Groups and Globalization
Dominique FRANCOZ
INSEE, DSE
18 septembre 2007
Foreword
› - Definition of the « group » used in French statistics
– Set of companies controlled directly or indirectly by the
same legal unit, that is not under the control of another
one
– Control : to hold more than 50% of the voting rights
– Corresponds to the MNE or the “enterprise group”
Page 2
Dominique FRANCOZ
Groups and Globalization
18 septembre 2007
The CNIS working party on « Structural business
statistics based on groups and their sub-groups »
› Why this working party :
– Gap observed between organizational structure of
economic actors and structures on which SBS are
based
‐ Groups : major role in the economy
‐ Legal Units : easy use for statistics
– a weakened ability to satisfy needs in terms of
economic information
Page 3
Dominique FRANCOZ
Groups and Globalization
18 septembre 2007
The CNIS working party on « Structural business
statistics based on groups and their sub-groups »
› How does this party works :
– Organized under the CNIS jurisdiction
‐Forum of producers and users of public statistics
‐Gives advices and recommendations
› The sub-group on globalization and its works :
– Problematic
– The state of art in terms of statistics on globalization
– The needs of statistics on globalization
– Auditions :
‐Statistics users (academics)
‐Financial analysts
‐MNE representatives
Page 4
Dominique FRANCOZ
Groups and Globalization
18 septembre 2007
The market economy in a globalized world
› International exchanges of good and services have
grown up
Evolution of imports and exports of goods and services between 1978
and 2006
140
Billions of Euros
120
exportations
importations
100
80
60
40
20
0
1978
Page 51980
1982
1984
1986
Dominique FRANCOZ
1998
1990
1992
1994
1996
1998
Groups and Globalization
2000
2002
2004
2006
18 septembre 2007
The market economy in a globalized and
moving world
› International exchanges of good and services have
grown up
– The MNE activity took part to this growth : 88% of
imports and 91% of exports (data douanes - 2004)
– Intra-group relationships : 36% of imports et 41% of
exportations (enquête sur les échanges internationaux intragroupes – 1999)
Page 6
Dominique FRANCOZ
Groups and Globalization
18 septembre 2007
World economy under French control vs.
Economy in France under foreign control
France
Indep.
RdM
6,3
2,1
groups
100% Fr
4,2
2,0
3,6
Foreign
control
Page 7
Millions of employees
Dominique FRANCOZ
Groups and Globalization
18 septembre 2007
The market economy in a globalized and
moving world
› MNEs’ Strategies to develop their activities at the
global level
– MNEs are worldwide organized
‐ Economic organization vs. financial organization
‐ MNEs are organized by functions
– Production, R&D and innovation, logistic, accounting,
advertisement…
– “support functions” used by all the MNE’s affiliates
‐ Close links between mother companies and their affiliates abroad
– Worldwide organization of production
‐ Defines the MNE’s strategy : choice between export and produce
abroad (offshore outsourcing)
Page 8
Dominique FRANCOZ
Groups and Globalization
18 septembre 2007
The question of actors’ nationality
› The nationality is still meaningful
– For MNEs, for analysts
– Criteria to define « nationality »
‐ According to Eurostat definition : « country of the main decisioncenter »
‐ Country where the most part of the value is produced
‐ Country where the « board » meets
‐ Country of which « board » members are citizens
› In a few cases, it is difficult to define nationality
– MNEs that claim a double nationality (Shell, …)
Page 9
Dominique FRANCOZ
Groups and Globalization
18 septembre 2007
Statistical needs in terms of globalization
› Deeper need to take into account the global dimension
– In some cases, an analysis limited at the country level is
not any more relevant
‐ Micro economic analysis – ex. BERD/turnover
– Information needs on French MNEs’ global activity
› But, there are still information needs at the national
level
– All problematics linked with public policies
– National accounts
Page 10
Dominique FRANCOZ
Groups and Globalization
18 septembre 2007
Statistical needs in terms of globalization
› Needs linked with the European FATS regulation
« Regular and good quality Community statistics on
the structure and activity of foreign affiliates in the
whole economy are essential for an adequate
assessment of the impact of foreign-controlled
enterprises on the European Union economy.
This would also facilitate the monitoring of the
effectiveness of the internal market and the gradual
integration of the economies in the context of
globalisation. In this context, multinational enterprises
are playing a leading role, but small and mediumsized enterprises can also be concerned by foreign
control »
Page 11
Dominique FRANCOZ
Groups and Globalization
18 septembre 2007
Statistical needs in terms of globalization
› FATS regulation : variables of interest
‐For Inward Fats : number of enterprises, turnover,
production, value added, purchases of goods and services,
gross investment in tangible goods, number of employees,
personnel costs, total intramural R&D expenditure, R&D
personnel
‐For Outward Fats : number of enterprises, turnover, number
of employees
‐Pilot studies for Inward FATS : Imports-Exports incl. intra
group
‐Pilot studies for Outward FATS : production, value added,
purchases of goods and services, gross investment in
tangible goods,personnel costs, total intramural R&D
expenditure, R&D personnel, Imports-Exports incl. intra
group
Page 12
Dominique FRANCOZ
Groups and Globalization
18 septembre 2007
Statistical needs in terms of globalization
› The available statistics :
– Lifi (Financial Links) database : survey improved with
external sources on links (DGTPE, Banque de France) et
with economic information
‐ Appropriate to answer the FATS regulation (Inward)
‐ Not sufficient to answer all questions on globalization
– The database on consolidated accounts : 2600 accounts of
French MNEs with information on the global activity
Page 13
Dominique FRANCOZ
Groups and Globalization
18 septembre 2007
Statistical needs in terms of globalization
› What can be improved
– Outward FATS statistics
– The follow up of global activity of French MNEs
‐Improve the knowledge of French MNEs’ affiliates abroad
‐ Measure of the intra-group flows
Page 14
Dominique FRANCOZ
Groups and Globalization
18 septembre 2007
The recommendations of the WP linked with
globalization
› Preamble 4 : the multinational dimension of MNEs, is
dominant toward its territorial dimensions.
› Preamble 5 : The WP considers it is necessary to
follow, within each MNE, its restriction to the French
territory (truncated MNE)
Page 15
Dominique FRANCOZ
Groups and Globalization
18 septembre 2007
The recommendations of the WP linked with
globalization
› Recommendation 4
› The WP recommends to settle down a perennial and regular
information system, that follows the activity of French MNEs
abroad. This system should allow to fulfill the European
obligations linked with the Fats regulation.
› Recommendation 5
› The WP notices that the intra-group flows play a significant
role in international trade ; The WP recommends to settle
down a regular publication on intra-group imports and
exports.
Page 16
Dominique FRANCOZ
Groups and Globalization
18 septembre 2007
Thank you for your attention
Dominique.francoz@insee.fr
Page 17
Dominique FRANCOZ
Groups and Globalization
18 septembre 2007