5331.0 - Balance of Payments and International Investment Position, Australia, Concepts, Sources and Methods, 1998  
Previous ISSUE Released at 11:30 AM (CANBERRA TIME) 22/09/1998   
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Globalisation statistics

18.10 Globalisation refers to the phenomena that more and more businesses conduct their activities on an international rather than on a local, or even national level; that world markets are becoming increasingly integrated, and increasingly transcend national borders in their production, sales of goods and services and international financial activities; and that rapid changes in communication, computer and transport technology facilitate these global changes.

18.11 Existing statistics can provide some insights into the globalisation phenomena. For example, ABS international trade, balance of payments, and international investment statistics provide extensive data on transactions between Australian residents and the rest of the world. The concept of direct investment highlights the importance of global businesses in a balance of payments and international investment position context. International investment position statistics also provide measures of foreign ownership of Australian businesses and Australian ownership of businesses abroad, as well as information on the stock of other foreign assets and liabilities, such as foreign debt. The ABS has regular collections of agriculture, mining, manufacturing and service industries supplemented by the economy wide surveys. Data from these collections greatly assist the understanding of economic activity and therefore global phenomena. Some of these collections have also, in recent times, included some broad questions on foreign ownership. However, statistics produced from these surveys are generally not classified in terms of foreign and Australian owned businesses.

18.12 Therefore, while a broad range of Australian economic statistics sheds some light on the globalisation phenomena, economists argue that existing statistics do not go far enough. There is an emerging requirement for economic statistics on global businesses and their impact on Australia.

18.13 A few countries have, so far, developed statistics on globalisation. The US Bureau of Economic Analysis collects extensive data on foreign-owned businesses in the United States and on United States-owned businesses abroad. The Bureau of Economic Analysis also provides some data on the sales of goods and services by foreign owned businesses, and their imports and exports of goods and services. Statistics Canada collects data on the operations of foreign controlled businesses in Canada, while the Ministry of International Trade and Industry in Japan collects data on Japanese owned businesses abroad. Each country adopts a somewhat different approach, although common elements are evident. As well, the United Nations Commission on Trade and Development compiles global data on trans-national corporations.

18.14 Australia has collected these types of data in the past. From the 1960s to the 1980s, the ABS conducted a number of foreign participation studies measuring foreign ownership and control of Australian economic activity. Recent studies have been conducted by bodies including the Committee for the Economic Development of Australia, the Business Council of Australia, the former Industry Commission, the Australian Manufacturing Council, the Department of Foreign Affairs and Trade, and Austrade, into specific aspects of globalisation, and there has been a parliamentary inquiry into Australia’s services exports.

18.15 In recent years a number of international statistical initiatives have encouraged national statisticians to provide data on globalisation. These include BPM5, which acknowledges that data on the activities of direct investment enterprises (such as their total assets and liabilities, employment, value added, etc.) would be useful; SNA93, which suggests that national accounts could usefully be sectored, inter alia, to show foreign controlled companies separately; and the OECD Statistics Working Group of the Industry Committee, which is considering the development of a manual on globalisation indicators.

18.16 The ABS is canvassing user views on the need for and priority of globalisation statistics. To provide a focus, the ABS released a discussion paper Options for Australian Globalisation Statistics in September 1997, with the aim of raising issues for discussion and assessment. Two broad globalisation initiatives are considered in the paper. The first is to identify the foreign ownership characteristics of Australian businesses by conducting a survey of shareholdings, with the results linked to the ABS business register; as a consequence it would be a relatively simple task to classify businesses in business register based surveys, and the resulting economic statistics, as either foreign, joint or Australian owned. For collections not based on the business register, an additional matching step is required to link the collection and the business register. For example, to measure foreign ownership characteristics of businesses in international trade statistics or financial surveys would require additional matching. The second initiative is to institute a survey of Australian owned businesses abroad and collect data on their business accounts, economic activity, financial activity and the trade with their foreign affiliates. These initiatives may not meet all requirements for globalisation statistics, but would fill in some important gaps.

18.17 An obstacle to the development of globalisation statistics is that there is no consensus among official statisticians about the nature and measurement of these statistics. As mentioned above, few countries have comprehensive data collections in place, and each has developed somewhat different measurement and collection practices. International statistical standards and recommendations can best be described as embryonic.

18.18 Although the ABS has prepared preliminary estimates of the costs of implementing these proposed initiatives, they have not been included in its forward work program, and any implementation would depend on assessment of the relative importance of globalisation statistics to users, and resolution of funding issues. The earliest possible date for the collection of comprehensive data on foreign ownership of Australian businesses and on Australian owned businesses abroad would be after the turn of the millennium.

Internet commerce

18.19 Business has been conducted electronically over computer networks for around 20 years. The growth of the use of the internet in recent years has provided a new impetus, and it will change the nature of business, encouraging both large and small business to become involved in international trade through internet commerce.

18.20 An important statistical issue is whether existing ABS collections will be able to compile the required data if businesses conduct transactions over the internet. In theory, at least, it does not matter how the international transaction is conducted, i.e. over the internet, by phone, by fax or in person. The business survey forms that collect data for the balance of payments and international investment position require information on the types of transactions, rather than on how payments were made or services delivered. Therefore the ABS considers that, in the short term, internet commerce does not pose any great threat to the quality and accuracy of Australia’s economic and trade statistics. While a number of particular measurement issues have arisen for some series, these are not significantly different from other changes to market structures, in terms of the statistical responses required, and they will be addressed through the normal ABS work program.

18.21 If internet commerce were to increase substantially, existing compilation difficulties for the ABS in some areas may be exacerbated, and some methodologies may require adjustment. For example, internet commerce may make it easier for households to maintain overseas bank accounts and use these accounts in the settlement of transactions, both domestically and with non-residents. What is already a difficult area to measure in Australia’s international investment position may become both more significant and more difficult. Current investigations, into using partner country information in collecting and sharing statistical data on cross-border financial claims, have not yet identified any significant coverage deficiency in this area. The increased pace of global co-operation here may help to plug any developing gap in coverage sources.

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