Page 277 - Special Topic Session (STS) - Volume 4

STS587 Hui W. et al.
(4) Defining trade in services
Differences in defining trade in services can result in large export/import
statistical discrepancies; Services are production activities that change the
condition of a good or a person or that facilitate the exchange of products or
financial assets; Trade in services occurs when its consumer or producer is a
non-resident; Four modes of trade in services: cross-border supply;
Consumption abroad; Commercial presence of foreign affiliates of MNEs;
Presence of natural persons.
(5) Measurement issues in measuring trade in services
Custom administrative data is the key data sources for compiling
export/import statistics; Services are delivered online, in particular business
services. Such transactions are harder to be captured; Development of
improved export and import price indexes is proceeding more slowly or no
progress at all.
(6) Measuring Multinational Enterprises (MNES)
Measuring activities of MNEs is the most serious challenge to GDP. MNEs
organise production on an international basis; Each country can only observe
parts of MNE operations; Statistics based on isolated parts can be misleading
Impact of internal transfer pricing. MNEs can lower their global tax burden by
a number of structural arrangements: affiliates overseas to act as income
recipients, holders of intellectual property rights; Transfer pricing can cause
value added to be misallocated if not true reflections of the market prices.
(7) How smartphones are treated in national accounts
Apple sends design and software to China. This transaction currently is
treated as an internal transfer within firm, with no separate transaction for
exports of design/software. The wholesale value is counted as import and in
final sales, resulting understated GDP. One option is to capture the export of
intellectual property to the foreign producer on its surveys of international
trade in services.
(8) Measuring international trade in intellectual property products
IPP categories: R&D, computer software & databases, artistic originals, and
other IPPs.
Alternative forms of IPP: Original IPP, licences to reproduce IPP, copies of
the original IPP.
International trade in IPP: No cross-border physical move; Recorded in
royalties and fees rather than in trade statistics.

4. Discussion and Conclusion
Measurement challenges posed by digital economy have become more
severe including Quality change, Increasing share of services, Intangibles, and
Globalization.

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