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Using Business Functions to Measure International Trade and Economic Globalization
Peter Bøegh Nielsen, Statistics Denmark, and
Timothy J. Sturgeon, MIT Industrial Performance Center
Prepared for: International Conference on Trade and Economic Globalization
29 September – 1 October 2014, Aguascalientes, Mexico
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DGINS 2014, Riga
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DGINS 2014, Riga
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Introduction
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New definitions and tools are being developed to capture the features, dynamics and impacts GVCs • Macro: Trade in Value Added (TiVA) and other international input-
output datasets
• Micro: enterprise and establishment level statistics business function surveys and improvements to business registers and administrative data
The macro and micro can and should be connected. • Business function surveys should be designed in such a way that
they can feed into and help improve international input-output datasets such as TiVA
• International input-output datasets should aim to capture issues critical to GVC analysis: ownership, value capture, characteristics of business linkages
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The Concept of Business Functions
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A set of generic, easy-to-understand categories that describe the various activities carried out by enterprises, irrespective of their main economic activity • Core/Primary:
• Goods and services intended for the market • Have costs but also produce revenues for the
enterprise • Can be associated with the activity (industry) of
the enterprise • E.g., making footwear, producing software
products for the market
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The Concept of Business Functions
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• Support Business Functions: • Business support services not intended for the market • Only represent costs for the enterprise • Cannot be associated with the activity (industry) of the
enterprise • To be considered a support function, the function must
commonly be carried out by enterprises in-house • E.g., IT, R&D, or freight transport services for internal
use
• Excluded from support services (note: can be core function): • Services requiring large external scale such as
telecommunications and passenger transport • Infrastructure services such as waste water treatment • Cultural and recreational services
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Business Function Lists
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Business Function Lists
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Implementing Business Functions in International Sourcing Surveys
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Four Sourcing Options for Business Functions (from 2010 NOS)
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Implementing Business Functions in International Sourcing Surveys
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2010 NOS Business Function Sourcing Data Collection Grid
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Implementing Business Functions in International Sourcing Surveys
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Implementing Business Functions in International Sourcing Surveys – Some Results
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Frequency of Sourcing Practices* and Distribution of Sourcing Costs for U.S. Organizations
Source, Brown et al, 2013. Note: “International sourcing” combines sourcing to foreign affiliates and international sourcing to suppliers. This material is based upon work supported by the National Science Foundation under Grant No. 0926746
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Implementing Business Functions in International Sourcing Surveys – Some Results
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Source Location Shares of Danish Enterprises Sourcing Internationally, 2009-2011; Selected Functions and Destinations
Source: Statistics Denmark: Survey on International Organisation and Sourcing of Business Functions 2012
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Business Functions Can Be Used for Purposes Other Than Measuring International Sourcing
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Business function lists have already been used to collect information on: • Employment:
• Employment by business function (2010 NOS, EU GVC/IS Survey)
• Related to occupations but business functions contain multiple and overlapping occupations
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Business Functions Can Be Used for Purposes Other Than International Sourcing
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Business function lists have already been used to collect information on:
• Wages:
• 2010 NOS Survey collected distribution of domestic wages by business function
• Less than 40k per year • 40k-60k • 60k-90k • More than 90k
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Business Functions Can Be Used for Purposes Other Than International Sourcing
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Business function lists have already been used to collect information on:
Questions for the FOC group: Can business functions be useful as a parsimonious framework for:
• Collecting and reporting statistics on international trade?
• For recording services inputs in supply-use tables?
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Business Functions Can Be Used for Purposes Other Than International Sourcing
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Four Sourcing Options for Business Functions
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A Proposed List of Business Functions Tied to S-TOD and Existing Services Classifications
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