Page 158 - Invited Paper Session (IPS) - Volume 2

IPS195 Gabriel Quirós-Romero et al.
Additional statistics are also needed to better analyze global value chains
(GVCs), including the role of MNEs in these processes. Key to better
understanding this fragmentation of production is interpreting current trade
related statistics as gross exports when they often contain significant foreign
intermediate goods and services. Since GVCs are not evident in the gross trade
data, potentially distorting who really trades with whom, current measures of
bilateral trade balances may need supplemental measures for optimal policy
analysis requiring national statistics to offer additional data to shed light on
the partial globalization of their respective national economies. It is also
necessary to better identify the role of MNEs in current account transactions,
potentially identifying intra-MNE flows some of which utilize transfer pricing
to shift profits to minimize an MNEs global tax burden. Breaking down the
goods and services account by enterprise characteristics, such as industry,
nationality (foreign vs. domestic) and firm size would be highly useful for
analysis of globalization issues. However, is it feasible, and if so to which
degree of granularity?
Globalization: Issues for further consideration. While progress has been
made, further research is needed in certain areas. One such issue is addressing
the globalization issue through extensions of the current BPM6 framework. To
do this, the BPM6 framework could be extended to provide an alternative view
that complements the residency concept, i.e. territorial, on which the
fundamentals of BPM and SNA are based. Introducing a nationality concept,
i.e. ownership, would allow users to better understand the passage from GDP
to gross national income or the value of conventional international investment
position statistics. Further exploration on how to manage the duality of
residence/nationality within the international accounts’ framework would be
needed before such extensions could be produced.
However, some issues– in which further research is still needed– may need
to be addressed through changes in the core framework as advances in
technology and communication, dominance of MNEs, use of SPEs, increasing
free capital movements, as well as the distortion of GVCs themselves due to
profit-shifting are seriously testing some of the fundamentals of the system.
It can be argued whether SPEs should be considered as separate
institutional units from their parent. An intrinsic difficulty to record and treat
appropriately SPEs is when their creation is due to tax-arbitrage and profit-
shifting, as is often the case. Currently, the residence of an SPE is determined
according to the economic territory under whose legal jurisdiction the entity
is incorporated or registered. If the entity is legally located in an economy
different from its parent, then it is recognized as a separate institutional unit.
3
As discussed in Moulton and Van de Ven , there are two reasons why: (i) this

3 http://papers.nber.org/conf_papers/f100570.pdf
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