Accounting for heterogeneity:Possibilities of using TEC to extend

supply & use tables 

Fabienne FortanierHead of Trade StatisticsOECD

Accounting for heterogeneity

• Key assumption in TiVA: homogeneous industries– all firms allocated to a particular industry have the same ‘

production’ function– That for a given product, imports by industries (firms) are

sourced from the same mix of countries

• Key challenge: taking the GVC beyond the industry level: accounting for firm heterogeneity– Not all firms in each industry are equally (or similarly) involved

in GVCs – Extent of GVC involvement is correlated with virtually all

dimensions of GVC impact, including value added, productivity, technology, size, growth, survival rate

3

Accounting for heterogeneity

• To what extent can we capitalize on existing statistics, including TEC, STEC, FATS, “TEC+”, to • a) improve our estimates (of e.g. the import content of

exports) and

• b) develop new, ‘richer’ indicators on GVCs (how, where, who)

• These statistics are policy relevant in their own right and for integration within TiVA framework

4

This presentation

• Highlights the importance of heterogeneity (using TEC)

• Explains more about TEC & how the data are compiled

• Lists the ‘ideal’ additional data needs for breaking down SUTs by enterprise characteristics– Requires combination of TEC and additional business

statistics (including SBS and FATS)

• Illustrates its possible uses in breaking down supply and use tables and challenges to overcome

• Gives an overview of current steps taken by the OECD to further this research agenda

Trade is concentrated among a few enterprises

LU

X

HU

N

FIN

NZ

L*

SV

K

ES

T

SW

E

DN

K

CA

N*

GR

C

SV

N

GB

R

AU

T

PR

T

FR

A

DE

U

NL

D

CZ

E

ES

P

PO

L

TU

R*

US

A*

ITA0%

10

0%

Top 5 Top 10 Top 20 Top 50 Top 100

(% of total* export accounted for by top # enterprises)

* For EU countries, data refer to extra-EU exports instead of total

6

Exporting firms are responsible for the majority of imports (1)

Irelan

d

Bulga

ria

Roman

ia

Finla

nd

Portug

al

Hun

gary

Latv

ia

Greec

e

Luxe

mbo

urg

Denm

ark

Austria

Slov

akia

Eston

iaIta

ly

Slov

enia

Franc

e

Pola

nd

Swed

en

Net

herla

nds

Belgi

um

Lith

uani

a

Uni

ted

Kingd

om

Germ

any

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Exporting firms' weight in total imports

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Exporting firms are responsible for the majority of imports (2)

Irela

nd

Bulga

ria

Roman

ia

Finla

nd

Portu

gal

Hunga

ry

Latvia

Greec

e

Luxem

bour

g

Denm

ark

Austria

Slova

kia

Eston

iaIta

ly

Slove

nia

Franc

e

Polan

d

Sweden

Nethe

rland

s

Belgi

um

Lithua

nia

Unite

d Kin

gdom

Germ

any

0

1000

2000

3000

4000

5000

6000

Value of imports per firm (exporters)Value of imports per firm (non exporters)

The value of imports per firm are on average 20 times greater for exporters than for non-exporters

Size matters (2)

Trade is concentrated among large firms(export value by firm size class in employees)

SW

E

DN

K

AU

T

ES

T

GB

R

TU

R*

FR

A

NL

D

ES

P

SV

N

SV

K

US

A*

GR

C

FIN

HU

N

PR

T

LU

X

CA

N*

DE

U

ITA

PO

L

CZ

E0%

10

0%

0-9 emp. 10-49 emp. 50-249 emp. 250+ emp. Confidential or unknown

Ownership matters (1)

Very few firms are foreign owned, but…(foreign owned firms and foreign affiliates, as % of all enterprises)

AU

T

CZ

E

FIN

FR

A

DE

U

HU

N

IRE

ITA

NL

D

NO

R

PR

T

SV

K

SV

N

ES

P

SW

E

GB

R

0%

1%

2%

3%

4%

foreign owned enterprises foreign affiliates abroad

Ownership matters (2)

foreign owned enterprises account for ~ 1/3 of turnover, 1/5 of employment and 1/4 of value added in OECD countries…(% of turnover, employment and value added by foreign owned

enterprises)

AU

T

CZ

E

FIN

FR

A

DE

U

HU

N

IRE

ITA

NL

D

NO

R

PR

T

SV

K

SV

N

ES

P

SW

E

GB

R

0%

20%

40%

60%

Turnover Number of employees Value added at factor cost

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Ownership matters (3)

…and for at least 1/3 of international trade

Austria

Czech

Rep

ublic

Eston

ia

Finla

nd

Franc

e

Germ

any

Hun

gary

Italy

Luxe

mbo

urg

Pola

nd

Portug

al

Slov

ak R

epub

lic

Swed

en

Uni

ted

Kingd

om

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Foreign controlled as % of firms % exports% imports

12

Trade by Enterprise Characteristics (TEC)

• All these presented examples are based on TEC data (OECD/Eurostat):– Trade by Size Classes & Economic Activity– Trade by Economic Activity & Top Enterprises– Trade by Economic Activity & Partner Zones – Trade by Economic Activity & Number of Partner

Countries– Trade by Economic Activity & Commodity Group– Trade by Type of Ownership & Economic Activity

• Domestically controlled enterprises (with or without own affiliates)

• Foreign controlled enterprises

TEC coverage and compilation

About the OECD-Eurostat TEC database:• Covers 33 countries (6 non-OECD) from 2005

onwards, up to 2 digit level of ISIC rev 3 & 4• Based on trade statistics linked to the

business register • Matching rates excellent to perfect• But some issues remain

– e.g. non-resident trade – overemphasis of wholesalers – Confidential data

Use Table

14

ExporterNon-

ExporterExporter

Non-Exporter

ExporterNon-

ExporterExporter

Non-Exporter

ExporterNon-ExporterExporter Non-ExporterExporterNon-ExporterExporterNon-ExporterTaxes on ProductsSubididies on Products

Total Domestic intermediate Consumption

Total importsTotal intermediate ConsumptionValue-Addedof which

Mixed Income

Compensation of Employees

Gross Operating Surplus

Other Taxes on Production

Other Subsidies on Production

Total Outputof which

own-account production of software

own-account prodduction of R&D

other own-account production

of which - non-

residents expenditure

Industry 1 Industry 2Foreign Domestic Foreign Domestic HHFC GGFC GFCF

Changes in

Inventories

Vauables Exports of which re-exports

Industry 1

Industry 2

Foreign

Domestic

Foreign

Domestic

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Accounting for heterogeneity in SUTs

A strongly simplified example (1 industry)

Homogeneous(now)

Heterogeneous(future)

All Industry ‘Domestic’ ‘Trader’

Imports 25 0 25

Domestic purchases 30 15 15

Value added 45 15 30

Total output 100 30 70

Export 60 0 60

Domestic sales 40 30 10

Import content of export:

25%(25 / 100)

36% (25 / 70)

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Information needs

For a breakdown between exporting / non exporting firms:• Geographical breakdown (e.g. main trading partners,

regions) of imports and exports (by exporting / non-exporting firms)

• Purchases, output, value added (employment if possible), by industry, broken down by exporting vs non-exporting firm

• link TEC with SBSFor a breakdown with (also) foreign ownership:• (Same as above) + exports by ownership, industry and

foreign ownership• link TEC with FATS

17

Feasibility of ‘macro-linking’

• Use the information from the three different data sources at the ISIC 2-digit industry level

• Illustrates (again) the importance and relevance of accounting for heterogeneity

• BUT: highlights also some problems that can only be solved at micro level

Examples of ‘Macro-linking’ (1)

18

Foreign-controlled enterprises are more export intensive

Export to turnover ratios, total economy (2011)

Austr

ia

Germ

any

Eston

ia

Finla

nd

Franc

e

Uni

ted

Kingd

om Ital

y

Luxem

bour

g

Polan

d

Portu

gal

Slova

k Rep

ublic

Swed

en0

10

20

30

40

50

60

70

Domestic Foreign

19

Value added over turnover ratio tends to be higher for domestic firms

Value added/Turnover by firm ownership, total economy (2011)

AUT

CZEDEU

ESPEST

FINFRA

GBRH

UN

IRL

ITA

LUX

NLD

NOR

POL

PRTSVK

SVNSW

E0%

5%

10%

15%

20%

25%

30%

35%

foreign controlled domestic

Examples of ‘macro-linking’ (2)

Challenges (1): wholesale is treated very differently across data sources

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mot

or veh

icle

s

other

tra

nspor

t

elec

tric

ity

wat

er, s

ew.

const

ruct

ion

sale

mot

or

whol

esal

e

reta

il

tran

sp &

sto

rage

info

rmat

ion &

com

m.

0%10%20%30%40%50%

% S/U table proportional allocationintermediate in TEC

Correlation S/U and proportional allocation: 0.8Correlation S/U and TEC intermediate imports: 0.55

Imported intermediates / total intermediates: comparing SU table, proportional allocation and TEC data (Italy 2010 )

21

Challenges (2): Populations are inconsistent across data sources

AU

T

BE

L

BG

R

DE

U

ES

T

FIN

FR

A

GB

R

HU

N

IRL

ITA

LT

U

LU

X

LV

A

PO

L

PR

T

RO

U

SV

K

SV

N

SW

E

US

A

0

2

4

6

8

10

12

14

16

0_9 employees 10_49 50_249 250

Number of 2 digit industries where the number of exporters in TEC is larger than the number of enterprises

in SBS, by size, 2011

22

Challenges (3): Variable values are inconsistent across data sources

AUT

BELBGR

DEUEST

FRAGBR

HUN

IRL

LTU

LVA

POL

ROU

SVK

SVN

012345678

0_9 employees 10_4950_249 250

Number of industries for which exports (from TEC) are larger than turnover (SBS) (by firm size, 2011)

23

Challenge (4): Inconsistencies between TEC and FATS

Differences in the share of imports of foreign-controlled firms as measured in TEC and in FATS (Italy 2011)

Pharmaceutical products

05_09

10_12

13_15

16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 41_43

45_47

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

FATS TEC

Current activities at the OECD

• Increase country coverage in TEC data• Investigate methodological improvements

– Better explanation of matching rates (non-resident trade);– Better assignment of trade accounted for by retailers and

wholesalers to underlying economic activities;– Explore if confidentiality issues can be overcome by deciding on

(harmonized) aggregation of certain items;

• Include services (STEC)• Add to visibility: e.g. website on TEC : http://oe.cd/tec

with country notes (forthcoming)• Continue with feasibility studies re. heterogeneity in

SUTs (including work with individual countries who can provide data)

• Institutional: WPTGS; Expert Group on Extended SUTs

Thank you

Contact:

Fabienne Fortanier fabienne.fortanier@oecd.orgHead of Trade Statistics

TEC : http://oe.cd/tec

TiVA : http://oe.cd/tiva

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