign Affiliates (AFA) Database – 7 countries
US cross-border trade
Do other countries collect intra-firm trade data in their
goods or services statistics?
OECD Trade & Agriculture
3
AMNE statistics vs. US goods trade statistics
•
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
OECD Trade & Agriculture
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Coverage of intra-firm trade according to inward
AMNE statistics in the OECD AFA database
Years
Intra-firm exports
Intra-firm imports
Number of partners for aggr.
manufacturing
Number of disaggregated
goods industries (partners)
Number of services
industries
Canada
Italy
Japan
Netherlands Poland
Sweden
U.S.
1991-1994 2005-2007 1991-2007 1997-2002 2004-2007 1990-2002 1977-2007
yes
yes
yes
yes
yes
yes
yes
no
yes
yes
yes
yes
no
yes
10
World only
62
64
61
65
13
25 (-)
17 (-)
30 (9)
30 (12)
none
31 (10)
28 (13)
2
2
4
4
none
4
4
•
Very few countries report data on intra-firm trade
•
Partner and industry coverage is limited
•
Trade in services is not covered
OECD Trade & Agriculture
5
Share of intra-firm and affiliate exports in total exports
for 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.
OECD Trade & Agriculture
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Total US goods trade and share of intra-firm trade
(Bill. USD, 2002-2009)
2100
2100
1800
1800
1500
1500
1200
1200
900
47.3%
48.0%
47.2%
600
48.3%
48.4%
48.5%
900
47.2%
600
48.2%
300
300
0
0
32.0% 31.9%
2002
2003
2004
2005
intra-firm imports
2006
2007
2008
2009
2002
total imports
2003
30.4%
2004
29.2% 28.4%
29.6%
31.0% 30.6%
2005
intra-firm exports
2006
2007
2008
2009
total exports
Source: US Census Bureau, Related Party Database
OECD Trade & Agriculture
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Share of intra-firm exports in private services
exports for the US
Source: US Bureau of Economic Analysis
OECD Trade & Agriculture
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Estimating intra-firm trade using firm level data from the
ORBIS dataset?
Methodology follows Alfaro and Charlton (2009)
Idea: Intra-firm trade occurs in the case of vertical FDI, i.e. the foreign
affiliate produces an input for the parent
1. Identify foreign affiliates and their parents in ORBIS
–
Parent company = global ultimate owner (>50% of equity along the
ownership chain)
2. Categorise parent-affiliate linkages as horizontal, vertical or complex
FDI
–
Compare 6-digit NAICS industry codes of parent and affiliate
–
Use input-linkages from detailed US input-output table to determine vertical
relationship
3. Use sales of vertical affiliates as estimate for intra-firm trade between
the affiliate and the parent
OECD Trade & Agriculture
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Motivation for FDI (and expected intra-firm trade)
Type of FDI
Identification in the dataset
Intra-firm trade
Horizontal
The foreign-owned subsidiary and the
parent company share at least one
identical 6-digit NAICS code.
No
Vertical
The foreign-owned subsidiary has at least
one 6-digit NAICS code which is an input
for the industry of the parent company
(according to the input-output matrix).
Additionally, there is no domestic ultimate
owner with a vertical link.
Yes
(exports from the
subsidiary to the parent
company)
Complex
There is both a horizontal and a vertical
link (at least one identical 6-digit NAICS
code and one that corresponds to an
upstream industry).
Partly, but cannot be
measured (ignored)
Neither
None of the previous connections.
No
OECD Trade & Agriculture
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Evidence from firm-level data (ORBIS)
‘Rough’ estimates
Number of
subsidiaries
Percent
Goods
Horizontal
5 602
13,7%
Vertical
7 338
17,9%
Complex
1 769
4,3%
Neither/not identified
26 296
64,1%
Total
41 005
100,0%
8 815
9,3%
18 350
19,4%
2 428
2,6%
Neither/not identified
65 081
68,7%
Total
94 674
100,0%
Services
Horizontal
Vertical
Complex
Australia
Austria
Belgium
Canada
Chile
Czech Republic
Denmark
Finland
France
Germany
Greece
Hungary
Iceland
Ireland
Italy
Japan
Korea
Mexico
Netherlands
New Zealand
Norway
Poland
Portugal
Spain
Sweden
Switzerland
Turkey
United Kingdom
United States
Total OECD members
OECD Trade & Agriculture
Intra-firm (Mil.USD)
Low
High
4 397
51 011
5 846
4 472
42
516
9 396
4 785
47 094
92 673
167
89
810
3 830
9 816
371
916
249
17 659
7 736
529
2 645
50 786
20 099
43 127
49
64 082
166 425
690 975
9 187
59 850
7 719
10 359
502
518
11 648
15 460
85 099
131 129
514
89
956
18 273
25 951
514
2 505
2 177
38 485
1 702
9 751
530
4 743
52 097
26 846
57 554
74
199 509
408 570
1 267 819
% of total trade
Low
High
3%
38%
2%
1%
0%
1%
11%
7%
9%
10%
0%
0%
14%
5%
2%
0%
0%
0%
5%
0%
12%
0%
4%
15%
16%
30%
0%
11%
9%
8%
7%
45%
2%
3%
1%
1%
14%
22%
16%
14%
1%
0%
16%
24%
6%
0%
1%
1%
12%
6%
15%
0%
7%
16%
21%
41%
0%
33%
21%
15%
11
Comparison with US BEA data
Country of the
affiliate
OECD members
Australia
Austria
Belgium
Canada
Chile
Czech Republic
Denmark
Finland
France
Germany
Greece
Hungary
Ireland
Italy
Japan
Korea
Luxembourg
Mexico
Netherlands
New Zealand
Norway
Poland
Goods shipped by
affiliates to US
parents (BEA)
(Mill. USD)
2,198
242
2,295
78,702
329
219
207
345
4,723
5,272
2
Not disclosed
18,497
1,777
1,402
2,225
Not disclosed
38,173
3,997
59
434
220
Estimates from
ORBIS
Low
1,845
78
3,939
7,860
1,677
1,290
2,646
172
6,869
19,650
471
36
287
7,429
85
1,271
4,150
48,508
87
75
2,756
High
3,235
78
36,395
45,414
1,682
1,818
3,044
172
32,833
32,545
802
65
11,312
13,496
298
2,927
21,327
64,289
116
304
5,050
Country of the
affiliate
Goods shipped by
affiliates to US
parents (BEA)
(Mill. USD)
Estimates from
ORBIS
Low
High
Portugal
Slovak Republic
Slovenia
Spain
Sweden
Switzerland
Turkey
United Kingdom
97
Not disclosed
Not disclosed
658
4,434
3,811
76
12,094
1,493
100
9
15,711
1,667
1,940
20,088
1,558
596
9
19,776
1,938
2,950
40,863
Other major economies
Argentina
Brazil
China
Estonia
India
Indonesia
Israel
Russian Federation
South Africa
653
2,027
4,605
Not disclosed
415
192
Not disclosed
1
362
641
9,232
1,383
5
151
142
1
1,311
12,818
3,260
5
496
1,602
65
237,583
168,733
407,602
Total
OECD Trade & Agriculture
12
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
OECD Trade & Agriculture
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To conclude: a question for discussion
•
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
OECD Trade & Agriculture
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