Application Of Manual Statistics

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List of acronyms

AMNE activities of multinational enterprises

BD4 Fourth edition of the OECD Benchmark Definition of Foreign

Direct Investment

BPM6 Sixth edition of the Balance of Payments and International

Investment Position Manual

CAPI computer assisted personal interviewing

CATI computer assisted telephone interviewing

CAWI computer assisted web interviewing

CIF cost, insurance, freight

CPC Central Product Classification

EBOPS Extended Balance of Payments Services Classi fication

Eurostat Statistical Office of the European Union

FATS foreign affiliates statistics (as used in thi s Manual)

FDI foreign direct investment

FDIR Framework for Direct Investment Relationships

FISIM financial intermediation services indirectly measured

FOB free on board

FTE full-time equivalent

GATS General Agreement on Trade in Services

GATT General Agreement on Tariffs and Trade

GDP gross domestic product

HS Harmonized Commodity Description and Coding Sy stem

ICFA ISIC, Rev.4 Categories for Foreign Affiliates in services

ICSE International Classification of Status in Empl oyment

(International Labour Organization)

ICT information and communication technology

IDC internet data collection

ILO International Labour Organization

IMF International Monetary Fund

IMTS International Merchandise Trade Statistics

IRTS International Recommendations for Tourism Sta tistics

ISCO International Standard Classification of Occu pations

(International Labour Organization)

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ISIC International Standard Industrial Classificat ion of All

Economic Activities

ITRS International Transactions Reporting Systems

MFN most-favoured-nation (treatment)

MNE multinational enterprise

NPISH non-profit institution serving households

NPO non-profit organization

OECD Organisation for Economic Co-operation and De velopment

RSIM recommendations on statistics of internationa l migration

SBR statistical business register

SNA System of National Accounts

SPEs special-purpose entities

TFSITS Task Force on Statistics of International T rade in Services

TRIPS Agreement on Trade-related Aspects of Intell ectual Property

Rights

TSA tourism satellite account

UCI ultimate controlling institutional unit (used in respect of

foreign affiliates)

UN United Nations

UNCTADUnited Nations Conference on Trade and Develo pment

W/120 Services Sectoral Classification List (see W orld Trade

Organization document MTN.GNS/W/120)

XBRL Extensible Business Reporting Language report ing

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TABLE OF CONTENTS

INTRODUCTION ....................................................................................................................................... 1

A. Background ....................................................................................................................... 2

B. Purposes and scope of the Guide ....................................................................................... 5

C. Organization of the Guide ................................................................................................. 6

PART I GENERAL FRAMEWORKS ..................................................................................................... 7

Chapter 1 Conceptual frameworks ................................................................................................. 7

A. Introduction ....................................................................................................................... 7

B. GATS, modes of supply and the statistical frameworks .................................................. 8

C. Statistics on resident/non-resident transactions in services ............................................. 10

D. Foreign Affiliates Statistics ............................................................................................. 13

E. Additional indicators for analysing the international supply of services ........................ 14

F. Integrated economic statistics ......................................................................................... 15

Chapter 2 Legal framework ........................................................................................................... 17

A. Summary of good practices ............................................................................................. 17

B. The importance of the legal framework .......................................................................... 17

C. Legal acts regulating institutional arrangements ............................................................. 19

D. Legal acts governing content and availability of data sources ........................................ 20

E. Legal acts protecting confidentiality ............................................................................... 21

F. Country experiences ........................................................................................................ 22

Chapter 3 Institutional arrangements ........................................................................................... 24

A. Summary of good practices ............................................................................................. 24

B. The purpose and types of institutional arrangements ..................................................... 24

C. Characteristics of effective institutional arrangements .................................................. 25

D. Country experiences ........................................................................................................ 27

PART II DATA COLLECTION ......................................................................................................... 30

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Chapter 4 Introduction and overview of data sources within the modes of services supply

framework ......................................................................................................................................... 30

A. Data sources and data collection: an overview ............................................................... 30

B. Sources for modes of supply data ................................................................................... 33

C. Comparing data sources .................................................................................................. 33�

Chapter 5 Statistical business registers and survey frames ........................................................ 35

A. Summary of good practices ............................................................................................. 35

B. Statistical Business Registers .......................................................................................... 36

C. A satellite register for trade in services and use of business registers to identify

potential mode 4 self-employed service suppliers ........................................................................... 42

D. Country experiences ........................................................................................................ 44

Chapter 6 Enterprise and Establishment Surveys ....................................................................... 47

A. Summary of good practices ............................................................................................. 47

B. General purpose and description of enterprise or establishment surveys ........................ 48

C. Enterprise and establishment surveys for trade in services statistics purposes...... ...... ...50

D. Foreign affiliate statistics and the international supply of services ................................. 65

Chapter 7 Surveys of persons and households, and population censuses .................................. 72

A. Introduction and summary of good practices .................................................................. 72

B. General Purpose and Description of Population Censuses and Persons and

Households Surveys.…………………………………………………………………… ....... …….74

C. Population census ............................................................................................................ 75

D. Household surveys .......................................................................................................... 76

E. Labour force surveys ....................................................................................................... 84

F. Border surveys ................................................................................................................ 87

G. Complementary surveys of persons ................................................................................ 94

Chapter 8 International Transaction Reporting Systems............................................................ 97

A. Summary of good practices ............................................................................................. 97

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B. General description and purpose of ITRS ....................................................................... 97

C. Using the ITRS for collecting data on international trade in services ............................ 98

D. Country experiences ...................................................................................................... 101

Chapter 9 Administrative Records .............................................................................................. 104

A. A summary of good practices ........................................................................................ 104

B. General purpose and description of administrative records .......................................... 105

C. Examples of administrative records .............................................................................. 107

D. Country experiences ..................................................................................................... 113

Chapter 10 Other Data Sources ..................................................................................................... 116

A. Summary of compilation guidance ............................................................................... 116

B. Other data soures and Big Data ..................................................................................... 116

C. External party sources ................................................................................................... 125

D. Linked microdata .......................................................................................................... 130�

Chapter 11 Comparing Data Sources ............................................................................................ 133

A. Summary of good practices ........................................................................................... 133

B. Comparison of data sources for resident/non-resident transactions ............................. 133

C. Good collection practices and comparison of data sources for FATS ......................... 142

D. Preferred collection practices and comparison of data sources for mode 2 and 4

numbers of persons ........................................................................................................................ 143

E. Country experiences ...................................................................................................... 146

PART III DATA COMPILATION ..................................................................................................... 150

Chapter 12 Introduction and overview of data compilation within the modes of services

supply statistical framework .............................................................................................................. 150

A. Data compilation within the modes of services supply statistical framework: issues

to consider………………………………………………………………………………… ....... ...150

B. Focusing on an integrated approach .............................................................................. 151

C. A phased implementation of the recommendations on data compilation ...................... 151

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D. Use of models and estimates ......................................................................................... 152�

Chapter 13 Integration of data from different sources ................................................................ 154

A. Summary of good practices ........................................................................................... 154

B. Integrated business survey programme: an overview .................................................. 155

C. Integration, consolidation, and merging of data ............................................................ 156

D. Country experience ....................................................................................................... 158

Chapter 14 Compilation of resident/non-resident trade in services statistics ............................ 160

A. Summary of good practices ........................................................................................... 160

B. Compilation of individual service categories ................................................................ 163

B.1. Goods-related services……………………………………………………… ...... ……163

B.2. Passenger transport and travel……………………………………………… ...... …...175

B.3. Construction…………………………………………………………………… ....... …184

B.4. Insurance, pension and financial services…………………………………… ....... …..189

B.5. Services related to intellectual property products…..……………………… ....... ……204

B.6. Education and Health services…………………..…………………………… ....... ……212

B.7. Government goods and services n.i.e.…………..……………………………… ....... …212

C. Allocation of resident/non-resident trade in services to modes of supply ..................... 215

D. Service transactions between related (affiliated) enterprises ........................................ 223

Chapter 15 Compilation of Foreign Affiliates Statistics and the international supply of

services ....................................................................................................................................... 226

A. Summary of good practices ........................................................................................... 226

B. General Description ...................................................................................................... 227

C. Selecting data sources ................................................................................................... 229

D. General compilation issues............................................................................................ 234

E. Compiling FATS Variables ........................................................................................... 238

F. Attribution of FATS variables....................................................................................... 247

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G. Regional aggregation .................................................................................................... 253

Chapter 16 Compilation of additional indicators on international supply of services ............ 255

A. Introduction ................................................................................................................... 255

B. Summary of good practices ........................................................................................... 256

C. Mode 2 and mode 4 movements and stays .................................................................... 257

D. Linking services trade data with the business register ................................................. 267

E. Other indicators of interest for the global analysis of service industries ...................... 268

Chapter 17 Estimation and modelling of missing data, forecasting or back-casting ................ 272

A. Summary of good practices ........................................................................................... 272

B. Imputation for filling data gaps and for data editing purposes ...................................... 273

C. Forecasting, back-casting, and revising time series ...................................................... 275

D. Allocating to individual EBOPS items and trading partners ......................................... 276

E. Model-based estimates .................................................................................................. 277

PART IV CROSS-CUTTING TOPICS ............................................................................................. 283

Chapter 18 Metadata ...................................................................................................................... 283

A. Summary of good practices ........................................................................................... 283

B. Metadata: basic concepts and definitions, the role of SDMX ....................................... 284

C. Indicative lists of metadata items .................................................................................. 286

D. Metadata standards of international and regional organizations ................................... 291

E. Country experiences ...................................................................................................... 295

Chapter 19 Quality management and quality reporting ............................................................. 297

A. Summary of good practices ........................................................................................... 297

B. Quality management: an overview of basic concepts .................................................. 298

C. Focusing on quality assurance ...................................................................................... .302

D. Quality measurement and reporting .............................................................................. 307

E. Country experiences ...................................................................................................... 312

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Chapter 20 Data and Metadata Dissemination ............................................................................ 315

A. Summary of good practices ........................................................................................... 315

B. Data and metadata dissemination: an introduction ........................................................ 316

C. Factors to consider in dissemination of data and metadata compiled within the

framework for describing the international supply of services ..................................................... 318

D. Presentation of statistics by mode of supply ................................................................. 327

E. Combined presentation of international merchandise and trade in services

statistics.. ....................................................................................................................................... 332

Chapter 21 Use of Information and Communication Technology ............................................. 334

A. Summary of good practices ........................................................................................... 334

B. Use of ICT at the data collection stage ......................................................................... 335

C. Use of ICT at data compilation and dissemination stages ............................................. 338 �

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Introduction

1. Rapid technological advances in the past few decades in transport, computing, and

telecommunications, including the development of the internet and electronic commerce, have

allowed enterprises to avail themselves of resources for production at more distant locations than ever

before and have enabled them to import or export services from ever wider markets. This trend

towards globalization, reinforced by liberalization policies and the removal of regulatory obstacles to

economic activities, has fuelled the steady growth of multinational enterprises, international

investment and trade in goods and services. Better communication and transport have also facilitated

the movement of people for the purposes of tourism, migration, employment and trade. The result has

been a growing economic interdependency among countries, be it through international trade, multi-

national enterprises, global value chains or the outsourcing of business functions. Particularly in the

field of trade in services, which are increasingly becoming the focus of trade liberalization

agreements, market access deregulation, and other policy initiatives, statisticians face a growing

challenge to produce statistics that measure these complex global transactions in a clear, accurate, and

timely manner.

2. The services sector accounts for the largest share of business activity, employment, and

economic growth in most economies, yet the role of services trade, particularly in designing policies

and negotiating regional agreements, continues to be poorly understood. A major reason for this

disconnect is the absence of abundant, high-quality data on trade in services that is comparable across

economies – making it difficult to measure the impact of services trade on the economy and provide

useful information for negotiators and policy makers incoming up with market access or policy tools

that could facilitate trade in services.

3. In this context the United Nations Statistical Commission adopted1 in 2010 at its 41st session

the Manual on Statistics of International Trade in Services 2010 (MSITS 2010) and endorsed the

implementation plan, while urging the Task Force on Statistics of International Trade in Services (TF-

SITS) to give high importance to the development of corresponding compilation guidance. To ensure

close coordination with the work of the International Monetary Fund (IMF) on the compilation

guidance for BPM6, the actual work on this Compilers Guide for MSITS 2010 started late in 2011

with the support of a UN Expert Group established for this purpose. The MSITS 2010 Compilers

Guide aims to help the compilers while staying consistent with the recommendations in MSITS 2010,

related statistical recommendations and the compilation guidance, which has been developed for the

Balance of Payment and International Investment Position Manual (BPM6).2

4. MSITS2010 Compilers Guide serves the purpose of harmonizing and improving the ways in

which statisticians at the national level collect, compile and disseminate statistics of international

trade in services. The aim is to increase the availability and quality of such statistics in order to fulfill

the urgent needs and demands for statistics reflecting modalities through which services may be

supplied by policy makers, researchers, market analysts and the public in general. While the

international standard in economic statistics of the 2008 System of National Accounts (SNA 2008)3

and the BPM6 are in the process of being implemented, this Compilers Guide is meant to provide the

statistical community with guidelines, best practices, case studies, and practical advice on the

compilation of data in compliance with the MSITS 2010 framework for compilation of statistics on

the international supply of services.

1 See Decision 41/104 of the 2010 Commission Report, E/CN.3/2010/34.

2 Balance of Payments and International Investment Position Compilation Guide. Available at:

http://www.imf.org/external/pubs/ft/bop/2007/bop6comp.htm.

3 System of National Accounts 2008, United Nations et al., 2009.

Box 1. Uses of terms statistics of international trade in services and statistics on the international

supply of services

The information needs described in the Manual on Statistics of International Trade in Services 2010 touch upon

a multi-purpose field of statistical work. As desc ribed in the box I.2 of the Manual, the conceptual framework

introduced in it covers a broad range of statistica l domains including (1) statistics on services tran sactions

between residents and non-residents (or resident/no n-resident trade in services statistics) broken down by

detailed service categories, partner countries and modes of supply, (2) foreign affiliates statistics (FATS)

covering supply of services through commercial presence broken down by type of services and partner countries

and related data on foreign affiliates (e.g., emplo yment, value added etc.) as well as (3) additional monetary and

non-monetary indicators for analysing the international supply of services. Therefore, the information needs

described in the MSITS2010 go beyond the concept of international services transactions or trade in se rvices as

covered in the balance of payments or in the rest of the world account of the SNA.

However, the exact terminology to refer to this complete set of statistical domains differs across var ious

statistical fora and users. In particular, compiler s should note that the term statistics of international trade in

services is an umbrella term which should be used in the br oad sense as outlined above. Indeed, these combined

components of the MSITS2010 are recognized by the UN Statistical Commission as a separate field of sta tistical

activity under this title. The broad use of the term initially referred to the fact that in the mid-90 s trade

agreements were increasingly covering services as w ell as goods. The most well-known and wide-reaching

agreement that triggered information needs as described in the MSITS2010 is the General Agreement on T rade

in Services (GATS).

The term statistics of international trade in services is often interpreted by users to refer only to statistics on

services transactions between residents and non-residents (i.e. as covered in the balance of payments goods and

services account). Therefore, the statistical frame work developed in MSITS2010 in order to compile

information on the modes of services supply uses the term statistics on the international supply of services to

make it more explicit that also components covered by the extended scope of international trade in services are

covered. For the purposes of this Guide, and in line with the MSITS2010 (in particular with the more

substantive chapters 3, 4 and 5), the term statistics of international trade in services (or trade in services

statistics) is used in more general contexts to describe the wide statistical domain, and the term statistics on the

international supply of services is used when explicit emphasis is placed on the inclusion of FATS and

additional monetary and non-monetary indicators for measuring the international supply of services.

A. Background

A.1. The GATS: an overview

5. In 1994 the Uruguay round of trade negotiations was completed by signing the Agreement

establishing the World Trade Organization (WTO). Annex 1B to the Agreement contains General

Agreement on Trade in Services known as the GATS4. The GATS established a set of rules and

disciplines governing the use by the WTO members of measures affecting trade in services. The trade

in services was defined in Article I of the GATS as “the supply of a service”. The same article

defined also four different ways in which a service can be supplied by a natural and juridical person

(service supplier) from the territory one of the WTO members to a service consumer in the territory of

another WTO member. Article XXVIII provided the elaboration of the meaning of the main of GATS

concepts for use in international negotiations5 on liberalizing trade in services and related analytical

work.

6. The term “service” is not defined in the Agreement. However, the scope of services with

which the GATS is concerned was clarified by the GATT Secretariat in the document

4 Available at http://www.wto.org/english/docs_e/legal_e/26-gats_01_e.htm.

5 The regional economic integration agreements take their inspiration from the GATS definitions. However,

some of these agreements may define the modes in a somewhat different way. The compilers should be awa re of

this while interpreting data on value of the services supplied under different modes in a regional con text.

MTN.GNS/W/120 entitled “Services Sectoral Classification List” (W/120). The list was based on the

consultations with the WTO Members and issued in 1991. W/120 identifies relevant sectors and

subsectors and enabled members to undertake specific commitments. It should be noted that the WTO

Members have tended to avoid any major changes in the list to ensure the stability and comparability

of commitments over time, even though related international statistical classifications have been

revised (see Chapter 1, Section B for details).

7. The GATS created a need in specific data leading eventually to establishing of a special

statistical domain – statistics of international trade in services. In view of a fundamental importance

of the GATS conceptual framework for these statistics its key elements are described in Chapter 1

(Section B) of this Guide.

A.2. GATS related data needs

8. The GATS negotiators and trade in services policy makers as well as business community,

research institutions and public at large need detailed and internationally comparable statistical

information on the supply of services by mode, type of service and trading partner. The policy makers

require such data to ensure an informed decision making process leading to specific commitments,

comparison of national commitments and a conduct of efficient negotiations as well as to assess the

extent of liberalisation reached in specific sectors/markets and to provide statistical background for

the settlement of disputes.

9. The availability of timely and comparable data reflecting the international supply of services

would greatly benefit business community as such data would significantly facilitate the evaluation of

the importance of each type of internationally traded service and understanding of how those services

are provided in the respective economies thus helping to realize the competitive advantages in a

globalized world. The research institutions and public at large are also interested in obtaining such

data to assess the role of services in economic and social developments both in their respective

countries and globally and to participate more effectively in the formulation of their countries’ trade

policies.

10. The conceptual and practical issues related to the compilation of data on value of

internationally supplied services occupy the most of the Guide. However, it is necessary to stress that

statistical needs related to the GATS go beyond the value of services as various non-monetary

indicators of modes of supply are critically important for assessing their economic and social impact.

Chapter 16 of the Guide is specifically focused on the conceptual and data compilation issues related

to the compilation of such indicators.

A.3. MSITS as a statistical response to the GATS related data needs

11. The GATS has highlighted that the scope of supply of services which is of a primary interest

to trade negotiators and trade policy makers is far broader than what statistics conventionally measure

(e.g., includes supply of services by commercial presence) thus making the statistical community

aware of an informational gap which had to be filled. Dealing with this issue was a serious challenge

as the GATS conceptual framework differs from statistical frameworks adopted internationally for

economic statistics. To meet this challenge successfully it was necessary to conceptualize the supply

of services by modes in a statistical context.

12. In response to this challenge the UN Interagency Task Force on Statistics of International

Trade in Services drafted Manual on Statistics of International Trade in Services (MSITS) and the

United Nations Statistical Commission (UNSC) adopted it at its thirty-second session in March 2001.

The Manual established the statistical framework based on which measurement of supply of services

was made possible. The Manual was revised by the Task Force less than a decade after its adoption to

take into account publication of the revised international statistical standards including BPM6, SNA

2008, CPC version 2, ISIC Rev.4, IMTS 2010, IRTS 2008 and others as well as the necessity of

further elaboration of the modes of supply measurement. The revised version of the Manual was

adopted by the UNSC in 2010 and provides a clearer, more detailed and more comprehensive

statistical framework, which once implemented, will result in data crucial for statistical and economic

analysis of international supply of services and evidence-based decision making.

13. The MSITS 2010 statistical framework was developed utilizing two main building blocks: (i)

BPM6 concepts and definitions describing transactions between residents and non-residents of

different economies and (ii) concepts and definitions developed in Foreign Affiliates Statistics

(FATS) on the basis of BPM6 and the OECD 4th edition of the Benchmark Definition of Foreign

Direct Investment. The use of these two building blocks was necessitated by the following

consideration. Interpreting supply of services between natural and juridical persons located in the

territories of different WTO members in terms of the services transactions between residents and non-

residents of different economies made possible not only estimation of value of supply of services by

all modes except for commercial presence, but also to provide details of such supply by service

categories and trading partners. However, since the BPM6 conceptual framework cannot cover supply

of services through commercial presence of service suppliers in the economy of service consumers a

new statistical framework for measuring the supply of services through that mode had to be

established. Such a framework was developed as part of foreign affiliates statistics. It should be

underlined that that framework, once implemented, will not only generate information needed for the

GATS related purposes, but also will result in statistics indispensable for a better understanding the

overall dynamics of the global economy and for assessing of the impact of globalization on

individual countries. Chapter 1 contains an overview of the main elements of these two components

of MSITS 2010 statistical framework as well as the main concepts underlying the compilation of

additional monetary and non-monetary indicators relevant for analyzing the international supply of

services. The rest of the Guide deals with various data collection, data compilation and data

dissemination issues.

14. While stressing the importance of the MSITS 2010 conceptual framework it should not be

overlooked that MSITS recommendations and guidelines on the compilation of statistics by modes of

supply are laid out only for statistical purposes. They do not imply any attempt to interpret the

GATS.6 In this connection MSITS 2010 recognizes that a comprehensive statistical treatment of

modes of supply that would fully mirror the GATS legal definition and other GATS articles is beyond

its scope7. The same limitation applies to the present Guide.

A.4. MSITS 2010 and the Compilers Guide for MSITS 2010

15. Although the original version of the Manual was released in 2002, the international statistical

community did not produce compilation guidance to accompany its recommendations. However, with

the adoption of the 2010 edition of the Manual the UNSC specifically requested that the Task Force

develop appropriate compilation guidance. This is the reason why UNSD, with the assistance of the

Task Force, established in December 2011 an Expert Group on compilation of trade in services

statistics (EG-CSITS) to assist in the preparation of the Compiler's Guide for MSITS 2010. The expert

group included all members of the interagency Task Force, as well as compilers from developing and

developed economies, and was convened by UNSD. The guide represents the result of the work of

both Task Force and the Expert Group.

16. EG-CSITS was established to ensure active country involvement in the development of the

Compilers Guide. In March 2012, the first meeting of EG-CSITS was held through virtual discussion.

The main objective of the meeting was to review the annotated outlines of all chapters of the

6 MSITS 2010, paragraph 5.32.

7 Ibid., paragraph 5.27.

compilers guide and to define the scope of the Guide and the content of each of the chapters. A

revised annotated outline was thereafter circulated for worldwide consultation in July 2012 and first

draft chapters were prepared as well. The outcome of the worldwide consultation and the draft

chapters were being discussed in a virtual meeting in October 2012. Further draft chapters were

discussed at a third virtual meeting in March 2013. In all three meetings about 65 representatives of

countries and international organizations actively participated. At the end of June 2013, the expert

group came together for a face to face meeting in Geneva to discuss the first full draft of the compilers

guide. A fully edited version of the draft Guide was subsequently prepared and presented to the Task

Force at its meeting in October 2013 and was discussed electronically by the Expert Group during

November 2013. The unedited draft version of this Guide was submitted to, and adopted by, the

Statistical Commission at its forty-fifth session, held in March 2014. The Task Force finalized the

draft guide over the course of 2014.

B. Purposes and scope of the Guide

17. The main purpose of the Guide is to assist countries in the production of high quality official

statistics on international trade in services in compliance with MSITS 2010. The Guide strives to

achieve this by (i) clarification and elaboration of a number of more difficult conceptual issues and

(ii) identification of good practices in the implementation of MSITS 20108 .Further, the Guide is

intended to better integrate the compilation of statistics of international trade in services in the context

of a global statistical work and, therefore, recognizes importance of not only such pillars as BPM6

and SNA2008, but also of the UNSC recommendations for other related statistical domains as well as

its guidance contained in Guidelines on Integrated Economic Statistics9 and National quality

assurance framework.10

18. In particular, the Guide aims to complement the BPM6 compilation guidance on balance of

payments statistics, focusing on the compilation of data by EBOPS 2010 categories, trading partner

and mode of supply. Also, it includes more detailed compilation guidelines for FATS as far as it

relates to the international supply of services, and provides guidance on how to compile statistics on

the modes of supply on the basis of the framework laid down in Chapter V of MSITS 2010. It is

expected that an increasing number of countries will begin compiling services data by modes of

supply following the good practices provided in the Guide. Further, the Guide recognizes the

importance of data quality, metadata and the use of IT tools in the statistical production process and

contains guidance and advice relevant to those areas of statistical work. In addition, the Guide is

intended to promote trade in services statistics by making available to users a comprehensive source

of information on its methodological foundations and on data compilation practices. This will enable

users to understand better the nature of these statistics and, consequently, to interpret and use them

correctly and more effectively.

19. As it is not possible to present a single best practice applicable in all cases the Guide outlines

various options that may be suitable depending on a country circumstances and resources. For

countries that have well-developed compilation systems, the Guide contains criteria against which

these compilation systems may be compared and evaluated. For countries that may need to improve

parts of their compilation systems, the Guide presents examples of good practices and related country

experiences. For countries that do not have well-developed systems, the Guide contains advice on

8 It should be noted that clarification of the conceptual issues implies (i) explanation of the terms u sed in the

definitions of particular concepts and (ii) operationalization of the definitions by relating them to the statistical

procedures which might be used to obtain anticipated data. The term “good practice” is to be understoo d as a set

of activities contributing to the implementation of recommendations contained in MSITS 2010 and resulting in

production and dissemination of high quality SITS.

9 Available at: http://unstats.un.org/unsd/nationalaccount/ies/GuidelinesIES.pdf.

10 Available at: http://unstats.un.org/unsd/dnss/QualityNQAF/nqaf.aspx.

good practices and other guidance that can be used as a starting point to develop appropriate data

collection and data compilation procedures. It should be noted that the identification of good practices

described in the Guide benefited from the input of national compilers which have gone through the

process of implementing the recommendations contained in MSITS 2010. The Guide focuses on the

main features of the relevant international recommendations and good practices, while some more

technical and country specific details are available on the dedicated UNSD website.

20. Scope of the Guide was determined by the tasks which the trade in services compiler

typically has to deal with. These tasks range from the operationalisation of the conceptual framework

and defining the set of variables to be compiled to the setting in place effective institutional

arrangements, identification of appropriate data sources, data collection and data compilation

procedures, and to the organization of efficient quality assurance and data dissemination programmes.

The Guide elaborates challenges and good practices in the above areas of work, provides numerous

country experiences and provides guidance on how those practices can be applied under different

country circumstances.

C. Organization of the Guide

21. The organization of the Guide largely follows the logic of the statistical process beginning

with an overview of general frameworks underlying compilation of trade in services statistics

followed by the description of data collection and data compilation issues, good practices, data and

metadata dissemination and concluding with the elaboration of several key cross-cutting topics.

22. Part I of the Guide provides an overview of general frameworks, namely conceptual

frameworks (Chapter 1), legal frameworks (Chapter 2) and institutional arrangements (Chapter 3),

which underpin statistics of international trade in services.

23. Part II focuses on data collection and starts off with an introduction and overview of data

sources within the modes of supply framework (Chapter 4), which is followed by elaboration of

registers and survey frames (Chapter 5), enterprise and establishment surveys (Chapter 6), surveys of

persons and households (Chapter 7), international transaction reporting system (Chapter 8),

administrative records (Chapter 9) and other data sources (Chapter 10). Part II is concluded by

comparing data sources (Chapter 11).

24. Part III elaborates various issues of data compilation. It begins with an introduction and

overview of data compilation within the modes of supply framework (Chapter 12) and elaboration of

challenges and good practices in the integration of data from different sources (Chapter 13). Specific

issues and good practices relevant to the compilation of particular data sets are elaborated in the

subsequent chapters as follows: resident/non-resident trade in services statistics (Chapter 14),

compilation of FATS and the international supply of services (Chapter 15), compilation of additional

indicators on the international supply of services (Chapter 16). Guidance on estimation and modeling

of missing data, forecasting or back-casting is contained in the concluding Chapter 17.

25. Part IV focuses on cross-cutting topics and consists of four chapters which provide guidance

on metadata (Chapter 18), quality management (Chapter 19), data and metadata dissemination

(Chapter 20), and on use of information and communication technology (Chapter 21).

26. The Guide has a number of Annexes which will be provided in the final version.

Part I General Frameworks

The Manual on Statistics of International Trade in Services 201011 provides an overarching statistical

framework to compile data required for measurement of the international supply of services and

elaborates the relationships between various components of that framework. This Compilers Guide

accompanies this reference publication. Part I contains an overview of the conceptual frameworks

(Chapter 1), the legal framework (Chapter 2) and the institutional arrangements (Chapter 3). Part II

and Part III focus on data sources/collection and data compilation. Part IV deals with cross-cutting

issues.

Chapter 1 Conceptual frameworks

1.1. Scope. This chapter introduces the conceptual frameworks identified in MSITS 2010

(section A); describes the General Agreement on Trade in Services (GATS), modes of supply and

the statistical frameworks (section B); and then provides an overview of concepts relating to

statistics on resident/non-resident transactions in services (section C), foreign affiliates statistics

(section D) and additional indicators for analysing the international supply of services (section E).

The chapter concludes with a description of the guidelines on integrated economic statistics

(section F).

A. Introduction

1.2. The General Agreement on Trade in Services (GATS) has been a driving force in the

drafting of MSITS, both for the first version of the Manual at the end of the 90s and its current

2010 edition. The GATS establishes a set of rules and disciplines that govern the use of measures

affecting trade in services by the World Trade Organization (WTO) members. Under the GATS,

WTO members are committed to entering into successive rounds of trade liberalizing negotiations,

which are conducted by type of service and by mode of supply. Economic Integration Agreements

at the regional or bilateral level follow the same approach. Consequently, availability of statistics

on the international supply of services detailed by the services type, mode of supply and by partner

country is highly important for trade in services policy making and related analysis.

1.3. Chapter II of MSITS 2010 focuses on conceptual framework for the development of

statistics of international trade in services and explains how existing statistical systems and

classifications can be used to progressively build these statistics to provide the necessary

information for measuring the international supply of services. It is consistent with concepts and

definitions included in the 2008 System of National Accounts (2008 SNA) and the sixth edition of

the Balance of Payments and International Investment Position Manual (BPM6). The compilation

guidance provided for these frameworks should be used as a starting point and this Guide should

be read as an extension of that guidance intended to cover specific compilation needs in the context

of MSITS2010 implementation.

1.4. As the relevant conceptual frameworks are outlined in MSITS2010 and are detailed on

other international manuals, this chapter only briefly introduces the basic elements of these

frameworks – those that are essential in the context of compiling trade in services statistics, and

makes reference to relevant material in the manuals. It clarifies the information needs, in particular

those of the GATS, and links this with the compilation of statistics on:

11 MSITS 2010 is available at:

https://unstats.un.org/unsd/tradeserv/TFSITS/msits2010/docs/MSITS%202010%20M86%20(E)%20web.pdf .

i. Services transactions between residents and non-residents, broken down by services type

(according to Extended Balance of Payments Services Classification 2010 (EBOPS 2010)),

partner, by modes of supply (mainly 1, 2 and 4) and by relation between the parties (trade

between affiliated firms and between unaffiliated firms);

ii. Foreign Affiliates Statistics (FATS), focusing on the variables and breakdowns of interest

in the context of the international supply of services while being consistent with the

frameworks described in the Organization for Economic Co-operation and Development

(OECD)'s Benchmark Definition of Foreign Direct Investment 4th edition and OECD's

Handbook on Economic Globalisation Indicators; and

iii. Additional monetary and non-monetary (quantitative) indicators relevant for the

assessment of the importance various modes of supply (in particular, modes 2 and 4) in an

economic context.

B. GATS, modes of supply and the statistical frameworks

1.5. The MSITS2010 describes the structure and guiding principles of GATS and its scope. For

making commitments in GATS negotiations, WTO members often make reference to the

MTN.GNS/W/120 entitled "Services Sectoral Classification List" (hereinafter referred to W/120).

This list should be viewed as an optional classification system of services sectors for negotiating

purposes, rather than a statistical classification like EBOPS 201012 which is used to compile and

publish resident/non-resident trade in services statistics. 13

1.6. Following the GATS, the international supply of services can take place through four

different modes of supply which depend on the territorial presence of the supplier and the

consumer at the time of the transaction. The four modes can be described as follows:

i. Mode 1 (cross-border supply): the supply of services from the territory of one Member

into the territory of any other Member;

ii. Mode 2 (consumption abroad): the supply of services in the territory of one Member to

the service consumer of any other Member;

iii. Mode 3 (commercial presence): the supply of services by a service supplier of one

Member, through commercial presence, in the territory of any other Member; and

iv. Mode 4 (presence of natural persons): the supply of services by a service supplier of one

Member, through the presence of natural persons of a Member in the territory of any other

Member.14 Mode 4 is further described in Box 1.1.

1.7. Existing statistical frameworks can be used as a basis for the production of data to satisfy

the GATS information needs regarding modes of services supply. For example, the value of the

international supply of services of a country can be established once statistics on the output of

12 MSITS 2010 Annex 1.

https://unstats.un.org/unsd/tradeserv/TFSITS/msits2010/docs/MSITS%202010%20M86%20(E)%20web.pdf .

13 A correspondence table has been developed between W/120 and EBOPS 2010 (See also MSITS2010

paragraphs 2.11-2.23).

14 A natural person of a Member is defined as a national of that Member or to a non-national who has the right

to permanent residence in that Member. See article XXVIII of the GATS for further information.

foreign controlled affiliates have been developed for the services sector to accompany the BoP

services statistics. The combination of both datasets would cover all four modes, provided

compilers ensure that appropriate breakdowns are delivered (i.e., service type, mode of supply,

partner country and exchanges between related and unrelated trade). As MSITS 2010 explains, to

produce a complete picture of the international supply of services, additional data, including both

monetary and non-monetary indicators, are still necessary.

1.8. For the compilation of data on the value of the international supply of services, MSITS

2010 develops a phased approach which includes (a) the compilation of resident/non-resident trade

in services statistics in the context of the Balance of Payments (suggesting a breakdown of

transactions according to EBOPS2010, by partner country, by mode of supply (mainly referring to

modes 1, 2 and 4) and by the relationship between the trading parties) and (b) the development of

foreign affiliates statistics (FATS), exclusively referring to mode 3. FATS should include data on

output (or sales/turnover if output is not possible) broken down by service type (or service activity

Box 1.1: Clarifying mode 4 from a statistical perspective

The MSITS 2010 chapter V introduces mode 4 in a statistical context, based on the description of GATS article

1 and the Annex on the Movement of Natural Persons under the Agreement. Mode 4 can, in general, be

described as covering foreign natural persons enter ing the host economy to:

(i) fulfil directly service contracts (contractu al service suppliers): this covers self-employed persons

(independent professionals) or employees of a foreign service supplier;

(ii) work in a foreign affiliate that delivers s ervices (intra-corporate transfer or directly recru ited by the

affiliate); or

(iii) negotiate a service contract (services sell ers), negotiate the constitution/acquisition of an establishment

supplying services (persons responsible for setting up commercial presence), market a service etc.

The purpose of stay under mode 4 is to provide services under a service contract. Therefore, persons c rossing

the borders to access the employment market and per sons present for the production of goods or for the

provision of services supplied under governmental authority are excluded. Also, permanent migration is

excluded from the mode 4 movements (the GATS does n ot apply to measures affecting residence, citizensh ip

or employment on a permanent basis).

Persons covered by mode 4 are, therefore, not limi ted to foreign persons directly involved in the rendering of

services (as indicated in (i) above), but include a lso those persons whose presence abroad is instrumental to the

provision of a service (items (ii) and (iii)). Ther efore, data to be compiled in connection with mode 4 of supply

of services cover:

a. The value of services supplied dire ctly by persons moving under the mode 4 commitments as

indicated under (i) above– that is the value which, in general, would be measured as trade in services in the

balance of payments. The exception would be for services supplied by self-employed persons staying more

than a year (still in the context of a service cont ract). However, normally such persons will represen t a small

proportion of the mode 4 population. In addition, although in principle the residence of the persons would

change, it may be difficult in practice for compile rs to identify (or even consider) that the residence has

changed if the length of stay is just for a few mon ths more (e.g. 2-3 months) and the value of supplied services

would still be recorded under services in the balance of payments. Compiling the mode 4 value of services is

not relevant for persons entering the host economy to perform activities described in points (ii) and (iii) above.

In fact, work of persons covered by point (ii) is c onsidered instrumental to the output of foreign affiliates

which supply services through commercial presence (mode 3). Persons covered by point (iii) are not

producing or delivering a service to consumers at the time of their presence in clients' country. They are rather

engaged in negotiations for an eventual future supply of services.

b. Non-monetary (quantitative) data o n the number of natural persons crossing borders to supply

services (or the number of trips of such persons) for the all three categories described above (see ch apter 16 of

this Guide).

See MSITS 2010 Chapter 5 for more information.

if type is not possible), by partner country (i.e., country of operation of affiliate for outward FATS,

or of the ultimate controlling unit (UCI) for inward FATS), and identifying to whom output is sold,

with a particular interest in the output sold within the country of establishment of the controlled

affiliate.

1.9. MSITS 2010 also recommends the compilation of other indicators of interest to users (both

monetary and non-monetary), including other FATS variables (employment, value added, number

of enterprises etc.); non-monetary quantitative indicators for mode 4 (i.e. number individuals

crossing borders and temporarily abroad to provide services in the context of services contracts)

and mode 2 (individuals going abroad to consume services); and indicators such as foreign direct

investment (FDI), services sectoral indicators or services trade by enterprise characteristics.

1.10. For services negotiations, especially within the GATS framework, users need

comprehensive information on the international rendering of services and on their mode of supply,

as well as on the operators taking part in these operations and their main features. This need has

led to the development of the statistics on the international supply of services which goes beyond

the primary objective of the Balance of Payments. Proper legal and institutional arrangements are

extremely important for the development of statistics needed for analysis of the international

supply of services. In most cases, the compilation of such statistics is a cooperative effort of

several agencies such as the National Statistical Office, the Central Bank, the Ministry of Economy

and the national agency in charge of trade negotiations. This calls for a better coordination of data

collection and data compilation between different institutions (see chapters 2 and 3 for details).

1.11. In order to maximally exploit the potential of combining and comparing statistics on the

international supply of services within and between countries, compilers are encouraged to use

internationally-accepted concepts and methods and classification systems when developing their

data collection and compilation systems. In the case of trade in services, these concepts include the

MSITS2010 and related international statistical systems and frameworks, such as BPM6,

SNA2008 and BD4. For modes of supply, compilers should align with the framework developed in

chapter V of MSITS 2010. In terms of classifications for BOP services transactions, FATS, and

mode 4 (and mode 2) quantitative indicators, compilers should, to the extent possible, use the

EBOPS2010 classification for service categories, the ISIC Rev.4 for activities and the partner

country data classifications used in the Balance of Payments Data Structure Definition, which was

prepared in the context of the Statistical Data and Metadata Exchange (SDMX) initiative

sponsored by seven international organizations – Bank for International Settlements (BIS), the

European Central Bank (ECB), Eurostat, the International Monetary Fund (IMF), OECD, UN and

World Bank).15

1.12. If compilers deviate from these concepts, for example in order to reflect specificities of

their economies or to take into account certain statistical frameworks adopted in their countries,

they are encouraged to develop classification systems that are compatible with those listed above

and construct the appropriate conversion tables to international systems.

C. Statistics on resident/non-resident transactions in services

1.13. Concepts recommended for use in statistics on services transactions between residents and

non-residents are based on the MSITS2010 chapter III, which in turn utilizes the BPM6 chapter

10.16 Statistics compiled following these concepts and definitions reflect the value of services

15In the Area Dimension (CL_Area) of the Balance of P ayments DSD. individual country coding follows the

ISO 3166 standard. The latest version of the BOP DS D is available on the SDMX website

(http://sdmx.org/?page_id=1747).

16 BPM6, Chapter 10.

mainly supplied via modes 1, 2 and 4. The collection of such data is, in general, the responsibility

of a country's balance of payments compilation agency. In many countries this agency will be the

Central Bank, but in others this responsibility is given to the agency in charge of compiling

economic statistics (usually the national statistical office (NSO)). Alternatively, some countries

have opted for a division of tasks (e.g., with the statistical office collecting trade in services data

and the central bank compiling and disseminating them). The collection and compilation of

resident/non-resident services transactions are further discussed in chapters 5, 6, 7, 8, 9, 10, 11, 13

and 14 of this Guide.

1.14. For producing these statistics, compilers should:

i. Follow the general BPM6 principles regarding institutional units, residence, centre

of predominant economic interest, economic transactions, valuation, market prices, accrual

accounting, gross recording, etc.), and, of course, the definition of services;17

ii. Breakdown of services transactions by EBOPS 2010 (on a step-by-step basis,

according to the needs of the compiling economy); compilers should be aware that EBOPS

2010 is completely consistent with the BPM6 classification of services but provides a

more detailed breakdown, and also suggests a number of complementary groupings for

compilation given the interest in particular sectors;

iii. Breakdown of value of services by trading partner (again, to be implemented

gradually and in line with the needs of the compiling country), determined according to the

economy of residence of the respective trading partner; 18

iv. Identify or estimate the modes of supply related to the services transactions; and

v. Specify the relationship between the parties involved in the services transactions.

1.15. When compiling statistics on the international supply of services as specified above, the

following considerations should be taken into account. The prices at which exchanges between

affiliated firms are valued may not represent market prices. However, the concept of market prices

is particularly important given that increased globalization is paired with (and often driven by)

enterprises headquartered in one country that establish affiliates in other countries to produce and

distribute goods and services -- see Boxes 1.2 and 1.3. International trade in services between such

parents and their foreign affiliates has rapidly increased. Therefore, within the framework of trade

in services statistics, identification of trading partners in transactions between parents and foreign

affiliates has an important analytical value.

17 MSITS 2010, paragraph 3.41.

18 See above footnote on partner country classification.

Box 1.2 Transfer and market prices

In some cases, the values against which transaction s between affiliated enterprises are priced

internally may not represent market prices. In general, when there is an international transaction

between two affiliated firms, it is expected that the value of the transaction to the exporting affiliate

will be equal to the value of the transaction for t he importing affiliate and hence they will cancel out,

leaving the multinational enterprise (MNE)’s overall profits unchanged, no matter what price it

chooses to use to value the transaction. However, in a world where there are taxes on international

transactions and where the rates of business income taxation differ across countries, the multinational

enterprise will have definite financial incentives to choose strategically the “transfer price” to

minimize the amount of tax paid to both jurisdictions. Transfer prices are the prices at which an

enterprise transfer physical goods and intangible property or provide services to associated

enterprises. Because transfer pricing might result in transactions between affiliated enterprises being

under or over invoiced compared to unrelated party transaction, adjustment should be made when

these exchange values do not represent market price s.

The OECD Transfer Pricing Guidelines state that, for income taxation and customs valuation

purposes, enterprises follow the arm’s length standard, i.e., set the transfer price equal to the pric e that

two unrelated parties would negotiate when trading the same or substantially similar products under

the same or substantially similar circumstances. Th e OECD guidelines propose five methods to adjust

transfer prices by arm’s length standard, which are based on the comparability of the transactions.

Transactions are considered comparable when their “economically relevant characteristics” are the

same, or if they differ, the differences have no ma terial impact on the results. In practice internal and

external transactions are unlikely to be exactly comparable, therefore the OECD Guidelines

recommend that material differences are identified, quantified and adjusted for in determining the

arm’s length transfer price. Moreover, since transf er pricing is not an exact science, the Guidelines

recommend that transfer prices be set inside a rang e of acceptable arm’s length prices, called the

arm’s length range.

See the OECD Transfer Pricing Guidelines at http://www.oecd.org/ctp/transfer-pricing/transfer-

pricing-guidelines.htm for more information.

Box 1.3 Trade in value added

With the increase of international fragmentation of production, intra- and inter industry trade,

creating so-called Global Value Chains (GVCs), has increased dramatically. Conventional measures

of international trade do not always reflect the flows of goods and services within these chains, and

are unable to answer policy questions related to the economic (and employment) impact of their

country’s embeddedness in GVCs. In response, OECD a nd WTO have developed an analytical data

set on trade in value added (TiVA), in order to provide insight into the value that is added by each

country in the production of goods and services that are consumed worldwide.

The estimates are based on a global input output table constructed from official national Supply and

Use tables (or input-output tables) and bilateral trade statistics (goods and services) made consisten t

with national accounts data. Since TiVA combines national statistics to develop a global analytical

toolkit requires high quality input data from national compilers, including information on bilateral

trade in services (by EBOPS category) and on the characteristics of the firms involved in services

trade (notably their industry classification). The first aspect requires balance of payments compilers

to develop trade in services statistics by partner, the second aspect involves the development of data

sets by national compilers that allow for the analysis of services trade companies by economic

characteristics (known as services trade by enterpr ise characteristics (STEC)). These statistics are

developed through linking trade and business registers which allows identifying which firms are

responsible for trade in services.

1.16. The identification of trading partners is especially important in the case of service items,

such as manufacturing services on physical inputs owned by others, research and development,

computer services, audio-visual services, charges for the use of intellectual property n.i.e. and

professional and management consulting services, which are provided within global production

and marketing networks. It is recognized, however, that compiling these statistics by trading

partner is resource-intensive and difficult, owing to issues related to disclosure and incompleteness

of information (the issues related to the identification of trading partner are further discussed in the

context of data collection Part II and data compilation Part III).

1.17. A second consideration relates to the bundling of services with other services or with

goods (such as in the tourism sector). Some arrangers will bundle various types of services and

goods and the final client will only make one payment for a package (which will also cover the

service fee for arranging these products).19 In principle the payments for related services (or

goods) should be unbundled,20 but if this unbundling is not possible, it may be a strong indication

that the bundling has resulted in the creation of a new product that is supplied to client (i.e. the

client is buying a different product). In this case, an appropriate classification has to be found for

such a product.

1.18. A final consideration is the strong link between intellectual property products and services

trade. Services related to intellectual property rights, for example, creative services such as

computer or audio-visual services, take an ever increasing importance in today's business world;

therefore, information on these services becomes progressively more important for economic

analysis. Chapter 14 addresses the relevant EBOPS 2010 services components in one group,

including services related to intellectual property products and other business/personal services

(covering charges for the use of intellectual property n.i.e., telecommunication, computer, and

information services, other business services, and personal, cultural, and recreational services).

MSITS 2010 also suggests some relevant complementary groupings within EBOPS2010:

Computer software transactions, audio-visual transactions and cultural transactions.

D. Foreign Affiliates Statistics

1.19. MSITS 2010 focuses on the foreign controlled subset of affiliates. The key concepts of

FATS (as described in MSITS 2010 chapter IV) are based on foreign direct investment

relationships and control, which are consistent with those specified in the BPM6, the OECD

Benchmark Definition of Foreign Direct Investment 4th edition21 and the OECD Handbook on

Economic Globalisation Indicators.22 Details of FATS collection and compilation are discussed in

Chapters 5, 6, 10, 11, 13 and 15 of this Compiler's Guide.

19 BPM6 (paragraph 3.17) does not refer specifically t o services transactions, but it recommends to unbundle

two or more different transactions that appear as a single transaction from the perspective of the par ties

involved.

20 Travel agencies and tour operators function in that way. Besides the treatment of transactions of trav el agents

which is described, BPM6 and MSITS 2010 do not provide further information on unbundling. However both

manuals propose an alternative presentation of travel by type of products consumed which would encourage the

unbundling of transactions. This is actually supported by tourism statisticians in the context of the Tourism

Satellite Accounts, and more generally to better li nk the information with the needs for establishing supply/use

and input-output tables.

21 MSITS 2010 and this Guide adopt the definition of foreign direct investment as provided in the 4th edition of

the Benchmark Definition of Foreign Direct Investment (BDM4). Available at:

http://www.oecd.org/fr/daf/inv/statistiquesetanalysesdelinvestissement/fdibenchmarkdefinition.htm.

22 These definitions are further described and adapted to the EU context in the Eurostat FATS

Recommendations Manual, available at http://ec.europa.eu/eurostat/en/web/products-manuals-and-guidelines/-

/KS-RA-12-016.

1.20. A number of variables are recommended for compilation: sales/turnover or output,

employment, value added, trade, number of enterprises etc. Output is the variable recommended

for measuring the supply of services through mode 3, but sales or turnover can be used in the

absence of data on output. Variables should be broken down to the extent possible as follows: type

of service provided (if possible using a classification compatible with EBOPS 2010 definitions and

identifying the provision of services in the country of operations), by main economic activity, by

country of operation of affiliates for outward FATS and by country of the UCI for inward. The

BPM6 basic principles also apply as relevant in FATS: residence, determining control which is

necessary for determining the FATS universe, recording of information on an accrual basis and for

monetary information valuation at market prices. The valuation of transactions between affiliated

firms may not represent market prices. This question is further discussed in Box 1.3.

1.21. Given that at the time of writing this Guide, FATS is still a relatively new statistical

domain, it is suggested that compilers develop a FATS compilation system in stages. MSITS 2010

recommends, as an initial priority, that FATS be compiled on an activity basis, because this is

required for the compilation of some variables, as well as since data are currently most widely

available on that basis. However, as compilation of data on a product basis is recognized as a

longer-term goal, compilers are encouraged to work towards providing product detail for those

variables that lend themselves to this basis of attribution (namely, sales (turnover) and/or output,

exports and imports). If this level of specificity cannot be achieved, compilers may wish to

disaggregate sales or output in each industry between sales/output of goods and sales/output of

services, as a first step towards achieving a product basis.

1.22. Inward FATS find often their place in structural business statistics (SBS), traditionally

compiled by NSOs, but they can also be collected through means used to collect foreign direct

investment statistics (or in conjunction with those, such as a dedicated survey). Outward FATS can

be produced within the scope of the foreign direct investment statistics (FDI or dedicated survey).

FATS can also be compiled from administrative records of a public agency in the economic or

commercial area related to foreign direct investment. For both inward and outwards FATS,

analysing the relationships between different data collection and compilation options yields a

number of advantages, including reduction of reporting burden and cost effectiveness. FATS

compilers may also consider accessing surveys based on a framework taken from business

registers of international groups prepared by supranational bodies.23 The current interest in the

phenomenon of economic globalisation and the new approach of international trade statistics in

terms of value added, and their relation to global value chains, have revealed the importance of

reinforcing these statistics.

E. Additional indicators for analysing the international supply of services

1.23. MSITS 2010 also recommends the compilation of additional indicators in order to further

analyse the international supply of services beyond the value of such transactions. These indicators

are needed in order to respond to the numerous information needs of trade negotiators and other

users. Some of these indicators are directly related to the (GATS) negotiations, as they support

comparison of commitments, provide background information for the settling of disputes, or can

be used more generally for an in depth analysis of the international supply of services. The other

indicators range from data on the number of persons/trips relevant to modes 2 and 4, the use of

data on services production, prices, employment or sectoral indicators (e.g., tourism,

telecommunications, etc.). All of these additional sets of statistics do not require the development

of new statistical frameworks, but rather refer to existing ones. Their compilation particularly

indicates the potential offered by the linking of trade in services statistics and business registers.

23 See, for example, the Eurostat Euro Groups Register.

Data collection and compilation of these other indicators are described in Chapters 6, 7, 9, 10, 11,

13 and 16.

1.24. Frameworks of particular interest are those related to the movements of individuals across

borders; i.e., tourism and migration statistics, whether for supplying services (mode 4) or for

consuming services (mode 2). Obtaining information on the characteristics of these movements

and on the individuals involved is highly important for trade policy making and monitoring, for the

analysis of global supply of services, as well as broader tourism and migration policy, in particular

for mode 4. Data on the movement of natural persons should include detailed information on the

characteristics and activities of such persons as well as on the service they are rendering or

consuming while abroad.

F. Integrated economic statistics

1.25. At its thirty-seventh session in 2006, the UN Statistical Commission (“the Commission)

recommended the operational use of an integrated approach to economic statistics in national

economic statistics programmes to ensure the efficiency of the statistical process.24 The

Commission subsequently developed the Guidelines for Integrated Economic Statistics,25 as it

recognized the significance of an integrated approach for increasing the consistency and coherence

of economic statistics. It enhances the quality and analytical value of short-term, annual and

benchmark economic statistics and macroeconomic statistics.26

1.26. The guidelines for integrated economic statistics are based on internationally adopted

standards, including the System of National Accounts 2008 (2008 SNA), the Balance of Payments

Manual, sixth edition (BPM6) and more specialized technical manuals, such as those on the

measurement of prices, sectoral and business statistics and FDI. The guidelines use the

methodological standards, the recommendations and the emphasis on policy-relevant data in those

manuals as the basis for the organizing principles and detailed practices for preparing integrated

economic statistics.27 The main characteristics of this integrated approach are described in Box 1.4.

24 Based on the report of the Secretary-General on integrated economic statistics (E/CN.3/2006/5).

25 United Nations Publication, Guidelines for Integrated Economic Statistics. ST/ESA/STAT/SER.F/108.

http://unstats.un.org/unsd/nationalaccount/docs/IES-Guidelines-e.pdf.

26 Ibid., preface.

27 Ibid., p. 1.

Box 1.4 An Integrated approach to economic statistics

Guidelines on integrated economic statistics identified the following features of an integrated approach:

i. Common concepts, definitions and classifications. The use of harmonized terminology,

definitions, concepts, standards and classifications is necessary in a national statistical system so

that the various data collections are comparable an d can be related to each other;

ii. Business registers and frames. Business registers h ave a central role in integrated economic

statistics in providing a central sampling frame for all business surveys.

iii. Standardization of surveys. Integration should be comprehensive and encompass survey design,

sample frame, and questionnaire design;

iv. Administrative data. Administrative source data ca n be integrated for statistical purposes;

concepts need to be matched with statistical records. The advantage of using administrative

records and various government data is to promote a more efficient use of data collections, and

reduce the burden of the respondents;

v. Data editing, linkage and integration. Documentation of the editing process and transparency are

indispensable to ensure that the resulting data can be used by various statistical domains and will

be widely accepted and understood by users;

vi. Dissemination and communication. Integration may facilitate providing user-friendly

presentations of data, explanations of concepts, en sure consistent format across publications,

electronic sources and websites.

Chapter 2 Legal framework

2.1. Scope. This chapter outlines the need for and importance of legal framework that regulates

activities of the institutions involved in the data collection and data compilation of in accordance with

the statistical framework recommended in MSITS 2010 for measurement of the international supply

of services, as well as the content of data sources and confidentiality of provided information. The

chapter consists of the following sections: summary of good practices (section A); the importance of

the legal framework (Section B); legal acts governing content and availability of data sources (section

C); legal acts regulating institutional arrangements (section D); legal acts protecting confidentiality of

reported data (section E); and country practices (section F).

A. Summary of good practices

2.2. It is a good practice that national laws and regulations be established to define the rights and

responsibilities of all agencies involved in the collection, exchange, processing, compilation and

dissemination of data on services transactions between residents and non-residents, foreign affiliates

statistics and additional monetary and non-monetary indicators for analysing the international supply

of services, so that those agencies will be in a better position to establish the necessary institutional

arrangements detailing their involvement in the statistical process. More specifically, such laws

should give the compiler a clear mandate to collect necessary data from relevant sources and to

compile and disseminate these statistics in the formats deemed appropriate by the responsible agency.

This Guide encourages compilers to actively participate, whenever appropriate, in the preparation of

the necessary modifications to national legislation or relevant administrative regulations. Moreover, it

is a good practice that international recommendations for trade in services statistics are properly

reflected in national laws or regulations.

2.3. It is further advised that additional legal acts establish more specific provisions for the data

content or the specific circumstances under which the data must be reported to other national agencies

as well as the frequency of dissemination. A legal basis for surveys related to resident/non-resident

trade in services statistics and FATS should also be well-established and should be cited on the survey

forms themselves. In the case of outward FATS, where the relevant company is located abroad, the

legal acts should provide a mandate for statistical compilers to require information from domestic

companies on their foreign affiliates located in other countries. The statistical compilers should also

be well aware of the contents of the legal provisions underpinning the international bank transaction

reporting system (ITRS) implemented in the country and make full use of them. It is further advised

that the national statistical act establishes a reminder and penalty system, including the possibility to

impose fines on data reporters, in cases of non-compliance in reporting required information.

2.4. Finally, it is of extraordinary importance that the legal framework includes provisions

guaranteeing the protection of individual data, restricting the use of such data to official statistical

purposes only, and preventing identifiable enterprise-specific information from being disclosed in the

disseminated statistics.

B. The importance of the legal framework

2.5. The legal framework promoted by this Guide consists of the laws and legally-binding

regulations that govern the data provision relationship between members of the national statistical

system and data reporters as well as all aspects of data compilation and dissemination.

2.6. A well-established legal framework is the foundation of an effective and well-functioning

national statistical system, because it:

i. Gives the statistical compiler a clear mandate to collect data and to compile and

disseminate the statistics, and makes relevant information (e.g., supplementary data sources)

available to the compiler. In view of the multiplicity of data sources necessary for compilation

of statistics on the international supply of services, a strong and comprehensive legal

authority to collect data is of special significance.

ii. Identifies and defines the national competent authority and the roles other

governmental agencies should play in particular statistical domains. (see also Chapter 3).

iii. Is a prerequisite for establishing a high-quality system of official statistics. For

example, the first element of the quality assurance framework recommended by the UN

Statistical Commission calls for the availability of a sound legal framework28, as does the

IMF Data Quality Assessment Framework (DQAF) for Balance of Payments and

International Investment Position Statistics.29

iv. Is likely to increase public trust in the confidential treatment of reported data and

thereby to facilitate obtaining higher response rates and the submission of accurate

information. Statistical confidentiality is a key element in collecting, storing, and

disseminating statistics and related micro-data. Thus, the legal framework should include

provisions guaranteeing the protection of individual data and restricting the use of such data

to official statistical purposes only.

v. Assists in the implementation of an integrated approach to statistics of trade in

services between residents and non-residents and FATS, as only well-coordinated efforts of

several agencies may guarantee a successful compilation and dissemination of such statistics.

The stronger the legal powers of coordination at the center of the statistical system, the

greater the chance of integrating the statistics effectively.30

vi. Provides the possibility to impose penalties on data reporters, including enterprises, in

cases of non-compliance in reporting required information (including delays in reporting,

missing or unreported data, and errors, etc.).

2.7. Legal acts relevant for statistics of international trade in services exist at different levels and

include legal acts regulating the collection, processing and dissemination of statistics; the working

relations of the concerned agencies; and the legal acts protecting the confidentiality of information.

The structure of the legal framework can vary from country to country. Often there is a national

statistical act establishing the mandate of the national statistical authority and governing general

statistical issues, such as establishment of a reminder and penalty system for enterprises failing to

comply with the reporting obligation. The national act could also identify statistical areas that are part

of the mandate. In addition to the general act, additional acts can establish more specific provisions

for a single statistical area like trade in services or FATS, for the data content or for the specific

circumstances under which the data must be reported to other national agencies and/or defining the

valid media and frequency of reporting and dissemination.

2.8. If a country becomes a party to an international convention or adopts international

recommendations, it then needs to incorporate the binding provisions and non-binding

recommendations of those conventions in its national laws and regulations. In this connection, it

should be noted that in the field of international trade, many international agreements exist to govern

transactions in goods and services. For example, the results of the Uruguay Round of Multilateral

Trade Negotiations contain numerous legal obligations of the WTO members and are incorporated in

the national legislation. In a similar sense, international recommendations for statistics on the

28 NQAF, page 9. https://unstats.un.org/unsd/dnss/docs-nqaf/2012-13-NQAF-E.pdf.

29 IMF, DQAF for Balance of Payments and Internationa l Investment Position Statistics (2012), page 1.

http://dsbb.imf.org/images/pdfs/dqrs_bop.pdf.

30 Guidelines on IES, paragraph 4.5.

international supply of services should be properly reflected in national laws or regulations. The

international recommendations, including the MSITS2010, the Balance of Payments and International

Investment Position Manual, and associated implementation guidelines, provide the foundation for the

data to be collected. These recommendations must be supported by national legal acts in order to give

the statistical office a clear mandate for collecting the necessary data elements.

2.9. In some regions there may exist legally-binding regional agreements that impact the national

definition and/or scope of statistics on the international supply of services and regulations pertaining

to the national agencies involved in the statistical process. Sometimes there are separate acts

regulating different areas of statistics. For example, in the European Union, “Regulation (EC) No

184/2005 of the European Parliament and of the Council of 12 January 2005 on Community statistics

concerning balance of payments, international trade in services and foreign direct investment”31

regulates the data to be submitted to Eurostat on trade in services between residents and non-residents

and “Regulation (EC) No 716/2007 of the European Parliament and of the Council of 20 June 2007

on Community statistics on the structure and activity of foreign affiliates”32 regulates the FATS data

to be submitted to Eurostat.

2.10. In many instances, the introduction of necessary improvements to the quality of official

statistics may be significantly facilitated by developing appropriate legal provisions, or, if such

provisions already exist, by amending them with regards to the collection of administrative data to be

used for statistical purposes. The national agency or agencies responsible for the overall compilation

and dissemination of statistics on the international supply of services should, whenever appropriate,

actively participate in the discussion of respective national legislation or relevant administrative

regulations in order to establish a solid foundation for the high quality and timeliness of these

statistics.

C. Legal acts regulating institutional arrangements

2.11. As often more than one national institution is involved in the compilation of data in

accordance with the statistical framework recommended in MSITS 2010 for measurement of the

international supply of services, it is either the national statistical office or the central bank that is the

responsible national authority for coordination of such activities as well as for data dissemination. In

many countries, a statistics act or formal legal arrangement exists which determines the national

authority for data collection (for instance through surveys), for data compilation and for data

dissemination. In some economies countries, these responsibilities may be shared among two or more

agencies. For example, central banks may have responsibility for obtaining data from financial

institutions, while the national statistical agency has responsibility for collection from other institutes

and for the data compilation and dissemination. Or, an investment approval agency or a financial

supervisor may be a very important source of information about cross-border transactions in services.

Under such circumstances, it is important that the legal or other arrangements are in place allowing

the agency responsible for the compilation of a particular data set to receive or get access to the

relevant data sources.

2.12. When the compiling statistical authority is dependent upon other national institutions for data,

close cooperation and coordination is needed. Such cooperation is facilitated by the appropriate

legislation. In this context, it is a good practice that compilers actively participate, whenever

appropriate, in the necessary modifications to national legislation or relevant administrative

regulations in order to establish a solid foundation for enhancing the quality and timeliness of the

statistics. It is a good practice that the national laws and regulations define the rights and

31 Regulation No 184/2005.

http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2005:035:0023:0055:EN:PDF.

32 Regulation No 716/2007.

http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2007:171:0017:0031:EN:PDF.

responsibilities of all agencies involved in the collection, exchange, processing, compilation and

dissemination of the statistics, so that those agencies will be in a better position to establish the

necessary institutional arrangements detailing their involvement in the statistical process. For

instance, if adequate legal provisions are in place, the responsible agency could establish, faster and

more efficiently, a working arrangement with the organizations keeping records relevant to statistics

on the international supply of services. See chapter 3 for further discussion of institutional

arrangements.

D. Legal acts governing content and availability of data sources

2.13. If the statistics are based on administrative records, it is advisable to include a paragraph in

the legal text that gives the statistical office a legal right to access these data sources. Such language

would facilitate the cooperation between the institutions involved, thereby contributing to timely data

deliveries and ensuring transparency.

2.14. One of the administrative sources relevant to trade in services statistics is customs records.

The World Customs Organization (WCO) is the international platform at which countries reach legal

agreements on customs regulations, including those relevant to compilation of data on international

freight and insurance related to the transportation and customs clearance of goods. Among the most

relevant WCO conventions is the revised international convention on the simplification and

harmonization of customs procedures (known as the revised Kyoto Convention),33 which provides

standards for various customs procedures (for example, procedures on inward and outward processing

of goods which have to be understood when compiling, for example, such items as manufacturing

services on physical inputs owned by others). The WCO also participates in setting legal provisions

for the customs valuation of goods, which has significant consequences on the valuation of the related

international transactions in services. In this context, it should be noted that it is the WTO’s

responsibility to formally adopt such provisions and amend them as necessary.34

2.15. Much of the data need for measuring the international supply of services come from statistical

surveys or from ITRS, formerly known as foreign exchange record systems. Most ITRS evolved as

by-products of foreign exchange control acts which were, and in many instances still remain, legally

binding. The statistical compilers should be well aware of the contents of the legal provisions

underpinning the national ITRS and make full use of them. Also, as countries are increasingly

planning to remove certain legal obligations, statistical compilers should prepare themselves well in

advance to make necessary adjustments in their data collection arrangements.

2.16. The importance of a well-established legal basis for statistical surveys is recognized and

promoted by all concerned international and regional organizations. For example, according to the

IMF, good legal authority needs to state that reporting of statistical information is mandatory,

especially for large enterprises.35 It is a good practice to explicitly refer to such legislation in the

resident/non-resident trade in services statistics and FATS survey forms.

2.17. Compared to outward FATS, inward FATS is often easier to collect because the relevant

enterprises are present in the compiling economy. Often only information about the foreign-owned

share of a domestically-located enterprise needs to be collected, which, in turn, can be linked to

existing information in the national business statistics. In the case of outward FATS, where the

33 The International Convention on the Simplification and Harmonization of Customs procedures entered into

force in 1974. The revised Kyoto Convention (RKC) was adopted in June 1999. The provisions contained in the

RKC aim at the facilitation of trade but at the sam e time make customs records a highly standardized a nd

reliable data source for trade statistics across co untries. The RKC comprises a Body, a General Annex and

Specific Annexes.

34 Statistical compilers should take note of the WTO Agreement on Customs Valuation; see IMTS 2010, Annex

35 See BPM6 Compilation Guide, paragraphs 2.5.

relevant economic entity is located abroad, the legal acts should provide a mandate for statistical

compilers to require information from domestic enterprises on their foreign affiliates located in other

countries. This aspect might cause difficulties for compilers because of the limited data availability

and sensitivity to reporting such data. In either case, it is important that the compilers have a clear

legal mandate for collecting the data.

E. Legal acts protecting confidentiality

2.18. According to the UN fundamental principles of official statistics, individual data collected by

statistical agencies for statistical compilation are to be strictly confidential and used exclusively for

statistical purposes (UN Statistical Commission, 14 April 1994).36 Statistical confidentiality is a key

element in producing reliable statistics as it is important to gain the trust of the data providers. Thus,

legal provisions should be established to ensure confidentiality and proper use of data and prevent

identifiable enterprise-specific information from being obtained in the disseminated statistics.

2.19. The legal acts on confidentiality should also address the use of administrative data for official

statistical purposes. In particular, it is important that legal acts state that administrative data

forwarded to the statistical authority become statistical data upon receipt, which implies that data

validated and edited by the statistical agency should not be shared with the administrative authority

which initially provided the administrative data. Examples of legal acts on data confidentiality are

provided in boxes 2.1 and 2.2.

2.20. Confidentiality of customs declarations. In general, customs declarations are not subject to the

same level of confidentiality measures as are other statistical instruments. By design, customs

declarations are used to assess tariffs, fees and taxes, and to enforce multiple agencies’ requirements

for admissibility of goods into the country or to enforce the country’s exports laws and regulations.

Once transmitted to the agency responsible for the compilation of international trade statistics, in

many cases, that agency treats the information as confidential. However, in most cases, the compiling

agency does not subject all data to rigorous disclosure reviews, and rather applies ‘passive disclosure’

methods by which importers/exporters inform the agency of possible situations for investigation and

for some form of statistical suppression. This fact should be well noted by the statistical compilers

while considering access to customs declarations for obtaining, for example, information on cross-

border trade in services.

2.21. The compiling agency may also establish appropriate regulation to safeguard confidentiality

in the exchange of basic information among agencies. However, regardless of the legal status of

confidential information, whether personal or commercial, this information should not be excluded

from the statistics and should be reported in aggregate form so that the confidential aspects of these

operations cannot be identified (see Chapter 20). It is further desirable that national legislation defines

rights and responsibilities regarding access to the micro-data, highlighting the appropriate principles

and procedures. The responsible agency should cooperate with the national legislature to establish

such laws.

36 UN Statistical Commission, 14 April 1994. http://unstats.un.org/unsd/dnss/gp/fundprinciples.aspx and

http://unstats.un.org/unsd/dnss/gp/FP-New-E.pdf. In addition, the General Assembly adopted Resolut ion

A/RES/68/261 entitled "Fundamental Principles of Official Statistics (without a vote) thereby endorsin g the

Fundamental Principles of Official Statistics, as adopted by the Statistical Commission in 1994 and reaffirmed

in 2013, and endorsed by the Economic and Social Council in its resolution 2013/21". The draft text, which was

adopted without any changes, can be found in A/68/L.36 and at

http://www.un.org/en/ga/search/view_doc.asp?symbol=A/68/L.36.

Box 2.1 The Confidentiality Act of the Philippines

Confidentiality of data in the Philippines is based on provisions of the Commonwealth Act 591, Section 4. The

Act states, inter alia, that data furnished to the National Statistics Office by an individual, corpor ation,

partnership, institution or business enterprise shall not be used in any court or in any public office either as

evidence for or against the individual, corporation, association, partnership, institution or business enterprise

from whom such data emanates; nor shall such data o r information be divulged to any person except authorized

employees of the National Statistics Office, acting in the performance of their duties; nor shall such data be

published except in the form of summaries or statistical tables in which no reference to an individual,

corporation, association, partnership, institution or business enterprise shall appear. Any person violating the

provisions of this section shall, upon conviction, be punished by a fine or by imprisonment, or by both.

See: http://www.census.gov.ph/content/commonwealth-act-no-591

Box 2.2 Legal act on confidentiality - example of the European Union

Member States of the European Union have to comply with the regulation on European Statistics (Regulation

(EC) No 223/2009 of the European Parliament and of the Council) which contains provisions on data

confidentiality in its Article 20. The article stat es, in particular, that cconfidential data obtained exclusively for

the production of European statistics shall be used by the NSIs and other national authorities and by the

Commission (Eurostat) exclusively for statistical purposes unless the statistical unit has unambiguously given its

consent to the use for any other purposes” (Article 20, point 2), and that statistical results which may make it

possible to identify a statistical unit may be disseminated by the NSIs and other national authorities and the

Commission (Eurostat) in the following exceptional cases: (a) Where specific conditions and modalities are

determined by an act of the European Parliament and of the Council acting in accordance with Article 2 51 of the

Treaty and the statistical results are amended in such a way that their dissemination does not prejudice statistical

confidentiality whenever the statistical unit has so requested; or (b) Where the statistical unit has unambiguously

agreed to the disclosure of data”. (Article 20, poi nt 3 and 3(a))

See:. http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2009:087:0164:0173:en:PDF

F. Country experiences

F.1. Country experience: the United States

2.22. The authority to collect statistics of international trade in services in the United States is

ultimately delegated to the Bureau of Economic Analysis (BEA), a statistical agency within the U.S.

Department of Commerce. The primary legal provision enabling BEA to collect information in a

timely manner from relevant institutions is known as the International Investment and Trade in

Services Survey Act ("the Act") (P.L. 94-472, 90 Stat. 2059, 22 U.S.C. 3101-3108, as amended)

37.

Provisions in the Act ensure that US entities (i.e., businesses, universities, hospitals, etc.) engaged in

international investment and trade in services are required to report their international transactions on

a periodic basis to the BEA. The Act specifies that the survey data may only be used for statistical and

analytical purposes. Access to the data is limited to officials and employees (including consultants and

contractors and their employees) of government agencies that are designated by the President to

perform functions under the Act. Certain other government agencies may be granted access to the data

under the Foreign Direct Investment and International Financial Data Improvements Act of 1990, but

only for limited statistical purposes. BEA is prohibited from granting another agency access to the

data for tax, investigative, or regulatory purposes. BEA cannot publish or otherwise release the data

collected on its surveys in a form that would allow the transactions of an individual reporter to be

identified.

2.23. The other primary legal provision governing the collection of resident/non-resident trade in

services statistics and FATS data is the Paperwork Reduction Act of 1995. By provisions of this act,

37 See A Guide To BEA’s Services Surveys; available at: http://www.bea.gov/surveys/pdf/surveysu.pdf

US government surveys must undergo an approval process in which the agency in charge of collecting

the data is required to demonstrate to the approving authority (the Office of Management and Budget)

the following three conditions: (1) the intended data are necessary, (2) they cannot be obtained from

an existing source, and (3) their collection does not place an unreasonable burden on respondents. As

part of the survey design and clearance process, BEA publishes notices about proposed surveys in the

Federal Register. In these notices, BEA requests comments from users and respondents on all aspects

of the data collection, including BEA’s estimate of the burden imposed by the reporting requirements.

BEA considers all comments before making final decisions on the scope and design of its surveys.

BEA makes every effort to balance the needs of data users for complete, accurate, detailed, and timely

data and the concerns of respondents about the burden imposed by the reporting requirements. By

convention, approval of a given survey must be renewed within 3 years.

F.2. Country experience: Costa Rica

2.24. In Costa Rica, trade in services statistics are compiled and disseminated in accordance with

the terms and conditions of the National Statistical System (SEN) Law No. 7839 of November 4 ,

1998 and the Central Bank of Costa Rica (BCCR) Organic law 7558 of November 3, 1995 (with

subsequent revisions). The Central Bank of Costa Rica (BCCR)’s Organic Law does not specifically

assign the task of compiling trade in services statistics to the BCCR. Article 15(d) of the INEC/SEN

law officially assigns to the BCCR the task of preparing the basic statistics needed to prepare the

national accounts and other macroeconomic accounts. However, the BCCR has no legal basis to

request information from the non-financial private sector in order to compile trade in services

statistics. Thus, it is not permitted to impose sanctions on entities that do not provide data. In view of

this limitation, staff of External Sector Statistics Area (AESE) and the Economic Surveys

Area (AEE) have adopted procedures to motivate data providers to report their information, including

letters explaining to respondents the importance of providing the requested data and sending them

reports based on the statistical contribution as well as periodical consultations when visiting the

companies. The average level of response to surveys is 90 percent.38

F.3. Country experience: India

2.25. In India, the collection of data foreign liabilities and assets (FLA) of Indian companies is

mandated by the Foreign Exchange Management Act (FEMA) of 1999. It is mandatory for Indian

companies which have received foreign direct investment (FDI) and/or made overseas investment in

any of the previous year(s), including the current year, to submit an annual return on FLA to the

Reserve Bank of India (RBI).39 Non-filing of the return before the due date is treated as a violation of

FEMA.

2.26. Initially, the objective has been to collect comprehensive information on the operations of

Indian companies having foreign participation in equity capital, including counterparty country

information for India’s participation in the IMF’s annual global Co-ordinated Direct Investment

Survey (CDIS). However, beginning in 2012, the scope of FLA has been extended to collect

information for the compilation of inward Foreign Affiliates Trade Statistics (FATS).

38 International Monetary Fund’s Special Data Dissemination Standards website for Costa Rica

http://dsbb.imf.org/Pages/SDDS/CtyCtgList.aspx?ctycode=CRI

39 Further information on Reserve Bank of India’s FLA return is available here

http://www.rbi.org.in/scripts/FAQView.aspx?Id=95

Chapter 3 Institutional arrangements

3.1. Scope. This chapter describes the need for and purposes of institutional arrangements in

the context of the implementation the statistical framework recommended in MSITS 2010 for

measuring the international supply of services. It elaborates on characteristics of effective institutional

arrangements and on good practices in setting up such arrangements under different country

circumstances. The chapter consists of the following sections: summary of good practices (section A);

the need and purposes of institutional arrangements (section B); characteristics of effective

institutional arrangements (section C); and country practices (section D).

A. Summary of good practices

3.2. It is a good practice that agencies involved in collection and compilation of data on the

international supply of services establish institutional arrangements that involve the key producers and

data users, properly reflecting the country's needs, priorities and resources. Such institutional

arrangements should present a clear division of responsibilities and work between the agencies

involved in the compilation of statistics on services transactions between residents and non-residents,

FATS as well as additional monetary and non-monetary indicators for analysing the international

supply of services. It is essential that appropriate channels of communication and mechanisms of

coordination.

3.3. This Guide underscores that institutional arrangements lay the groundwork for effective

process management, from the identification of data sources to the dissemination of output and for

promoting communication between the staff of the different institutions involved. Institutional

arrangements should be based on the legal framework and elaborate upon it as necessary. Institutional

arrangements should be periodically reviewed and improved as necessary to keep them relevant. An

advisory committee, or a similar body, should be established in order to support sound decision-

making and to take into account the interests of stakeholders.

B. The purpose and types of institutional arrangements

3.4. The production of official statistics typically requires the participation of several agencies

and, consequently, the establishment of institutional arrangements. In the area of trade in services

statistics, agencies that may be involved in the statistical process may include the National Statistical

Office (NSO), the Central Bank (CB), the Ministry of Trade, the Ministry of Economy, the Ministry

of Finance, the Tax authorities, Immigration authorities, the National Tourism Administration, Border

protection agencies, Customs administration, Financial markets regulators, Chambers of Commerce

and Investment promotion bodies.

3.5. The institutional arrangements are generally understood as a set of agreements on the division

of the responsibilities between the agencies involved in the collection, compilation and dissemination

of data pertaining to a given statistical domain. These arrangements ensure that official statistics meet

users’ needs, follow quality standards and are compiled and disseminated in the most efficient way.

Meeting users’ needs is especially important in a relatively young and wide statistical domain like

statistics of international trade in services. The scope of institutional agreements may range from

determining the complete process of the statistical production and dissemination to regulating certain

parts of this process.

3.6. National statistical systems are organized on the basis of the statistical and other

applicable national laws and regulations, which, to different degrees, specify the rights and

responsibilities of the involved agencies thus defining main features of the county’s statistical system.

Usually, two main types of national statistical systems are differentiated - centralized and

decentralized statistical systems40. A national statistical system is referred to as centralized if the

management and operations of the statistical programmes are predominantly the responsibility of a

single autonomous government agency. A national statistical system is commonly referred to as

decentralized if the statistical programmes are managed and operated under the authority of different

institutions with coordination normally provided by a single body.

3.7. Institutional arrangements should ideally complement the legal framework (see chapter

2). Especially in cases in which the legal framework is weak, institutional arrangements can play an

important role in improving it and addressing the current constraints. Different types of institutional

arrangements can equally provide for statistics on the international supply of services that follow

internationally recognized methodological guidelines, utilize all available statistical sources in an

efficient way and apply appropriate compilation procedures. Practical examples from countries with

different statistical systems are provided to help in setting up institutional arrangements in a most

effective way at the end of this chapter.

C. Characteristics of effective institutional arrangements

3.8. Institutional arrangements should involve the key producers and users of the statistics and

can be set up in different ways depending on each country's needs, priorities and resources. They

should contribute to establishing appropriate channels of communication and mechanisms of

coordination to ensure efficiency in statistical production. Pre-existing institutional arrangements in

related statistical domains (e.g. in international merchandise trade and tourism statistics) should be

taken into account and built upon when possible.

3.9. As part of the balance of payments, resident/non-resident trade in services statistics are

important to monetary policy analysis and, together with the national accounts and other economic

statistics, describe a country’s economic development. Therefore, NSOs and CBs often share

responsibilities for the collection and compilation of these statistics.

3.10. Another important analytical aspect of which statistical compilers should be aware is the

need of countries’ economic agencies (such as Ministries of Economic Affairs and the Chambers of

Commerce, among others) to conduct assessments of the competitiveness of countries and economic

sectors for the design of economic policies and international trade negotiations based on GATS.

Furthermore, the compilation of statistics on the international supply of services in some areas

coincides with other mandatory regulations. For example, Financial Market Authorities are typically

responsible for banking and insurance supervision. Moreover, NSOs, NCBs, and other institutions

may play very important roles in collecting, producing and disseminating foreign affiliate statistics

(FATS), in accordance with the legal mandate in the statistics area assigned to each institution.

3.11. The success of the institutional arrangements, in most cases, depends on the existence of

a clear division of the responsibilities and mutually beneficial cooperation between NSOs and CBs

(and possibly other agencies involved), which have historically developed in different ways. In view

of the growing need for information going hand in hand with rising cost consciousness, NSOs and

CBs should seek cooperation in focusing on their respective expertise, making use of existing data

and ensuring consistency in statistical production.

3.12. This process is further stimulated by the planned expiration in many countries of the bank

settlements systems (traditionally the main data source of central banks for balance of payments

statistics, which cover trade in services). These systems are generally being gradually replaced by

enterprise surveys as the main data source for the compilation of trade in services statistics. This

40 For details see: Guidelines on Integrated Economic Statistics, United Nations publication,

ST/ESA/STAT/SER.F/108, 2013, paragraphs 3.33 – 3.39.

transition leads to a more evident need for closer cooperation and coordination between the CBs and

the NSOs, as the latter are normally conducting enterprise surveys and maintaining the business

registers.

3.13. NSOs and CBs should also look for close cooperation with the Chamber of Commerce

(or other representatives of a country’s private sector) to get support in producing high-quality data.

On the one hand, Chamber of Commerce and/or other representatives of a country’s private sector can

inform enterprises about the importance of timely and accurate reporting, the use of electronic media

and support the communication between statistics producers and enterprises in survey design as well

as in the interpretation of results. On the other hand, NSOs as well as NCBs can make customized

datasets available to the representatives of private sector which would reflect their specific economic

interests.

3.14. CBs and Financial Market Authorities work closely together in fulfilling their respective

tasks for financial market stability, sometimes centralized in a single institution. Therefore, they

normally cooperate closely in mutual assistance and no additional legal act is needed for the sharing

of information. However, besides institutional arrangements, CBs as well as NSOs should ensure they

have legal access to administrative data on banking and insurance transactions that are collected for

supervisory purposes.

3.15. The characteristics of effective institutional arrangements are as follows:

i. They should take account of the respective responsibilities of the institutions involved

that cover all stages of the statistical process – from the identification of user needs and the

collection of raw data through data compilation, dissemination and evaluation;

ii. The rights and responsibilities of the institutions involved should be clearly defined to

avoid misunderstandings, duplication of work or omission of significant elements of work;

iii. The terms of cooperation should be laid out in a legal document so that any changes

to administrative procedures or statistical processes that could affect data compilation become

an integral part of the terms of cooperation and could be dealt with in advance;

iv. At the same time, institutional arrangements should leave room for necessary

flexibility in every-day statistical production;

v. Given the legal foundations of the cooperation of various agencies, one institution

(the national statistical office, the central bank or a specially established interagency body)

should have a clear mandate to monitor and coordinate aspects of the production process of

statistics on the international supply of services, as well as disseminate the data and keep in

contact with international organisations and other data users;

vi. The main user groups should be included in the institutional arrangements and their

needs should be accounted for given the legal obligations and resource restrictions of the

institutions that produce statistics.

3.16. Further, the characteristics of effective cooperation can be described as:

i. Operationalization of the relevant international statistical standards and good country

practices;

ii. Development and implementation of the work programme for collection and

compilation of data in accordance with the statistical framework for describing the

international supply of services, including establishment of appropriate interagency data

compilation arrangements;

iii. Establishment of close contact and regular consultations with the user community to

guarantee the analytical and policy relevance of the data compiled and disseminated;

iv. Promotion of an integrated approach to data compilation as well as of appropriate

quality management to ensure that high-quality data on the international supply of services

meet ever-increasing user demands and are made available to users despite limited resources;

v. Dissemination of easily accessible and detailed statistics on the international supply

of services to users, both domestically and internationally, and

vi. Consultations with enterprises on questions concerning reconciliation and exchange

of data.

3.17. Finally, some guidelines for creating effective institutional arrangements and terms of

cooperation are:

i. Adopt a strategic approach to multi-level planning for advancing the integration of

economic statistics;

ii. Implement effective process management from the identification of data sources to

the dissemination of outputs;

iii. Periodically review institutional arrangements and initiate necessary adjustments in

order to keep them relevant in the light of evolving user needs and emerging new data

sources;

iv. Establish an advisory committee so that the interests of all stakeholders are taken into

account and the committee members assist in the development of data by supporting sound

decision-making;

v. Promote communication between the staff of the different institutions involved to

develop an understanding of the entire production process of statistics compiled within the

framework for describing the international supply of services as recommend in MSITS 2010.

D. Country experiences

D.1. Country experience: Austria

3.18. Statistics on resident/non-resident transactions in services. In Austria, the

Oesterreichische Nationalbank (OeNB) is legally responsible for compiling and disseminating of

resident/non-resident trade in services statistics (Foreign Exchange Act 2004 § 6 (1)). In order to keep

the costs of data compilation low – both in reporting for as well as producing statistics, the OeNB

opted for a close cooperation with Statistics Austria. The two institutions have signed a basic

cooperation framework agreement to guide their cooperation in all fields of statistics related to the

Austrian economy and based on international and/or national legislation. The basic principle of

cooperation is that both institutions concentrate on their respective expertise and data access, which

governs the determination of specific areas of activity. The basic agreement defines the compilation

of services trade statistics as an area of “intensive cooperation” as the OeNB and Statistics Austria

work jointly on a single statistical product, in contrast to areas of “vital interest,” where one party is

responsible for data production and the other is a main user of the data. The details of cooperation in

this area are laid down in an individual service contract where one institution provides input for a

statistical product for which the other institution bears the legal obligation and responsibility. The

contract mainly specifies: (a) individual production stages, dates and interfaces, (b) classifications,

revisions and quality measures, (c) access to non-published data, (d) utilization and reconciliation of

existing registers and administrative data, (e) evaluation of new statistical, technical, financial and

legal requirements as well as (f) coordination of the stance to be taken in national, EU- and

international bodies.

3.19. FATS: In contrast to resident/non-resident trade in services statistics, the NSO is

responsible for compiling and disseminating FATS in Austria. These statistics are compiled in close

cooperation with the OeNB, which has a service provider contract with the NSO. Concerning Inward

FATS, the OeNB determines which enterprises are foreign-controlled and the NSO collects the

respective variables as part of the structural business statistics. Concerning Outward FATS, the

respective variables are collected by the OeNB as part of the survey on FDI. By applying this

approach, FATS can be compiled with minimal additional reporting burden for enterprises in Austria.

3.20. In addition to regular information sharing in the course of statistics production, the OeNB

and Statistics Austria have set up a committee consisting of at least two higher voting members of

each institution. The committee meets at least once each quarter to monitor the joint activities and

recommend enhancements where possible. It further initiates extensions and updates to the existing

areas of cooperation including the prolongation and amendments to the basic cooperation framework

agreement.

3.21. With the introduction of direct reporting in compiling external statistics the OeNB also

initiated close cooperation with the Austrian Chamber of Commerce to support contacts with the

business sector. The two institutions decided to enter into a basic cooperation framework agreement

with the main focus on enhancing efficiency in producing and dissemination of up-to-date and

relevant statistical information. On the one hand, the OeNB aims at minimizing costs of statistical

production on both sides – in the data reporting by enterprises as well as in the Central Bank – by

making utmost use of administrative and register information. On the other hand, the OeNB makes

efforts to disseminate easily accessible and detailed statistical information in order to cut costs of

accessing the data. The Chamber of Commerce assists the OeNB in fulfilling its tasks by supporting

communication with enterprises in various ways; e.g., by offering access to internal media and events

and by arguing for the importance of statistical information in general. At the same time, the Chamber

of Commerce fosters the use of administrative and existing statistical information to keep reporting

obligations to a minimum and advocates the simplification of reports; e.g., by using electronic media.

D.2. Country experience: Malaysia

3.22. In Malaysia all statistics collected and published by the Department of Statistics Malaysia

(DOSM) are governed by the Statistics Act, 1965 (Revised 1989). Under the terms of this Act, DOSM

has the independence to determine the coverage, contents, methodology and periodicity of data

collection. For the collection, compilation and dissemination of trade in services statistics (including

FATS), DOSM has the lead responsibility. Memoranda of Understandings (MOUs) were established

between DOSM and the Central Bank of Malaysia (BNM) and Tourism Malaysia (TM) to facilitate

and improve cooperation with these agencies. BNM, through its Statistical Services Department, is

responsible for compiling BOP statistics from International Transactions Reporting Systems (ITRS),

while Tourism Malaysia collects tourism-related data to be used for statistics on the international

supply of services. In addition to these agencies, there are 14 other agencies that also contribute.

3.23. To coordinate the dissemination of trade in services statistics, DOSM chairs the quarterly

meetings of the Inter-Agency Planning Group (IAPG) to brief members on the data prior to

publication. The members include the Economic Planning Unit (EPU), Treasury, BNM, Ministry of

International Trade and Industry (MITI), the Malaysia External Trade Development Corporation

(MATRADE) and the Malaysia Industrial Development Authority (MIDA). Technical meetings with

BNM and other agencies are held as necessary. In addition, The high-level committee structure of the

Industrial Master Plan for Malaysia includes a Working Group on Services Statistics (WGSS)

particularly to monitor the development of trade in services statistics.

D.3. Country experience: Spain

3.24. In Spain, the Bank of Spain (BE) is responsible for the compilation and dissemination of the

resident/non-resident trade in services statistics and the National Institute of Statistics (INE) is

responsible for production and dissemination of FATS. The BE estimates travel services transactions

between residents and non-residents based on information from surveys developed by the different

institutions, including INE and the Institute of Tourism Studies (IET). A Cooperation Agreement

between INE, IET and BE was established to outline the exchange of information needed to estimate

the Travel item. For its part, the BE estimates the Other Services item of the BoP on the basis of a

bank settlements system combined with direct reporting for some large declarants.

3.25. The planned expiration (set for 2014) of the bank settlements system currently used by

BE for compiling the Other Services item of BoP led to a 2004 agreement with INE for the joint

design of the International Trade in Services Survey (ITSS). INE is responsible for the design of the

sample, the fieldwork and the tasks subsequent to data collection (i.e., editing, imputing and grossing-

up of the sampling data), while BE contributes the main framework of the survey and the reporters of

international services transactions obtained from its bank settlements system. In 2004 BE signed an

agreement with INE for the joint design of the International Trade in Services Survey (ITSS). INE is

responsible for the design of the sample, the fieldwork and the tasks subsequent to data collection

(i.e., editing, imputing and grossing-up of the sampling data), while BE contributes the main

framework of the survey and the reporters of international services transactions obtained from its bank

settlements system.

3.26. Since 2004 INE also has had a Cooperation Agreement with the Spanish Tax

Administration Agency (AEAT), which annually forwards the micro-data of VAT records for

international goods and services transactions to INE as well as the micro-data of VAT records

specifically on services transactions within the EU. Within this Agreement, INE also receives

annually the micro-data on the INTRASTAT/EXTRASTAT operators that dispatch or bring in goods

for processing or repair, which is useful for identifying the population that engages in the processing

and repair services category of EBOPS 2010.

3.27. For the compilation of Outward FATS, INE has a Cooperation Agreement with the

Ministry of the Economy and Competitiveness under which every year the latter forwards micro-data

of the Foreign Investments Register (FIR) to INE, which means that there is no need for a specific

survey.

3.28. Inward FATS are compiled based on the business structural surveys conducted by INE in

relation to the industrial, services and R&D sectors, to which is added information from the Ministry

of Development on the construction sector, information from the Ministry of the Economy and

Competitiveness (DG for Insurance and Pension Funds) on the insurance sector, and BE information

on the financial sector. There are no ad hoc cooperation agreements with these administrative bodies

for this exchange of information.

Part II Data Collection

Scope. Part II focuses on data collection, while Part III deals with data compilation. It is recognized

that the boundary between data collection and data compilation is not always clearly defined.

However, efforts were made to discuss in this part main aspects of data collection, such as data

sources, their advantages and shortcomings, as well as various aspects of data collection process. Part

II begins with an introductory Chapter 4 providing an overview of data sources used within the modes

of services supply framework, which is followed by the description of registers and survey frames

(Chapter 5) and continues with elaboration of enterprise and establishment surveys (Chapter 6),

surveys of persons and households (Chapter 7), international transaction reporting system (Chapter 8),

administrative records (Chapter 9), and other data sources (Chapter 10). Part II is concluded by a

comparison of various data sources (Chapter 11).

Chapter 4 Introduction and overview of data sources within the modes of

services supply framework

4.1. Scope. This chapter serves as an introduction to the other chapters of Part II by briefly

describing the main data sources which countries are encouraged to use in collecting information

necessary for the compilation of statistics on services transactions between residents and non-

residents, FATS and additional indicators on the international supply of services. Part II is followed

by Part III, which focuses on the data compilation issues.

A. Data sources and data collection: an overview

4.2. Part II describe the main data sources used for compiling statistics of international supply of

services. While the international transaction reporting system was in the past the most prevailing data

source of information for resident/non-resident trade in services statistics, it is being increasingly

supplemented by other sources of data as more detailed information on services categories and trading

partners is required. Nevertheless, for the balance of payments services statistics, the ITRS remains an

important data source in many countries and it should be utilized. Increasingly, statistical business

registers, which serve both as a source of information and the basis for the organization of various

surveys, are being recognized for their central role in the implementation of an integrated approach of

statistics and are a prerequisite for building a forward-looking programme of data collection in this

statistical domain. The use of administrative sources and other sources is another essential part of

such a programme, as these sources can complement statistical surveys and/or provide information

when, for example, surveys are not cost effective or difficult to organize.

4.3. Possible data sources for compilation of statistics, according to the recommendations of

MSITS2010, and their definitions are listed below (each data source is covered more in depth in each

of the corresponding chapters cited):

i. Statistical business registers (chapter 5). The statistical business register (SBR) is commonly

understood as a register of economic entities active in the national economy. If various types

of those entities and their characteristics are taken into consideration then the definition can

be further elaborated.41

ii. Survey (sampling) frame (chapter 5). The survey frame (also called the sampling frame) is the

statistical tool used to gain access to the target population that is to all economic entities

41 See Eurostat publication Business registers: Recommendations manual at:

http://unstats.un.org/unsd/EconStatKB/Attachment174.aspx.

which are intended to be surveyed. There are two types of frames: list frames and area frames.

The frame is the backbone of the statistical system.42 It represents what must be regularly

measured by the statistical system. Its coverage must be as complete as possible and reflect

the organizational structure of all statistical units of the economy.

iii. Enterprise and Establishment Surveys (chapter 6). These surveys can be one of the following

types:

i. Census: Includes all members of the population;

ii. Partial coverage collection survey: Includes all enterprises above a certain threshold

measured in terms of their dimensions (e.g. nominal capital) or other variables

(e.g., significant cross-border activity);

iii. Random sample survey: Includes enterprises that are preferably selected according to

rigorous sampling procedures, with the results “grossed up” for the whole

population;

iv. Stratified random sample: groups population components according to the size of

selected activity so that enterprises within different strata have different

probabilities of selection. Usually, this is a combination of the partial coverage

and random sample options but is more sophisticated and might produce a high

level of coverage while remaining relatively cost-effective.

iv. Surveys of Persons and Households (chapter 7). Surveys of individuals or households,

with household being defined as a group of persons who share the same living

accommodation, who pool some, or all, of their income and wealth and who consume

certain types of goods and services collectively, mainly housing and food.43

v. International Transactions Reporting System (chapter 8). A system of collecting data of

individual international settlements and/or transactions from banks, enterprises and

individuals. In most countries that maintain ITRS, the reporting is mandatory and

settlement data have been collected.

vi. Administrative records (chapter 9). Administrative records are compiled for regulatory

purposes or to support and document the administration of various government

programmes (such as immigration regulation, social security benefits, education, and

health).

vii. Other data sources (chapter 10). These sources may include: credit card records,

mobile phone records, records of business associations, financial statements of

companies, reports of chambers of commerce, records of investment promotion

agencies, private databases and data compiled by trading partners. Some of these

sources are part of the body of information referred to as Big Data.

4.4. Chapters 5-10 describe the roles and characteristics of these data sources (such as their design

and maintenance); how they can be used in the context of data collection of resident/non-resident

trade in services, FATS and modes of supply; their advantage and limitations, when relevant; and

country experiences in using such sources in statistical compilation.

42 Guidelines on IES, paragraph 5.69.

43 SNA 2008, paragraph 24.12.

4.5. In the case of enterprise surveys, chapter 6 describes specific types of surveys used for

compilation of certain service categories are discussed in detail, including transportation surveys,

manufacturing services, insurance and financial corporations, R&D surveys, surveys of tourism

activities, construction surveys, structural business surveys for FATS collection, foreign direct

investment surveys in the context of FATS (by incorporating key FATS variables), and separate

foreign affiliates surveys. Country experiences are also presented on the use of enterprise surveys to

collect data for modes of supply, manufacturing services, construction, education, computer software

and IT services, and FATS, among others.

4.6. In the case of surveys of persons and households, chapter 7 highlights specific types of

surveys and how they can be used to collect data on the international supply of services. In particular,

population censuses can be used to gather benchmark information (in particular for compiling

outgoing mode 4 data) or used for household sampling; household and border surveys can be used to

collect data related to international travel, consumption of other services (e.g., internet

purchase/consumption of services, mode 4), and international provision of services of members of

households, in particular for self-employed persons (modes 1 or 4); and labour force surveys can be

used to collect information on the mode 4 variable “number of persons or trips” and on outbound

business travel.

4.7. Chapter 8 highlights the advantages and limitations associated with using an ITRS to compile

trade in services statistics. It also presents issues to consider regarding ITRS reporting thresholds

(different approaches for dealing with missing values due to ITRS thresholds are discussed in chapter

17 in Part III of this Guide).

4.8. Administrative records covered include tax records, customs records for estimating value of

trade related transport and insurance services, Immigration records and entry/departure cards, work

permits collected by the immigration authority, and population records. Administrative records or

commercial database on foreign affiliates are also useful for FATS but their forms and questionnaires

cannot be easily designed to provide data useful for statistical and analytical purposes. Thus, they

could rather be used as supplements to the survey on foreign affiliates. The chapter on administrative

records (chapter 9) also covers in detail how such sources can be used to collect data on modes 2 and

4.9. Chapter 10 on other data sources discusses the potential uses of Big Data; payment card data;

mobile phone data; external party sources; and linked microdata. The chapter also presents country

experiences in exploring the potential uses of such data sources to compile trade in services statistics.

4.10. Compiling statistics by partner country. There are a number of external sources that may also

provide information by partner country to which the compiler will have access, which can in

particular be useful to improve the quality of compiled statistics. These sources include bilateral data

compiled by compilers in other economies that represent the counterparts to transactions of residents

of the compiling economy.44 A similar approach can be adopted for other sets of data covered in this

compilers guide, such as for FATS.

4.11. When other sources are used, the compiler should make every effort to ensure that partner

country information is classified correctly. The compiler must also decide on the principle of

classification and the list of countries or country groupings to be shown. The country classification

should be based on the country of residence of the provider and the recipient of the service.45 The

same country classification should be used across all sources of data collection. If it is not possible to

44 Ibid., A5.21.

45 Ibid., A5.3.

obtain correctly classified data from the source, the compiler should, at least in significant cases,

investigate alternative sources to obtain supplementary information.46 If countries provide and/or

receive services from international organizations a separate partner group – international

organizations – should be used as such organizations are resident in an economic territory of their

own, and not the economy in which they are physically located (see MSITS 2010, paragraph 3.28).

B. Sources for modes of supply data

4.12. When considering sources for modes of supply data, compilers should carefully evaluate how

residence is defined in their country, be aware of the laws and regulations in place for migration and

trade in services, and assess how this can be used in a statistical context. Mode of supply data for

trade in services can be either collected through a direct reporting (surveys) or be estimated/modelled.

In many cases a combination of the two approaches should be used to obtain the required aggregates.

Using surveys to collect modes of supply data has the advantage that the compiler has a significant

control over the data that can be obtained and that they can be tailored to answer specific policy

questions. Modes of supply data are unlikely to change significantly in the short-term, so these extra

questions may not need to be included each time the survey is run. However, this advantage needs to

be weighed against other considerations, such as cost, respondent burden, and difficulty in

implementing the survey (such as respondents understanding the concepts so that they will report

correctly).

4.13. Sources for mode 2 movements of persons are likely the same as those used for the collection

of travel information, such as household, border, and labour surveys. For incoming mode 2 persons,

specific surveys targeting students, medical personnel and tourists could be used as well as border

surveys. Values calculated from household surveys need to have sufficient metadata accompanying

them as there are likely to be large sample errors associated with such numbers Often the data will

need to be combined with other sources, such as administrative data on border counts or entry and

departure cards, to obtain relevant data on the number of mode 2 movements/persons.

4.14. Regarding mode 4 types of persons, border and household surveys, enterprise surveys, and

potentially inward FATS surveys (if they include variables measuring exports and import of services

of the foreign affiliate) are an important source both for incoming and outgoing employees and of

self-employed providing services under a contract. As for mode 2, the data will most probably need to

be combined, in particular for compiling breakdowns, to obtain relevant data on the number of mode

4 movements/persons, e.g. through the use of data on characteristics sourced from surveys of persons

or households, combined with counts of those crossing borders. Use of data from partner countries

may also be relevant, in particular that it may be easier to capture the relevant information for sending

countries.

4.15. For compilers using an International Transaction Reporting System (ITRS), modelling the

relevant mode of supply may be the only option. Data on Mode 3 (commercial presence) will need to

be collected in addition to existing data on resident/non-resident services trade as this mode of

services supply falls outside the scope of service transactions measured under the Balance of

Payments framework.

C. Comparing data courses

4.16. Chapter 11 provides comparison tables on the advantages and disadvantages of each type of

data source in the context of compiling specific service categories, FATS and the number of mode 2

and mode 4 movements. The chapter addresses the coverage of each data source, the accuracy of

reporting, the timeliness and frequency of the source, the relevance, and the burdens of reporting and

46 Ibid., A5.23.

processing the data involved. In guiding compilers in determining which data sources are most

appropriate to use on a case-by-case basis, the chapter also lays the foundation for the discussion of

integration of data from different sources, which is introduced in Part III: Data Compilation in chapter

13. Integrating data from different sources is advised as the principle way to ensure the production of

more detailed and more comprehensive statistics, as well as to reduce the burden on survey

respondents. Compilers are advised, therefore, to keep this goal in mind when reading Part II.

Chapter 5 Statistical business registers and survey frames

5.1. Scope. A Statistical Business Register (SBR) is commonly understood as a register of

economic units resident in the national economic territory. An SBR is established and maintained for

statistical purposes; for example it provides a central sampling frame for business surveys and plays a

central role in the integrated collection and compilation of economic statistics, from which detailed

and interlinked indicators can be derived. This chapter focuses on how business registers and survey

frames can be used in the context of data collection of resident/non-resident trade in services, FATS

and modes of supply. It consists of four main parts: a summary of good practices (section A), roles

and characteristics of SBRs and survey frames (section B), a satellite register for trade in services and

use of business registers to identify potential mode 4 self-employed service suppliers (section C), and

some country examples (section D).

A. Summary of good practices

5.2. Compilers of data in accordance with the statistical framework for measurement of the

international supply of services are advised to use SBR as the central sample frame for their survey

programme in order to obtain better coverage, harmonisation of surveys, integration of trade in

services statistics with other economic statistics, reduction of costs, reduction of response burden,

prevention of double counting of statistical information, and above all, better quality and more

coherence in official trade in services statistics. A high-quality SBR helps to improve the efficiency

and coherence of the national statistical system.

5.3. International guidelines for statistical business registers have recently been developed and are

being continuously updated47. Compilers are advised to refer to these guidelines for more detailed

information on setting up and maintaining a business register. This Compilers Guide focuses mainly

on the role of SBR as a central sample frame for surveys related to international trade in services.

5.4. The maintenance and development of SBR should be well coordinated. It is a good practice to

have a clear agreement on the responsibilities of the agencies involved in the maintenance and

development of the SBR in the national statistical system. It should be noted that in some countries

this process is handled by one dedicated unit in the national statistical system, instead of several units

within the various substantive areas. This Guide advises that an appropriate legal framework is put in

place for enabling statistical authorities to access and use administrative records, especially tax and

social security records, to maintain SBR.

5.5. It is a good practice that the SBR maintenance process is based for a large part on the use of

administrative sources such as the administrative company register, register of sole proprietors,

administration. To ensure that SBR provides a solid basis for collection of data needed for measuring

the international supply of services, it is further advised to update SBR should be based also on

sources such as the settlements and international payments databases; trade registers; the FDI register;

balance sheet information; and other specific registers available from trade associations or regulatory

bodies.

47 See Guidelines on Integrated Economic Statistics, United Nations publication, ST/ESA/STAT/SER.F/108,

2013, Chapter 5, section C; see also materials avai lable on the website of the UNECE the Task Force

established to draft international guidelines on statistical business registers at:

http://www.unece.org/task_force_business_registers.html

5.6. It is very important that SBR uses the SNA 2008 definitions for its statistical units. To ensure

more efficient collection of data on the international supply of services by various modes, this Guide

advises to include in SBR additional indicators providing information on international transactions of

the registered entities, as wells as on turnover, economic activity, number of employees, balance sheet

variables, and data on foreign ownership, in order to properly carry out selection and stratification of

the statistical units, sampling and estimation. It is also a good practice to use SBR to identify the

mode 4 self-employed population as merchants and small manufacturers (including self-employed and

one-man companies) should be registered in it.

5.7. While it is a good practice that the national statistical system aims at maintaining one

multipurpose SBR, in practice, it may be useful to have a tailored-made satellite register consisting of

all enterprises which are engaged in the international supply of services. If established, it is a good

practice that such a satellite register is maintained by a dedicated unit within the agency responsible

for the compilation of trade in services statistics. Such a unit should, in particular, systematically

update this satellite register using the information available in the central SBR and actively participate

in the harmonization of the contents of these two registers.

B. Statistical Business Registers

B.1. Roles of the SBR

5.8. The UN Statistical Commission recommends the SNA 2008 to obtain a comprehensive and

coherent set of statistics of the national economy. Implementation of SNA 2008 begins with setting up

a basic data collection system for all economic activities. This effort goes hand in hand with setting up

a system for integrated economic statistics, which is based for a large part on using an SBR as the

central frame for all business surveys. Therefore, a number of regional and international agencies

have been actively engaged in establishing and improving SBRs, especially in Africa48, Asia and

Europe. These improvements will benefit the collection of data by means of business survey (and

some administrative data as well) for the compilation of trade in services statistics.

5.9. The SBR is a means to an end rather than an end in itself. As such, it is a vital component of

an integrated program of economic surveys. The ultimate goal is the production of comprehensive,

coherent, and high-quality economic statistics. Figure 5.1 illustrates the various roles of the SBR. An

important role of the SBR is to maintain and keep track of the changes of statistical units and their

characteristics due to real life events (see Section B.3 for details). This is a continuous process in

which constant modifications of a collection of statistical units occur in time and space. The

frequency of modifications depends on the update strategy of the SBR. In this respect the SBR can be

considered as a kind of ‘Live Register’ in which the composition of units constantly changes over

time49.

48 Guidelines for Building Statistical Business Registers in Africa: Laying the foundation for the harmon ization

of economic statistics programs, African Development Bank.

http://www.afdb.org/en/knowledge/publications/guidelines-for-building-statistical-business-registers-in-africa/.

49 Further details on the European experience in this respect can be found in the Eurostat manual on business

registers available at: http://ec.europa.eu/eurostat/ramon/statmanuals/files/KS-32-10-216-EN-C-EN.pdf

Figure 5.1 The roles of the Statistical Business Register

B.2. The SBR as the central sample frame

5.10. The primary benefits of maintaining one sample frame are better coverage, harmonisation of

surveys, integration of survey data, reduction of costs, reduction of response burden, prevention of

double counting of statistical information, and above all better quality and more coherence in official

statistics. Of course, these benefits can only be realized when one central register is used to derive a

sample frame.

5.11. There are three reasons why construction and use of an SBR as the central sample frame is

desirable. First, if survey frames are independently created and maintained, there is no means of

guaranteeing that they are harmonized. As a result there may be unintentional duplication and/or

omission of activities. Second, an SBR enables practical application of standard statistical units and

their classifications, which is a crucial requirement for survey outputs to be integrated. Third, it is

more efficient for a single organizational unit to maintain the SBR as a source of frames for all

business surveys than for each survey team to be independently maintaining its own frame.

5.12. An up-to-date survey frame is required for each repetition of a regularly conducted survey. It

is more efficient to maintain a frame so that it can support the sequence of repetitions of a survey than

it is to create the frame afresh with each repetition. This is particularly true in the case of sub-annual

surveys, where overlap of sampled units from period to period is essential. Survey frame maintenance

is best achieved through the development of a single statistical business register (SBR) and its use as

the source of frames for all business surveys.

5.13. The SBR serves also as the basis for grossing up the results from these surveys to produce

estimates for the entire business population, and is the main source for data on business populations

and their demography. The SBR should preferably cover as much national economic activity as

possible. However, the high cost-benefit ratio involved in covering the smallest units means that some

sort of cut-off is usually applied in practice. In addition to its role as sampling frame, a high-quality50

SBR can also improve the efficiency of the national statistical system by coordinating and spreading

the samples of the various statistical surveys, which should help reduce the response burden, and

improve coverage and congruence of the survey results. Finally, a comprehensive and up-to-date SBR

has a central role in achieving integration of economic statistics, and is essential for the full co-

ordination of source data that use the same basic information about business units51.

B.3. Characteristics of a SBR

5.14. The SBR typically list the economic entities that are of interest for economic statistics.

Economic entities have numerous characteristics, but some of the most important ones include their

classification by (a) institutional sector (as defined in SNA 2008), (b) economic activity (as defined in

ISIC, Rev.4) and (c) location. Most countries provide laws that enable economic entities to define and

the persons or institutions that own them. A legal entity can own goods or assets, incur liabilities and

enter into contracts. The legal entity (or unit) always forms, either by itself or sometimes in

combination with other legal units, the basis for the statistical unit52. A statistical unit defined as an

entity about which information is sought and for which statistics are ultimately compiled. It is the unit

that provides the basis for statistical aggregates and to which tabulated data refer.53 These may be

identifiable legal or physical entities or statistical constructs.

5.15. The SNA 2008 provides the standard definitions of the statistical units which are

recommended by the UN Statistical Commission for use in setting up data collection in all economic

areas54 As mentioned before, the MSITS conceptual framework is grounded in SNA 2008. The SNA

2008 definitions of the statistical units should therefore be used for trade in services statistics

purposes as well. Box 5.1 lists and briefly defines main types of statistical units. The statistical units

used in an SBR should be described by at least three sets of variables and characteristics, namely:

i. Identifier variables: identity number, name, address (including postcode), telephone

and fax numbers, electronic mail address and information to permit electronic collection of data,

value added tax (VAT) registration number or other administrative identity numbers.

ii. Economic/stratification characteristics: These characteristics are related to activity

classification (principle and secondary), size (e.g. number of persons employed, turnover, value

added) and location variables .e.g. country of global decision centre (UCI), countries where

enterprises or local units are located, information on whether or not the unit is engaged in

international trade.

iii. Demographic characteristics: recording calendar dates for important events like

commencement of activities, termination of activities, and joining or ceasing to be part of an

enterprise (group) permit an initial demographic analysis of the population of enterprises, local

units and enterprise groups.

50 Overall quality is not easy to measure, though sev eral of its specific aspects of it can be used as i ndicators,

e.g. coverage, accuracy of the data held, frequency of updates and consistency of processes (see also chapter

20).

51 Guidelines on IES, paragraph 3.29.

52 See International Recommendations for Industrial Statistics 2008 (IRIS 2008), the UN publication

ST/ESA/STAT/SER.M/90 , paragraph 2.15.

53 IRIS 2008, paragraph 2.12

54 In addition to SNA 2008 and IRIS 2008 and ISIC, Rev.4 the compilers may wish to consult the UNSD web –

publication Statistical Units, available at: http://unstats.un.org/unsd/industry/docs/stat_2008_6.pdf.

Box 5.1 Different types of statistical units

The institutional unit is an economic entity that is capable, in its own right, of owning assets, incurring liabilities

and engaging in economic activities and in transactions with other entities. Two main types of units may qualify

as institutional units: persons or groups of persons in the form of households, and legal or social en tities.

An enterprise is an institutional unit in its capacity as a producer of goods and services. An enterprise is an

economic transactor with autonomy in respect of fin ancial and investment decision-making, as well as authority

and responsibility for allocating resources for the production of goods and services. Enterprises under the

control of the same owner form an enterprise group to achieve economic advantages such as economies of

scale, control of a wider market and an increase in domestic productivity through more effective busin ess

management.

An establishment is an enterprise or part of an enterprise that is situated in a single location and in which only a

single productive activity is carried out or in which the principal productive activity accounts for most of the

value added. Note that the SNA 2008 also defines in dustries in terms of establishments.

There are two other statistical units that are often referred to in data sources relevant for statistics on the

international supply of services: A kind-of-activity unit is an enterprise or part of an enterprise that engages in

only one kind of productive activity or in which the principal productive activity accounts for most of the value

added; and a local unit which is defined as an enterprise or a part of an enterprise (for example, a workshop,

factory, warehouse, office, mine or depot) which en gages in productive activity at or from one location.

Source: based on the definitions provided in SNA 20 08 and IRIS 2008

B.5. Creation and maintenance of a statistical business register

5.16. The circumstances and factors, within which SBRs are built, can clearly be vastly different

across countries. The legal frameworks for acquiring data, as well as the access to human, financial

and technical resources will ultimately determine how countries can proceed. There are however some

key themes that recur, including:

i. The need to build effective partnerships with data suppliers, funding providers and the users

of the SBR by first making sure that the critical role of the SBR in delivering a coherent and

reliable national economic statistics programme is well recognized, and second by putting in

place governance structures and partner engagement mechanisms that are robust;

ii. The need to manage the implementation and operation of the SBR in a manner that allows it

to focus on and achieve its mission-critical purpose, which is to identify the population of

businesses of a country so that they can be surveyed to acquire useful economic data. There

are other secondary yet highly desirable roles that an SBR can fulfil, such as acting as a data

collection management and tracking tool. The original design and implementation plan should

allow for adding in these components, but only once the SBR has fully matured in its role as a

quality statistical frame;

iii. Generally, the approach should be to maintain simplicity to the extent possible. Conceptual

and technical complexities should be added in only when they serve a practical purpose, and

they should never detract the SBR from meeting its larger goals.

5.17. Even though the primary purpose of SBR is to provide a central frame for economic surveys

across statistical programmes the longer-term vision, however, should allow for adding features and

components that will further enhance the SBR’s value-added. For example:

i. SRB can serve as a source of register-based statistics. This requires seamless

integration of administrative data, adequate quality assurance, raw data treatment and

programming resources;

ii. A module to track respondents and response burden can be added. This module

requires human IT resources to develop and maintain server and database resources. This

module may or may not be efficient or necessary when using SBR in the early stages, since

population coverage remains limited and resources are directed towards the economic entities

that have the largest impact;

iii. A receptacle for tracking survey collection outcomes and response rates and a

“survey feedback” mechanism can be established to facilitate analysis of the survey efficiency

and results as well as to update the SBR on a more regular basis.

The IT professionals who will architect the data structures and larger system design will in particular

benefit from having this longer-term vision clearly pre-defined, thereby facilitating the addition of

these modules as the SBR evolves. To re-iterate, the SBR must first and foremost be a solidly reliable

listing of businesses from which statistical surveys can accurately measure the economic trends of a

country. Creating it will be a challenging task, as will keeping it up to date once it is in use. The

challenges entailed by the creation and on-going maintenance will be greatly facilitated by adhering to

the following principles.

5.18. Do not over-extend resources in the early stages by trying to cover all types of business.

While a highly developed SBR may cover a vast amount of the economic population, a new SBR

must focus on covering the population that is both most important and that can be most reliably

captured and reflected. The need to maximize limited human and technological resources, and to use

available funding efficiently, should limit the scope of the initial SBR population. Reflecting the

informal economy, which is highly diversified and for which no administrative data exist, cannot be a

focus of the SBR development project. Typically, for the macroeconomic indicators that are the

driving objective for the statistical programmes to be served, acceptable margins of statistical error

can be obtained by excluding the numerous businesses that are at the smallest end of the size spectrum.

Including the ‘micro’ businesses would add large volumes of records to be maintained, while adding

only very small increments to the statistical aggregates (such as GDP or balance of payments main

components) being produced. This is not to say that having these businesses will not be useful, as they

can inform important policy analysis pertaining to business formation strategies, small-business

financing and other micro-economic issues. This again is a desirable feature that is worth adding, but

only once the core objective of adequately supporting the key indicators produced by the national

accounts and balance of payments has been met.

5.19. Plan for a system that provides both live and snapshot versions of the register. It will likely

be necessary to have two instances of SBR: (1) a ‘live’ version, which can be used to receive updates

so that the updating of records entailed by on-going frame maintenance activities can be instantly

recorded, and (2) a ‘snapshot’ version produced from the live instance on a monthly, quarterly or

annual basis that survey programmes, which can be used to create their particular sample files. The

snapshot also provides a basis for period-to-period comparison of frame quality.

B.6. Governance of SBR

5.20. Governance and organizational structure is very important — not only for developing the

SBR programme itself, but even more so for the SBR ongoing maintenance and support for its users.

SBR should be, where possible, an independent entity with a dedicated manager. It is a good practice

that the manager’s unit assumes the following responsibilities:

i. define and document all concepts, in line with international, national, and local

statistical offices standards;

ii. plan and direct the development of SBR system processes and functionalities;

iii. plan and implement a quality assurance program for the SBR with the goal of

a. assessing the quality and ensuring the frame’s continued integrity

b. defining and producing quality measures for the SBR

c. identifying system improvements, or recommending adjustments to the training

program or procedures, if required;

iv. profile businesses to delineate those that are larger and more complex, to properly

represent their production output;

v. ensure that businesses are classified within the proper standard industry classification;

vi. assign or derive statistical indicators, or create statistical units, from the

administrative registers to create a complete and unduplicated SBR aligned with the needs of

the System of National Accounts and basic economic statistics;

vii. validate new development strategies, specifications and procedures;

viii. develop and deliver the courses and material to educate t SBR users such as: profilers,

survey frame specialists, analysts, data coders, staff of survey divisions and collection

units/areas (training could follow a certification process so that those wishing to access the

ix. support the SBR data users e.g., by providing assistance in evaluating their needs for

their survey design;

x. provide direction and support on legal aspects related to the survey frame such as

access to the SBR and dissemination of the SBR based data;

xi. maintain a dedicated group tasked with producing files for users and processing all

files related to updating the frame;

5.21. The creation and maintenance of a unified comprehensive statistical business register is a

long-term objective and a challenging task,55 and it is recognized that resources devoted to that

purpose vary between countries. In spite of this, a number of common issues remain that many

national statistical office may encounter in assessing the suitability of a business register for trade in

services statistics purposes.56 For instance, a legal framework should be in place to allow access and

use of these administrative records for the purpose of the business register. In the maintenance process

as many administrative sources as possible should be used to update the register, including, for

example, the administrative company register, register of sole proprietors, register of government

units, register of non-profit units, tax information e.g. corporate tax, value added tax and social

security information.

5.22. Ideally, there should be a unit in the national statistical office responsible for developing and

maintaining the statistical business register. Decentralized systems may want to begin by developing a

system for reconciling the more significant inconsistencies in the data produced by multiple business

55 Guidelines on IES, paragraph 5.67.

56 Compilers interested in learning more about the detailed aspects involved in the establishment of an effective

SBR should consult the Eurostat publication Business registers: Recommendations manual. Busines s registers:

Recommendations Manual. http://unstats.un.org/unsd/EconStatKB/Attachment174.aspx.

registers, to improve the accuracy of the data through more consistent classification of key enterprises

and the elimination of overlaps and gaps in coverage.

B.7. Maintenance of SBR

5.23. The statistical business register needs to be continuously updated to reflect changes in the

population of economic entities as accurately as possible. In particular, the number and characteristics

of economic units engaged in trade in services are normally shifting very rapidly, which means that

the SBR data may age fast and soon become useless. The register should be updated at least annually

to record unit creations and deletions, as well as changes in address and stratification variables.

5.24. New enterprises should be recorded in the business register as soon as information about them

is available, preferably before they start trading, so that information about investment in new

buildings and plant can be collected. Changes in the data necessary for the conduct of surveys, such as

addresses of reporting units, should obviously be reflected in the register in the most fast way as

well.57

C. A satellite register for trade in services and use of business registers to identify potential

mode 4 self-employed service suppliers

C.1. A Satellite Register for Trade in Services (TIS-R)

5.25. A satellite register of SBR is a register which covers a sub-population of the SBR with

specific characteristics. For instance, a satellite register for trade in services (TIS-R) consists of all

economic units which are engaged in the international supply of services. This sub-population is

identified by linking SBR with data from other sources, which helps the statistician to determine the

target sub-population when indicators are published. Subsequently, survey samples can be drawn

from this satellite register.

5.26. It is a good practice that TIS-R is maintained by a dedicated unit within the agency

responsible for the compilation of trade in services statistics in the country. However, it is strongly

advised that the core information on the economic units in TIS-R is automatically updated from the

central SBR and its content is harmonised with SBR. The harmonization of TIS-R and SBR includes

forwarding the information on the statistical units identified as engaged in the international supply of

services but not yet included in SBR to the SBR managers. For example, TIS-R can include and

provide to SBR information on units, which are identified by the central bank as being active in

resident/non-resident services transactions but not yet registered in SBR. International supply of

services is, in principle, a possible activity for all units in an economy. Therefore, drawing efficient

samples requires including in the sample frame all those units which supply service internationally

and excluding those which are not engaged in this activity. In this context, in practice, it is useful to

have tailored-made satellite register for trade in services.

C.2. Objectives of TIS-R

5.27. The objectives of TIS-R can be described as follows:

i. The TIS-R needs to enumerate all the resident economic units having had in the

recent past international transactions in services. Ideally, the services sub-register should

enable an immediate differentiation of its population by major kinds of services and

distinguish the population of services exporters from that of importers insofar as these

populations may have significantly different features.

57 Eurostat publication Business registers: Recommendations Manual, paragraph 4.4, page 23.

ii. The TIS-R needs additional indicators providing information on international

transactions (generally not included in SBR). The SBR is a necessary but not a sufficient

source to determine the TIS population.

iii. The selection of the population of economic units which are of interest to statistics on

the international supply of services will be an extract of this register. It generally includes all

big players and SMEs selected for participation in a sample survey. So we are distinguishing

three sets of economic units: the overall population of SBR, the subset population of TIS-R

and the sample of TIS-R which is surveyed.

5.28. Variables. Various economic information like turnover, economic activity, number of

employees, balance sheet variables, foreign trade data and data on foreign ownership are necessary

auxiliary variables to carry-out the selection, the stratification of economic units, sampling and

estimation. It is also a good practice to use business registers to identify the self-employed

population that could be potentially supplying their services through mode 4, because merchants

and small manufacturers (including self-employed and one-man companies) should be registered

in them. An indication of cross border trade activities might be also available and should be

reflected.

5.29. Sources. The different sources used to build and update the TIS-R must be considered under

two aspects: the identification of the population and the variables that should be used to identify the

population and to select the enterprises to be surveyed (see the diagram above). Here are some

potential sources to be carefully tested:

i. The general SBR lists the businesses active in the country, whatever their activity

(domestic and/or international). It may contain relevant information for building and updating

the TIS-R: identification variables, stratification variables relating to the activity and size of

the enterprises, demographic variables and relationships variables (links between units);

ii. The settlements and international payments databases exist in many countries and

contain the detail that can be derived from an ITRS on the resident units carrying out

international payments through accounts held in resident banks with an item breakdown

(including trade in services);

iii. The trade registers include a list of resident operators involved in international trade

in goods. Generally a link can be established between trade in goods and trade in services

(e.g., through information on international freight);

iv. VAT registers are used as a major source for updating other registers existing in the

country. The basic information in the VAT register includes, in general, the variables like

turnover, employment, main activity and total goods and services exports and imports which

may be useful for TIS registers;

v. Other sources are the register of partial direct reporting companies, FDI register,

balance sheet information, specific registers available from trade associations or regulatory

bodies (insurance companies, postal and telecommunication operators, trusts, securities

dealers, press and other media).

C.3. Using Business registers to identify potential mode 4 self-employed service suppliers

5.30. In some countries foreign individuals must apply to a supervision office. All new entries and

changes are recorded and could eventually be published nationally. This means that potential mode 4

persons could be observed if this information feeds the business register and subsequently linked to

the trade in services variable. Therefore, demographics of the businesses including in relation to mode

4 can be derived.

5.31. In those countries where the compilers have a direct access to the business register or can link

their own BoP register with the business register, the self-employed category could be accessible. For

example, in the EU, very small enterprises should be included in the business registers. Therefore, it is

recommended that this legal type (that is physical persons acting on the basis of small business

authorization) and size class (micro enterprises) be used as a first indication of potential mode 4 self-

employed persons.

5.32. For example, chapter 7 of the Eurostat business registers manual stipulates which legal units

must be recorded in business registers in the EU member states, while chapter 8 provides relevant

information for mode of supply in section 8D (External sourcing of ancillary services) and section 8E

(Activities of workers under exclusive contracts). There are many activities that involve the services

of workers under exclusive contracts: “Commercial representatives, travelling salesmen, insurance

agents. Such workers may or may not be treated as employees of the enterprise, depending on the

nature of the contract binding them to the enterprise”. Therefore, for countries interested in self-

employed mode 4, it is advised to take into account the EU experience and incorporate similar

information in their registers and to enable compilation of supply of services by mode 4 persons.

D. Country experiences

5.33. This section contains descriptions of three country cases, each of which represents specific

practice adopted by a given country. The experience of Italy shows that a persistent difficulty with the

access to general statistical register and other statistical problems with obtaining a survey frame

relevant for cross-border phenomena may lead to a decision to create a specific, statistical business

The case of Spain demonstrates the complexity of issues which have to be overcome to build a tailor-

made TIS register when the general statistical business register traditionally used as the statistical

frame for almost all business surveys does not contain variables needed for the direct identification of

exporters and importers of services. The Uruguay experience proves that sustained efforts can result

in developing a register which can provide a basis for compilation of statistics on the international

supply of services under the circumstances the developing countries usually have to face.

D.1. Country experience: Italy

5.34. In the period 2007-2011, the Bank of Italy modernized its BOP system. The business register

developed by the Bank of Italy plays a central role in the new system. It is used particularly to

facilitate direct reporting via surveys covering different parts of the BOP and the IIP. Although the

use of a single national business register across all domains of economic statistics (not just BOP)

would be ideal, the Bank of Italy had to create its own statistical business because, despite intense

statistical cooperation between the national statistical institute (ISTAT) and the central bank, due to

legislative constraints, the Bank of Italy cannot access the national statistical institute’s (ISTAT)

business register.58

5.35. The Bank of Italy register contains information for the entire corporate sector (about 1.5

million units), with the exception of small one-man-owned firms (individual firms). The coverage of

the register in terms of turnover is near 90 per cent, and even higher for cross-border operations.59

Given the tight deadline for the production of BOP data, timeliness is a particularly critical factor for

58 At the time of writing of this Guide, the two institutions are working together to overcome the mentioned

legal obstacles.

59 In terms of number of enterprises the coverage of the BoI business register is about 33 per cent. The

apparently low percentage is explained by the fact that the numerous “individual firms” are excluded. In other

words, the true population frame of the register is actually the corporate sector, for which the coverage is

complete (100 per cent). In any case the cross-bord er transactions of individual firms are covered through tax

authority’s data; their cross-border transactions r epresent about 5% of the total in the “other services” aggregate.

the Bank of Italy’s business register. The register is therefore updated daily, with online data

transmissions. This allows to timely account for changes in the population of firms, which in some

cases may significantly affect the external sector statistics (especially FDI). An always up-to-date

business register also contributes to the smooth running of back-office activities (e.g., help desk,

formal communications to enterprises and sanction procedures).

5.36. Enterprises that engaged in cross-border transactions are flagged in the register; based on

information from quarterly bank reports on firms that carried out cross-border settlements. This

integration of sources significantly improves the efficiency of sample selection. The Bank of Italy’s

business register is built by aggregating various source data (mostly received from external data

providers) and converting them into normalised tables. The latter are integrated, forming a relational

database, through a “bridge table” which contains all the identification keys used by the various data

providers. The relational database consists of three tables: a structural data table, which contains

information such as firm’s name and address; a quantitative data table, with balance sheet data and

the flag for the presence of cross-border payments; and an FDI table, concerning enterprise ownership

features.

5.37. The final population list used for direct reporting purposes is extracted from the business

efficiently in a survey strategy. Therefore, a threshold is applied, according to which only the firms

with total assets or turnover greater than 1 million of euro are included in the subpopulation. In Italy’s

direct reporting system, the business register not only allows for the identification of the target

population, but it also contributes auxiliary information and is used to reduce the population (with a

cut-off strategy), to stratify the population in homogeneous clusters and to derive model-based

estimators directly in the estimation process.

D.2. Country experience: Spain

5.38. Since 2005, the National Institute of Statistics (INE) has been entrusted to conduct the

International Trade in Services Survey (ITSS), with the aim of helping the Bank of Spain (BE) to

estimate Other Services item of the balance of payments. The ITSS is sent out to enterprises sampled

from the business registers of various institutions because the INE’s Central Business Register does

not contain a variable to identify exporters and importers of services. Populations that are considered

are obtained from different registers, including regular declarants of foreign services transactions

enterprises from the monthly VAT records of Large Companies, and a sample of enterprises (with 10

employees or more) from the Central Business Register (DIRCE); care is taken to exclude double

counting of the same units. More detail on these populations is available in the on-line version of the

guide.

5.39. The results obtained by the ITS survey between 2005 and 2012 showed significant differences

in level (but not in trend) from those obtained by the Bank of Spain settlements system. From 2013

onwards, the populations and statistical frameworks used in the surveys remain very diverse. The

intention is, however, to reduce to the maximum the number of survey respondents who may state in

the questionnaire that they do not carry out such transactions. In the new sampling design, the Central

Business Register (DIRCE) does not form a statistical frame by itself. Instead, its main function is to

characterize the companies of the different populations by main economic activity and size, to enable

to sub-stratify each stratum by these two variables.

5.40. FATS. The set of INWARD FATS statistics is compiled from the INE structural business

surveys, the majority of which use the DIRCE. DIRCE records the "group of enterprises" as a

statistical unit. The system is updated on a yearly basis in a way similar to the other statistical units.

The maintenance processes affect both the basic features of the groups and the units forming them. In

this process access to a complete set of both administrative (corporation tax groups) and private (Dun

& Bradstreet database or INFORMA/IBERINFORM shareholder database) is absolutely crucial.

5.41. For each DIRCE company, whether it operates independently or under a group of companies

and the nationality are available variables, which identify the INWARD FATS population. The set of

OUTWARD FATS statistics is obtained directly from an administrative register from the Ministry of

the Economy and Competitiveness called the Foreign Investments Register (RIE).The main variables

include: identification of the company, its legal status, its main business activity, number of

employees, turnover, and other economic variables, % of foreign participation and country, and % of

Spanish participation, among others.

D.3. Country experience: Uruguay

5.42. The National Statistics Institute (INE Uruguay) is in charge of the creation and maintenance

of the national business register. Information sources used for the maintenance of the business are

divided into administrative sources (such as the tax authority, social security agencies, internal

economic surveys and information from other ministries) and other sources (including phone

directories, web pages, members of commercial chambers, and press releases and other information

on publicly traded companies). The enterprises directory was created in its initial version after the

economic census of 1996. In 2007, a new agreement between INE, the tax authority (DGI) and the

Social Security Agency (BPS) resulted in a new version of the business register with these institutions

being main source data providers. In addition, the Ministry of Tourism provides data on hotel

occupation. Information from companies operating under the free zone regime is obtained through a

census of these companies.

5.43. In this new version of the register, INE includes information on foreign ownership and on

involvement in trade (in services), following the guidelines designed in the Inter-American

Development Bank (IADB) project for Latin American Business Register and the Manual on

Statistics of International Trade in Services 2010. The business register in Uruguay will serve as the

main tool for detecting enterprises engaged in international trade in services. As part of its new

design, information on main and secondary activities, goods and services produced, and the

destination of the sales (national or foreign and country of destination), the origin of capital (national

or foreign) and foreign ownership will also be included. A new survey will subsequently be designed

to better estimate international trade in services and FAT statistics. More information on the definition

of statistical units used in the Uruguay business register is available online.

Chapter 6 Enterprise and Establishment Surveys

Introduction

6.1. Scope. This chapter describes enterprise and establishment surveys, which are needed to

collect data for the compilation of statistics on resident/non-resident transactions in services and

FATS. The Chapter promotes an integrated approach to the organization and conduct of the surveys,

keeping the response burden as low as possible and linking trade in services and business statistics.

The Chapter consists of the following sections: General description of enterprise or establishment

surveys (Section A), Surveys of resident/non-resident services transactions (Section B), foreign

affiliate statistics and the international supply of services (Section C), and trade in services surveys

with links to FATS and FDI (Section D).

A. Summary of good practices

6.2. Enterprise and establishment surveys can be used to provide data for the full range of

resident/non-resident services transactions, as well as for FATS and for additional indicators on the

international supply of services. Such surveys should always be based on clearly defined objectives,

sound sampling framework and collection methodology, and a well-established legal basis. Compilers

are advised to take into account the set of steps for developing and conducting an enterprise survey

described in Box 2.1 of Chapter 2 of the BPM6 Compilation Guide, as well the suggestions for the

creation and updating of the survey frame, and the model survey forms provided in Annex 8 of the

IMF BPM6 Compiler’s Guide. It is a good practice to provide clear and simple

instructions/explanatory notes to respondents on the information to be submitted.

6.3. Compilers can conduct general enterprise or establishment surveys, which usually cover most

or all services that can potentially be delivered or consumed by enterprises, but it is a good practice to

consider the need for, and use of, focused surveys for specific service categories, such as

manufacturing services, transportation, R&D and finance and insurance. Such focused surveys allow

the compiler to capture a great level of information detail for a specific service category and related

transactions without imposing response burden on those enterprises or establishments that are not

involved in a particular service. In such focused surveys, compilers are suggested to ensure that forms

take into account the specificities of individual service categories (such as mode of transport for

transportation services).

6.4. For FATS compilers it is suggested to collect data via SBS (inward FATS only), FDI or

designated FATS surveys, weighing their respective costs and benefits as described in chapter 15, and

to include in their survey forms at least the main FATS variables of interest as identified in the

MSITS 2010 (including revenues or turnover, employment and value added). Given that output is a

preferred measure to sales or turnover, it is also important to consider that relevant information is

collected to enable the compilation of this item. Compilers should ensure that the data sources enable

as a minimum the relevant breakdowns of information by (services) activities and country of origin or

destination of control. In addition compilers should consider for revenues (or output) that services

products (at least a total) and destination of sales in the country of establishment of the affiliate can be

separately identified. For those compilers for whom it is difficult to implement the collection of all

these details when starting the collection of FATS, it is important to establish a gradual approach, first

focusing on the information of primary interest to the economy.

6.5. Compilers should consider that for certain services sectors, it may be logical to use a single

survey to respond to various information needs (e.g. trade in services and FDI/FATS). This could be

applicable in particular for construction activities.

B. General purpose and description of enterprise or establishment surveys

6.6. Business surveys can be conducted at the establishment level or the enterprise level and can

provide coverage across the full range of services. They have proven successful for the collection of

trade in services data and FATS in many countries. Detailed descriptions of the types of surveys, their

design, sampling techniques as well as related data editing and data compilation procedures are

described in a number of publications60 , most notably Chapter 2 and Chapter 3 of the BPM6

Compilation Guide which compilers are advised to consult when developing enterprise or

establishment surveys for trade in services and BOP purposes61. Compilers also are advised to make

sure that the national definitions of the statistical unit (see chapter 5) comply with the standard

definitions and document any deviations in metadata.

6.7. One of the first decisions to be made in collecting data is whether to undertake a census or to

compile data from a sample survey that balances data quality with other considerations such as

reporting burden (see Chapter 11 for the comparison of data sources). In determining the reporting

population, various approaches are possible, including a census, a partial coverage collection survey, a

random sample survey and a stratified random sample survey. In practice, compilers in many

countries use a combination of two or three approaches when collecting data from enterprises,

benefiting from their respective different advantages. 62

6.8. Surveys should always be based on clearly defined objectives, sound collection methodology,

and a well-established legal basis. Properly designed collection forms, full coverage of the population,

well-defined data structures and classifications, and effective data validation and aggregation

procedures are also required.63 The principles of survey design include:

i. Specify the objectives and coverage;

ii. Establish the sampling unit and the information to be collected;

iii. Determining the appropriate sample size, if a sample will be used;

iv. Developing a sampling frame, i.e. an exhaustive list from which sampled units are selected;

v. Developing the sample design, i.e. how the sample is selected from the frame;

vi. Determining the method of collection (paper form, electronic, interview, etc.).

6.9. Sampling techniques and contacts with respondents. Compilers can choose from a wide

variety of sampling techniques, generally either probabilistic or non-probabilistic. Under probability

sampling, every unit in a population has a calculable probability of being selected in the sample. This

approach is objective and defensible. There is a theoretical basis for the process of extending the

sample results back to the population. Under this approach, estimates of sampling error can be

calculated and inferential statistics can be derived. Non-probability sampling methods should be used

with caution because there is no way to measure their precision. The only way to address the quality

of the survey data produced under non-probability sampling is to compare the results of the survey to

some known information about the population. A frequently used non-probability sampling method is

cut-off sampling (see more detail in box 6.1).

60 For example in the Eurostat Handbook on the design and implementation of business surveys, available at :

http://epp.eurostat.ec.europa.eu/cache/ITY_OFFPUB/CA-09-97-818/EN/CA-09-97-818-EN.PDF and Eurostat

publication Survey sampling reference guidelines: Introduction to sample design and estimation techniques

(2009), available at: http://ec.europa.eu/eurostat/ramon/statmanuals/files/KS-RA-08-003-EN.pdf. Many

countries published their guidelines as well.

61 Draft BPM6 Compilation Guide (BPM6 CG).

62 See BPM6 CG (p.13-14) for a more detailed explanat ion about survey forms and their advantages and

disadvantages.

63 BPM6 Compilation Guide, Chapter 2, paragraph 2.3.

6.10. Whether selecting a sample using probability or non-probability techniques, compilers must

define the universe (population) from which they will sample, that is, in practical terms, construct a

sampling frame. In most countries it is possible to define the population using various lists of

enterprises (business registers), compiled for administrative purposes. For more information on

sampling techniques, sample frame, sample structure and sample allocation (how to allocate the data

collection between the strata), compilers are suggested to consult the Producer Price Index Manual

(Chapter 5)64. While the Manual focuses on price collection, much of the information can be applied

more generally to enterprise or establishment surveys.65

6.11. The collaboration with respondents to surveys is essential for the production of good quality

statistics, as explained in more detail in the BPM6 Compilation Guide (Chapter 2). Compilers are

suggested for example to hold consultation meetings to make respondents aware of the purpose of the

survey and to help the statistical agency design the survey.66

Box 6.1 Cut-off sampling

Cut-off sampling is a strategy frequently used by c ountries to select samples. In this approach, a pre determined

threshold is established with all units at or above the threshold included in the sample (selected wit h certainty)

and units below the threshold level not included (zero probability of selection). Cut-off sampling is a common

technique in economic surveys in cases when most economic activity is generated by the largest firms . It can be

used to reduce the number of firms required to report in non-benchmark years, thus reducing the burden on

excluded firms and reducing processing costs.

Cut-off sampling generally results in a high degree of coverage among a small number of prospective un its. This

occurs because the distribution of the selection variable (for example, production or sales) is concen trated in a

small number of large establishments. Limiting the target population enables the exclusion of small e nterprises

and/or enterprises that are not primarily engaged in providing services. This method is resource effic ient and

ensures large firms are included. However, there i s no way to determine if firms that fall below the cut-off

behave in similar ways to the firms in the survey.

Sample frame cut-offs are revaluated regularly. If benchmark surveys are conducted, cut-offs are typically left

unchanged between benchmark surveys and are often increased at each benchmark, for a number of reasons .

First, since cut-offs are set in nominal terms, inf lation will eventually cause enterprises that did not grow in real

terms to exceed cut-offs. Therefore, small enterpri ses may face a higher reporting burden due simply to price

changes. Second, industry consolidation may increase the share of economic activity originating from t he largest

firms. Therefore, it may be possible to increase th resholds without significant loss of coverage.

Compilers must consider resources when using cut-of f sampling. Lower cut-offs reduce the amount of data that

needs to be estimated. Since more enterprises are required to respond, a greater share of the estimates are actual

data from reports. Estimates with lower cut-offs ar e likely to be more precise. However, lower cut-offs also

impose a number of costs on respondents as well as the compiling agency. Requiring more firms to respond

imposes a burden on respondents since firm employees must devote time and effort to gathering information and

filling out forms (and these costs are proportionally higher at small firms compared to large firms). Once a

report is received, it requires substantial effort by editors to process. Processing more reports is m ore costly and

slows the issuance of data. Cut-off sampling significantly reduces the costs of a survey by reducing the number

of both reports and items filled out and processed.

64 https://www.imf.org/external/pubs/ft/ppi/2010/manual/ppi.pdf

65 Likewise, the Eurostat Survey Sampling Reference G uidelines provide more detailed information on this

topic.

66 BPM6 Compilation Guide, paragraph 2.29.

C. Enterprise and establishment surveys for trade in services statistics purposes

6.12. Enterprise or establishment surveys are often used to collect data needed for the compilation

of resident/non-resident trade in services statistics. They may take various forms, such as an extensive

survey covering many or all services (often excluding most of the data needed to compile transport,

travel and government goods services n.i.e.), or a specialised survey which may be developed for

various reasons, e.g. to avoid unnecessary burden on firms that are not likely engaged in trading some

specific services, or for sectors that are important enough to develop a dedicated survey for e.g.

manufacturing services, business process outsourcing services. Existing enterprise surveys such as

structural business surveys or research and development surveys may also be used to collect some

trade in services data.

6.13. Surveys that collect data on trade in services covers the value of exports (credits) and imports

(debits) of services, broken down by type of service (at least for the services sectors of primary

interest to the compiling economy), with an identification of the country of the counterpart in the

transaction (i.e. partner country). Other recommended elements for data collection of the value of

exports and imports of services cover the identification of trade between related parties (intra-firm

trade) and an identification of the way these services were traded (mode of supply).

6.14. Various options exist for collecting data according to these dimensions via surveys.. Given

the complexities surrounding trade in services, surveys should always be accompanied by explanatory

notes to help respondents understand the type of information required. The frequency of the data

collection (and associated levels of details) will depend on the needs identified before the data

collection is established (see chapter 3 on institutional arrangements). While this chapter covers the

aspects more directly related to trade in services data collection, readers can also refer to the BPM6

Compilation Guide for further information. In particular the model survey forms shown in Annex 8

provide useful guidance as to the type of information and questions to be included in trade in services

survey forms. The model forms of interest include: International Trade in Services, Manufacturing

services, Resident Transport Operators, Transactions with Nonresident Transport Operators,

Construction, International Insurance Transactions and International Pension Services.

6.15. In all surveys, questions should be clearly phrased, using wording that businesses understand,

while ensuring that these will fit the EBOPS 2010 definitions, including complementary groupings,

that the data can be used in the subsequent compilation of trade in services statistics. In some

instances, such as for insurance or financial services, the information to be collected cannot be the

value of the service rendered itself but will have to be deducted from data reported in the survey

forms (often derived from some accounting records e.g. insurance premiums and claims). This would

also apply if for some services categories a more detailed list than EBOPS 2010 is included in

questionnaires.67 When elaborating survey forms and notes, this guide strongly encourages compilers

to refer to the CPC to define the service items in terms of levels of details or for the explanatory notes.

A correspondence table between EBOPS 2010 and CPC Version 2 is provided in an on-line annex to

MSITS 2010.68

6.16. This section first presents general guidance on the use of generic trade in services surveys

(B.1), and then describes the use of some specific surveys, namely, transportation surveys (B.2),

manufacturing services surveys (B.3), surveys to insurance and financial corporations (B.4), R&D and

innovation surveys (B.5), Surveys of tourism related activities (B.6), construction surveys (B.7), and

other specific surveys (B.8) that can be used to also derive trade in services information.

67 This would be particularly relevant for specific services surveys.

68 http://unstats.un.org/unsd/tradeserv/TFSITS/msits2010/ebops2cpc.htm.

C.1 Generic trade in services surveys

6.17. A generic trade in services survey is a survey that usually covers most or all services that can

potentially be delivered or consumed by enterprises. It usually does not cover the data on services

transactions that correspond to imports of services by households or individuals (e.g. travel related

transactions), or some specialised services where the number of transactors may be more limited (e.g.

exports of transport services, construction) and a more targeted survey may be more efficient. A

generic trade in services survey is a survey of enterprises with potential relevant balance of payments

transactions with non-resident households, corporations, and governments. Enterprise trade in services

surveys have traditionally been used to capture data used for the compilation of the balance of

payments and IIP,69 but they should to the extent possible also serve the more detailed needs as

identified in MSITS 2010. In particular it can be used to collect data by service type, by counterpart

country as well as by relation between the parties (affiliated and unaffiliated trade). They can also be

useful to identify the mode of supply in resident/non-resident transactions, to develop modes of

supply estimates.

6.18. The organization and conduct of generic trade in services surveys is a complex task which

countries approach depending on their needs and circumstances. Some countries had to develop the

survey systems in view of lack of necessary information from banks’ records on payment transactions

(settlement system). The experiences of France and Austria, which are provided below, provide

valuable lessons for compilers which might decide to develop new or improve existing surveys for

collecting trade in services data. It is a preferred practice for compilers to take into account the set of

steps for developing and conducting an enterprise survey described in Box 2.1 of Chapter 2 of the

BPM6 Compilation Guide, as well the suggestions for the creation and updating of the survey frame.70

A model survey questionnaire is available in Annex 8 of the IMF BPM6 Compiler’s Guide (Form 6).

To respond to the trade in service information needs such a model questionnaire will have to be

amended with some additional breakdowns/questions. Box 6.2 illustrates how such additional

information could be collected. The different dimensions, content and design (as well as formulation

of questions) of the survey forms will have to be chosen according to the needs identified.

Box 6.2 Sample questions for collecting trade in legal services data broken down by partner,

affiliated/non-affiliated trade and mode of supply

Revenue for year __

Country

Other

countries

Legal services

- Of which to related parties

- How were your legal services delivered (% of total)?

From your territory to a non-resident overseas % % % %

To a non-resident customer temporarily in your territory % % % %

Delivered to non-resident customer by a resident

employee, temporarily working abroad

% % % %

6.19. Compilers looking to incorporate mode-of-supply data in generic trade in services surveys are

suggested to first consider what the costs, burden and priorities are for such a breakdown as compared

to other needs (e.g., partner country, etc.), and if this is needed for all services items or for a selection

of these. Decisions could be made using a step-by-step approach, e.g. in light of policy needs, priority

may be given to breaking down exports of services by mode of supply (for all items, or in first

instance for a selection of aggregates); imports of services by mode might be done in the second stage

of the survey development. Alternatively some simplification rules could be used such as described

69 BPM6 Compilation Guide, paragraph 2.2.

70 Ibid., page 11.

in chapter 5 of MSITS 2010, i.e. a service transaction can be associated to one or two dominant modes.

Only the identification of one (or two) mode(s) may therefore be requested, assuming that the residual

may be derived from the information provided.71 Another option could be to simply ask respondents

to identify one dominant mode in a service transaction (e.g. by ticking a box).

6.20. It is good practice to provide clear and simple instructions/explanatory notes to respondents

on the information to be submitted, in particular on how to determine the modes of supply if relevant

questions are included in the forms. In electronic surveys, prompts and restrictions can be used to help

improve the accuracy of the reported data. For example, asking the respondent to confirm their answer

if they enter a mode of supply that is unlikely to be associated with a particular service type. It should

be considered that respondents are generally more comfortable to estimate proportions of the value

already provided, than giving exact monetary values by mode of supply.

6.21. While processing survey results, imputations should be part of the work. Compilers can use

table 5.2 of MSITS 2010 as the basis (for lower value answers), or by contacting respondents directly

for clarifications (for higher value answers). Experience shows that respondents are very likely to be

able to provide mode of supply information when contacted directly.

6.22. It is also important to note that trade in services enterprise surveys can be the source for mode

4 (contractual service supply) and quantitative indicators (i.e., number of persons or trips). Firms

normally keep staff records (although not necessarily in the same department as the ones that report

data on transactions; i.e., personnel versus accounting departments), which may include information

on the type of work performed and/or whether the staff member received special compensation for

working abroad. Such information could serve the needs for mode 4. Within enterprise surveys, and if

deemed relevant, one could also consider including explicitly mode 4-related questions along the lines

proposed in the trade in services surveys, or other questions designed to identify mode 4 activities.

C.2. Country experiences72

C.2.a. Country experience: Austria

6.23. In Austria, the Oesterreichische Nationalbank (OeNB) is responsible for compiling and

disseminating information on trade in services between residents and non-residents. Since 2006, trade

in services statistics have been compiled by taking samples from enterprises, institutional investors

and banks (not including households), instead of the ITRS system that was previously used. To keep

the costs of data collection low and make utmost use of existing data, the OeNB works in close

cooperation with Statistics Austria such that the OeNB concentrates on the financial corporations

while Statistics Austria focuses on the real economic sector.

6.24. On behalf of the OeNB, Statistics Austria compiles quarterly data on service exports and

imports from non-financial corporations. The survey covers information on individual partner

countries and all business activities according EBOPS 2010, except for travel which is measured

separately. The survey is also supplemented with information obtained from public institutions (on

cross-border government services), and from 120 non-profit organizations (on e.g. international aid

services such as education and health services).

6.25. The survey collects data from a stratified sample within the scope of the Structural Business

Survey (SBS). The sample is drawn from the total population of enterprises engaged in trade in

services. To identify this population, Statistics Austria conducts a survey on services exports and

imports in the enterprise sector every five years, and complements this information with former

71 For example a systematic identification of the pro portion of mode 4, assuming that the residual will be either

be mode 1 or mode 2 depending on the type of service considered.

72 Extended country examples are available on the UNSD Compiler’s Guide website.

settlement data (for unit-non-response) and estimates of values below survey thresholds. Since OeNB

decided that the regular survey should cover at least 90% of service exports and imports in every two-

digit NACE division, approximately 4,800 non-financial enterprises were selected (reflecting an

initial reporting threshold of EUR 200,000 for both annual services exports and imports). From 2013,

the reporting threshold was raised to EUR 500,000 after administrative data sources have become

available within the European Union (the Value added Tax Information Exchange System).

6.26. The OeNB conducts the surveys in the financial sector. The report on service exports and

imports by Austrian banks as well as imports by insurance companies mirrors the enterprise report run

by Statistics Austria and covers all EBOPS 2010 items. In addition, the OeNB makes use of

administrative data from the Financial Market Authority (FMA) on insurance service exports in

particular. Quarterly data are reported to the OeNB on premiums and claims from insurance service

exports, whereas yearly data include financial claims and liabilities from insurance transactions and

insurance technical reserves. FMA also gathers mirror data from other EU countries on insurance

service imports in Austria. These data become available only with some delay, but they are especially

important for the calculation of life insurance imports.

C.2.b. Country experience: New Zealand - Collecting data on modes of supply

6.27. Most of New Zealand’s trade in services data comes from surveys. Modes of supply data (for

exports) was collected directly through the 2011 Census of International Trade in Services and

Royalties, which collects data on 55 different service types excluding transportation, travel, insurance,

and government services. Respondents were asked to estimate the proportion of their services exports

that were delivered through mode 1, mode 2, or mode 4. A detailed guide accompanied the Census to

provide further help, along with examples.

6.28. Respondents were asked to report their services exports in the upper sections of the survey,

and then asked to estimate the percentage of the value that was delivered through mode 1, mode 2,

and mode 4. It was felt that the respondents would be more comfortable estimating proportions of the

value already provided, rather than giving exact monetary values by mode of supply – fewer

respondents should leave this section blank this way. Testing showed that most respondents

understood the modes of supply concepts, although feedback suggested the guide was helpful as well.

6.29. For policy reasons, New Zealand’s Ministry of Foreign Affairs and Trade was mainly

interested in exports of services, which is why only exports data was collected for modes of supply.

However, modes of supply information could be compiled for imports of services in the same way.

C.3. Transportation surveys

6.30. Enterprise and establishment surveys of resident and non-resident carriers are important

sources of transport services data. Often the agents of the operators will have to be approached to

collect relevant data, in particular for imports of transport services. When considering data collection

it is important to note that MSITS 2010 follows BPM6 in recommending a cross-classification of

transport services by mode of transport and by kind of service. There are different modes of transport

to consider such as maritime/sea, air, rail, road, or internal waterway transport. The types of services

covered are the transport of passengers, freight and other supporting and auxiliary transport services.

Some modes of transport, given the smaller number of operators or agents, may be easier to survey

(air, maritime, rail or inland waterway transport) than others (road). In addition, given their specific

nature, special forms or enquiries may need to be designed for space or pipeline transport, as well as

for electricity transmission. For these three sectors, the number of entities to which the surveys should

be addressed is also often limited.

6.31. An important point to consider is that operators, which are the providers of the transport

service, in many cases differ from the owner of the transport equipment. In addition, when defining

the residence of the operator, the country of registration of ships and aircraft may also differ from that

of the operator (or the owner). Charters or vessels without crew (i.e. operational leasing services) also

need to be differentiated from charters of vessels with crew (i.e. transport services). Such

considerations render the collection of data complex, but clear notes referring to relevant information

can be collected. Specific surveys should be sent to the operators (i.e. as the providers/exporters of the

transport service) of each category of modes of transport and if relevant with a distinction between

transport of passengers and goods. Exports of such services are identified in resident operators’

activities, while imports are identified in non-residents’ operators' activities. Compilers may face

difficulties in getting a representative coverage of the non-resident carriers’ activities. However, when

transport is regulated in a country (air transportation being the best example), non-resident carriers

have to be registered to operate and they typically establish branches or agents in that country. Such

entities in principle know or have access to the information necessary to the compilers. Thus,

compilers could send survey questionnaires to those branches/agents to collect information on imports

of services. Transport surveys often are used to also gather related information such as on auxiliary

and supporting services, leasing services or on fuels and provisions provided to carriers (goods). The

BPM6 Compilation guide proposes model forms 8 and 9 (Appendix 8) that could be used as a guide

for designing survey forms related to transport services. See BPM6 Compilation Guide paragraphs

3.21-3.52 for more information. In designing the survey forms it will also be necessary to factor in the

country of residence of clients (for exports) and of operators (for imports), as well as other dimensions

if identified as necessary.

6.32. Many users, in particular for GATS purposes, would need information on the real value of

international freight transport services contracts (i.e. with no adjustment for either the FOB/FOB

valuation of goods in the BOP, or the FOB/CIF valuation in merchandise trade statistics). This is in

fact the data that are collected in transport surveys. Compilers are encouraged to use the raw data that

may be collected from freight transportation companies (or their agents) to make publicly available

some supplementary estimates of the "real" trade in freight transport services taking place between

residents and non-residents.73

C.3.a. Country experience: Chile

6.33. Data on international transport services are collected by the Central Bank of Chile (CBCH)

through quarterly questionnaires to resident sea and air international transport companies and to the

agencies or representatives of foreign companies in Chile. The transportation questionnaires are

prescribed by the “Compendium of International Exchange Regulations (CIER).” The response to the

transportation questionnaires is mandatory and data are directly reported in US dollars.74

6.34. Both the questionnaires addressed to Chilean resident companies and those addressed to

agencies or representatives of foreign companies in Chile request information on all acts or

conventions that create, modify or extinguish obligations payable in foreign currency. In general,

transport services accompanying settlements in foreign currency are distinguishable in resident

companies’ commercial accounting as it distinguishes revenues and expenses in foreign currency

from those in national currency for income statement purposes companies. In the case of agencies or

representatives of foreign companies, their purchases’ books or expenses’ books distinguish transport

services accompanying settlements in foreign currency.

6.35. The first block of information in the questionnaire includes general backgrounds which are

used to identify the enterprises, the reporting period, and the name of the responsible of the

information (to be able to consult respondents about the reported data). The second block inquires

73 See Chapter 14 and MSITS 2010, paragraphs 3.107-3. 110.

74 The instructions to complete the questionnaires and forms are set out in the Chapter VIII, annex 1.1 and 1.2 of

the CIER and are available on the CBCH website: http://www.bcentral.cl/normativa/cambio-

internacional/manual-procedimiento/pdf/capviiianexo1.pdf.

about incomes and expenses related to international transport business. Most of the information

collected in this section is used in estimating transport services, but is also used for the estimation of

certain other services categories. For example, rentals of transportation equipment without crew or

major repairs abroad are used to estimate “operational leasing services” in “other business services”

and “repair of goods”, respectively (see details in the elaborated example online).

C.4. Manufacturing services surveys

6.36. Manufacturing services on physical inputs owned by others (or manufacturing services in

short) include activities such as processing, assembly, labelling and packaging, undertaken by

enterprises without ownership of the goods. The BPM6 Compilation Guide model form 7 provides a

sample questionnaire on manufacturing services.

6.37. If imports of manufacturing services are important for the compiling economy, a survey can

be used to collect data from the owners of the goods on the processing fee they paid to non-resident

processors (which may incur cost of materials procured by the processors for use in the production).

In addition, data on the costs and origins of materials supplied by the resident enterprises (owners) to

the non-resident enterprises (processors) for outward processing should also be collected. This covers

both cases where owners’ materials are sent to the processor’s economy directly from a third economy

and from the owners’ home economy. It may be difficult to identify the population involved in such

activities. To identify enterprises possibly involved in processing activities, exports declarations

(when sending goods for processing) or import declarations (when receiving processed goods) from

the customs authorities could be used. The identified enterprises can then be surveyed to collect

various data on the fee and the goods involved in outward processing.

6.38. The enquiries also need to identify the cases where processed goods do not enter or return the

economy of the owner (i.e. they are sold in the economy of the processor or to a resident of a third

economy). If relevant, the survey could go beyond manufacturing services and also cover merchanting

as well as other trading type activities (where there may be some processing component or not). The

sales values and various cost components of the goods for different types of global production

arrangements could therefore be captured for all different cases, including when such transactions

with non-residents are completed offshore.75

6.39. For exports of manufacturing services on goods owned by non-residents, the data collection

has to cover at least the processing fee as well as the identification of the country of the client, as well

as the costs and origins of materials procured by the resident processors. If it is available, information

on the destination of the processed goods would be useful. In principle a survey of processors should

be easier to establish as (i) the number of service providers should be small and (ii) many of these are

often located in special zones such as export processing zones, and are generally subject to special tax

regimes. The survey will have to distinguish the rendering of manufacturing services to non-residents

from manufacturing on the processors’ own account and that for other residents.

C.4.a Country experience: Hong Kong, China

6.40. Hong Kong’s outward processing activities (processing of goods, which are owned by the

Hong Kong residents, by the non-residents) are substantial and are predominantly carried out in

Mainland China. The goods processed in Mainland China may be sold in Hong Kong but are also

frequently sold directly to other markets. To support the collection of data on manufacturing services

and related activities, the monthly survey on trade involving outward processing in Mainland China

(OPS) and the annual survey on imports and exports of services (ASIES) have been enhanced and a

75 For a more elaborate discussion and guidance, see the UNECE Guide on Global Production and the handbook

on the Impact of Globalization in the National Acco unts.

new quarterly survey on merchanting and other trading activities (QSMTA) has been launched. Two

main cases are identified:

Case I: Outward processing in Mainland China with processed goods returned to Hong Kong

6.41. The OPS survey uses the import/export declarations of Hong Kong’s trade with Mainland

China as the unit of observation. The declarations are stratified by trade types (including domestic

exports and re-exports to Mainland China, and imports from Mainland China) and by commodity

groups. For cases pertaining to imports (from customs-based perspective) from Mainland China which

involve outward processing of goods under “processing and assembling” arrangement, data are

collected on a) the value of raw materials/semi-manufactures sent from Hong Kong to Mainland

China; b) the value and origin of raw materials/semi-manufactures purchased and delivered directly

from places other than Hong Kong to Mainland China; and c) the value of manufacturing services on

goods owned by Hong Kong, distinguishing between the processing fees paid by Hong Kong; and the

value of raw materials/semi-manufactures procured directly by Mainland China processors.

6.42. A significant proportion of OPS respondents are logistics companies (rather than the owners

of imported processed goods) which generally do not have readily available information pertaining to

the additional data required. Therefore, efforts have been made in establishing rapport with major

logistics companies, so that these companies can now either acquire the relevant information from the

goods owners themselves or provide the contact details of the goods owners for subsequent follow-up.

This practice has successfully reduced the non-response rate.

Case II: Offshore trade activities involving outward processing with processed goods sold offshore

6.43. Some of the offshore trade activities involve outward processing in which goods owned by

Hong Kong companies are processed in Mainland China (or elsewhere) before they are sold offshore

directly to non-residents. These offshore trade activities cannot be collected from import/export

declarations and are captured through ASIES and QSMTA.

6.44. In ASIES, offshore trade activities involving outward processing are distinguished from

conventional merchanting activities. For manufacturing services and related activities, data are

collected on similar items as in the OPS survey, as well as on the sales value and cost of processed

goods sold offshore by origin, destination and commodity group.

6.45. The values and destinations of exports of manufacturing services on goods possessed by

companies abroad (inward processing of goods by Hong Kong) is also collected in ASIES. The new

QSMTA survey collects similar data at quarterly intervals to support the timely compilation of

relevant macroeconomic aggregates (namely BOP and GDP).

C.5. Surveys of insurance and financial corporations

6.46. Surveys of insurance corporations. The collection and compilation of data relating to

insurance are described in Annex 2 of the BPM6 CG. In order to obtain source data for insurance

services, in particular for exports of such services, surveys on insurance corporations represent the

preferred source. To ensure an appropriate coverage of the domestic insurance sector, a survey frame

should be available including a list of insurance companies. Insurance agents and brokers are usually

required to register with insurance authorities; therefore, a list of these businesses should be readily

available from official sources. Surveys of insurance corporations could also be used to capture

information of exports and imports of reinsurance services.

6.47. The insurance service provided to residents and nonresidents is derived by determining the

output of the insurance in a way that mimics the accounting practices based on premiums earned and

losses incurred pertaining to the accounting period. An extended model form can be found in BPM6

CG Appendix 8 (form 12). For a survey to insurance companies to be useful for compiling TIS

statistics, it should include amongst other things questions about premiums written to, premiums

earned from, and claims paid to, non-residents for different insurance categories (i.e. life insurance),

and to specify also reinsurance ceded to and accepted from non-resident issuers (and vice-versa).

Information on technical reserves dues to non-resident policyholders is also necessary.

6.48. The export of freight insurance can be identified by surveys of insurance corporations, though

small insurers or small lots of export might not be fully captured. It is important to note that premiums

payable on internationally traded goods before they reach the customs frontier of the economy of the

exporter are included in the FOB price of the goods. Freight insurance premiums payable subsequent

to the departure of the goods from the customs frontier of the exporter’s economy are treated as

payable by the importer. This means that relevant detailed questions need to be included in forms so

that the compiler can derive the freight insurance services which should be included in the compiling

economy’s balance of payments to compile relevant estimates of the exports of insurance services.

6.49. The export of freight insurance can be identified by surveys of insurance corporations, though

small insurers or small lots of export might not be fully captured. In contrast, the import of freight

insurance is often estimated from the price of imported goods, in conjunction with the estimation of

transportation services (see Chapter 14. B (iii).

6.50. Surveys of financial corporations. In order to obtain source data for financial services, their

exports in particular, conducting surveys of financial corporations is very useful. In this respect, it is

often financial intermediaries that are engaged in international transactions. Mandatory reports of

assets and liabilities of these corporations may be required for countries’ prudence policy. However,

such call reports may not contain sufficient information on international trade of financial services.76

The BPM6 CG contains a model survey form (form 17 (part E in particular) in appendix 8) with

questions that can be useful to ask financial corporations to obtain information on financial services.

To estimate FISIM, it is useful to ask information on positions and interest payments related to loans

to and deposits from (exports) and loans from and deposits to (imports) non-resident non-banks (see

BPM6 CG page 368).

6.51. To ensure an appropriate coverage, a survey frame should be based on a list of financial

intermediaries. In this respect, depository corporations and securities dealers are usually required to

from official sources. In contrast, a list of other financial intermediaries other than depository

corporations and securities dealers, such as securitisation companies, may not be available in some

countries. In this case, it is important to develop country’s business profile so that such intermediaries

are identified. A full list of financial intermediaries will make it easier to conduct surveys for specific

businesses in the financial sector.

C.5.a. Country experience: the United States collection of insurance data

6.52. The main source of U.S. exports and imports of insurance services is a survey of U.S.

insurance enterprises, "Quarterly Survey of Insurance Transactions by U.S. Insurance Companies with

Foreign Persons (BE-45).77 This survey, conducted by the Bureau of Economic Analysis (BEA),

collects quarterly data on reinsurance premiums sold to and purchased from abroad and annual data

on reinsurance claims paid and received, primary insurance premiums sold and claims paid, and

auxiliary insurance services. For the quarterly survey, there is a reporting threshold. This form

distinguishes transactions with foreign affiliates, transactions with foreign parent(s) and other

members of affiliate foreign group, and transactions with unaffiliated foreign persons.

76 See also BPM6 CG.

77 The entire forms can be retrieved from http://www.bea.gov/surveys/iussurv.htm.

6.53. For the quarterly survey, filing is mandatory if, with respect to these transactions, any of the

following eight items were greater than positive USD 8,000,000 or less than negative USD 8,000,000

for the previous calendar year or can expected to be in the current calendar year, on an accrual basis:

(1) premiums earned, and (2) losses, on reinsurance assumed; (3) premiums incurred, and (4) losses,

on reinsurance ceded; (5) premiums earned, and (6) losses, on primary insurance sold; (7) sales of,

and (8) purchases of, auxiliary insurance services.

6.54. Every 5 years, BEA conducts a benchmark survey of insurance enterprises, “Benchmark

Survey of Insurance Transactions by U.S. Insurance Companies with Foreign Persons (BE-140),” to

collect information on enterprises that fall below the reporting threshold on the quarterly survey.

6.55. To ensure complete coverage of imports of insurance services, BEA asks non-insurance

enterprises in the United States to report premiums paid to and losses recovered from foreign insurers

on another survey, "Survey of Transactions in Selected Services and Intellectual Property with

Foreign Persons." BEA conducts this survey quarterly and also as a benchmark survey every 5 years.

C.5.b. Country experience: France collection of data for financial services

6.56. Over the last three years, Banque de France (BdF) has improved the way it collects data on

financial services. As of 2013, data on financial services are collected according to four channels:

i. The Relevé de Transactions Économiques (RTE), a monthly reporting concerning a sample of

408 non-financial companies which generate the most important flows with entities abroad. In

2012, 58 of those companies reported that they are involved in financial services flows with

non-residents;

ii. The Enquête Complémentaire sur les Échanges Internationaux de Services (ECEIS), an

annual survey of data from non-financial companies which have generated service flows with

non-resident entities. In 2011, 162 among 3 921 companies reported significant financial

services flows with non-residents;

iii. The Comptes-rendus de Transactions (CRT), a reporting by the financial intermediaries. Data

is collected either on an annual basis – for 1 523 companies – or on monthly basis for the 37

most significant companies; CRT account for over 75% of the overall flows of financial

services with non-residents.

iv. A monthly pro forma reporting concerning the Financial Services of the General Government.

6.57. These reports enable BdF to meet with the breakdowns required in BPM6 and produce an

estimation based on monthly data with a relevant coverage for the monthly financial services flows.

6.58. The national accounts incorporate a measure of imports and exports of FISIM. A joint

workflow with the National Statistical Institute (INSEE) is currently being developed to base the BOP

FISIM on the National Account data for the production process and for back data. This will ensure the

consistency of the BOP FISIM data with those of the national accounts. FISIM geographical

breakdown will be based on the geographical breakdown of the stock of loans and deposits.

6.59. Regarding financial services embedded in margins from buy-sell transactions (b), and asset

management costs deducted from property income (c), methodological work is being carried out,

based on case studies with the industry.

C.6. R&D and innovation surveys

6.60. R&D and innovation surveys may include variables that are relevant for the estimation of

trade in certain service categories, notably related to computer software and information services;

research and development services; Architecture, engineering, scientific and other technical services;

Audio-visual and related services included in personal, cultural, and recreational services; and charges

for the use of intellectual property n.i.e. In particular questions related to the origin of funding of

R&D activities, and payments for the sales of the products and services derived from R&D can be

used to get to better estimates of trade in services in these service categories.

6.61. When developing and conducting R&D and/or innovation surveys, compilers should consult

the Frascati Manual, which is the internationally accepted standard for such surveys (note that at the

time of writing of this Compiler’s Guide, the Frascati Manual is being revised and is expected to

include a chapter dedicated to the globalisation of R&D). Since 2011, the Manual has included an

online annex designed specifically to address the features and needs of developing countries. This

annex is being integrated into the revised core manual.

6.62. When using questions from R&D and innovation surveys related to payments for R&D,

compilers should be aware that the international funding of R&D may also include donations and

grants and thus do not necessarily represent payments for R&D services. Hence, care is needed to

clearly identify this information for the purposes of compiling trade in services statistics (especially

when compiling import statistics because the coverage of R&D surveys does not necessarily include

firms that buy R&D services but do not perform R&D themselves). Compilers can build on the

prototype questionnaire with a comprehensive list of questions as described in the OECD Handbook

on Deriving Capital Measures of Intellectual Property Products, notably the section III with example

questions on data for international trade in R&D services and R&D output produced in the past.78

6.63. In addition to questions related to payments for R&D services, questions in R&D and related

surveys (e.g., ad hoc commercialisation and licensing surveys) could also give insight into the value

of intra-firm trade in services related to IPPs, notably if no payments are made for those services. Box

X gives some examples of these questions that could be added to derive such information. A

distinction between the types of IPPS could be included.

Box 6.3 Questions for R&D surveys to better capture intra-firm services related to IPPs

i. What is the estimated value of intellectual property licences (whether protected by copyright, patent etc. or

otherwise) that you use in production and receive from your parent or other affiliated party, and who own

and control the underlying asset, but for which no explicit payment was made by you?

ii. What is the estimated value of intellectual propert y assets (whether protected by copyright, patent et c. or

otherwise) that you use in production, whose ownership was transferred to you by your parent or other

affiliated party but for which no explicit payment was made by you?

iii. For dedicated intellectual property producers that receive no revenue through licensing of IPPs: What is

the estimated value of intellectual property assets developed by your firm this year on behalf of your parent

or other affiliated parties, and which may have funded the activity but did not make an explicit payment that

was recorded by you as sales?

iv. For dedicated intellectual property producers that receive some revenue through licensing of IPPs to n on-

affiliated parties: What is the estimated value of intellectual property (whether protected by copyright,

patent or otherwise) you provide to your parent of affiliated parties but for which no explicit receipt was

booked as sales.

All these questions can in turn be broken down by type of service category, e.g. R&D, Software, brands or

audio-visual.

78 Two other publications that are relevant for measuring trade in services related to R&D include Globalisation

in the National Accounts, and The Guide to measuring Global Production (forthcom ing).

6.64. It is a good practice to target certain questions to specific groups of respondents. For example,

sellers and buyers of licences to reproduce/distribute are likely to remain within discrete industry

groups.

C.7. Surveys of tourism activities79

6.65. It is useful to observe the activities which supply products relevant to Travel (credit) and

inbound tourism consumption according to the tourism statistics concept. This necessitates the ability

to identify those products which meet the share-of-supply condition, that is, those in which travellers

and visitors’ consumption represent a relevant share of total supply. Additionally, it will be necessary

to be able to distinguish between the output provided to residents and those to non-residents. In the

following, the supply of accommodation and travel agencies and tour operators services will be

highlighted as possible sources of information on resident to non-resident transactions related to travel

and international tourism consumption.

C.7.a. Supply of accommodation services

6.66. Accommodation services are mostly provided by production units specialized in their

provision, though there are few exceptions. It is generally assumed that the provision of such services

as a secondary output to other activities is limited, meaning that the collection of data will be

restricted to production units producing accommodation services as their main output.

6.67. Providers of accommodation services. There are two broad categories of visitor

accommodation providers: (i) market providers, which receive payment for their services, included

under “Accommodation” (ISIC Division 55) or under “real estate activities” (ISIC Division 68) and

(ii) non-market providers, which accommodate guests free of charge (case of family and friends and

accommodation in one’s own second home or timeshare). Staying with family and friends as a form

of accommodation does not generate any additional production of accommodation services, and

services provided by own second homes or timeshares do not depend on the actual visit to those

homes.80

6.68. Only market providers included in ISIC Division 55 will be considered in the present

compiler's guide, as in most countries, they represent the major providers of accommodation services,

and are those at which specialized surveys are usually directed. For more information on the other

categories of providers, users can refer to the previously mentioned IRTS 2008 Compilation Guide.

Activities under ISIC Division 55 include classes “551 Short term accommodation activities”; “552

Camping grounds”, “Recreational vehicle parks and trailer parks”, and “559 Other accommodation

activities”.

6.69. Most national tourism administrations have their own registers of accommodation

establishments, based on a licensing procedure, which contemplates a more detailed classification (for

instance using a “star” system of qualification of the services provided) but possibly a more restricted

coverage (no inclusion of class 559, or even of class 551) whereas the NSO might have its own

general Business Registry, that classifies generally establishments, without considering these

particularities. This makes inter-institutional coordination all the more so important in order to insure

consistency of the results.

6.70. Survey design. Regarding the statistical design, care should be taken, mostly in the annual

NSO design, to ensure that accommodation establishments located in zones of low general economic

activity (manufacturing, business services) but with a high tourism orientation are not omitted through

79 This sub-section deals only with the “supply side” of tourism statistics while the demand side is covered in

Chapter 7.

80 See TSA-RMF 2008 paragraph 2.36.

the general selection procedure of statistical units (which is often based on the density of general

economic activity).

6.71. The general sample design should recognize also the existence of small family-owned units. It

may be the case that the licensing system is recording them, but not the general business register.

Such establishments should be included in the annual survey (but might be excluded from the monthly

or quarterly ones that usually focus on relatively big units, following a census type system whose base

should be frequently updated (at least annually) to take into consideration the dynamics of the

activity. Some of these small family-units might also be observed using household surveys or surveys

to associative bodies to which they might belong. Such surveys might inform on the global

performance of their associates in terms of tourism indicators (in particular accommodation units

offered and occupancy).

6.72. Surveys of accommodation units concentrate in measuring occupancy rates, room rates

revenues per night or guest, and the national origin of guests. This type of information can help in

estimating non-resident expenditures on accommodation. In addition, other variables related to

establishments can be compiled, such as: employees per room and their remuneration, total revenue,

revenue derived from sales of accommodation services, value added, remuneration of employees,

details on employment in particular according to the permanency of the work contract (short time

contract for the season are often used), and gross fixed capital formation.

6.73. Frequency of accommodation surveys. Because tourism is a phenomenon which usually

presents high seasonal variations, establishments belonging to these activities are observed monthly,

quarterly and annually. Tourism administrations frequently control the monthly and quarterly surveys,

whereas often the National Statistical Office (NSO) is in charge of the annual, structural survey. The

surveys used for these different observation frequencies should have a harmonized design, to enable

the comparison of their respective results.

C.7.b. Surveys of travel agencies and tour operator services

6.74. The main business of travel agencies and tour operators services consists in trading in

services such as passenger transport, accommodation, package tours (arranged by others or arranged

by themselves). The related fees are paid usually, but in different proportion both by the person

traveling (or his employer in the case of business travel) and by the provider of the service

(international transport, visitor accommodation services, package tours). The person travelling is

usually resident of the same economy as the travel agency, though this is rapidly changing with the

increase of transactions realized through the Internet; in the case of the service provider, it might be

resident of the same economy as the visitors, resident of same economy as the service provider or

resident of any other economy.

6.75. Because their services are used to book or arrange trips, travel agencies and tour operators can

provide indications on the intensity of travel (debit) or outbound tourism consumption. It is

worthwhile mentioning that, in Balance of Payments statistics as well as in statistics of international

trade in services, when services providers (principally international transportation and accommodation

providers) use the services of a travel agency resident in an economy different from their own to make

their supply available to the public, a resident-nonresident service transaction needs to be recorded;

this transaction, however, is not included in travel but in trade-related services.

6.76. As a consequence, and in the case of mainly travel agencies, two important sets of data should

be collected:

i. Data on the volume of travel agencies’ business in intermediating in the sale of international

transport, international accommodation and package tours to travel abroad (arranged by either

themselves or by specialized tour operators whom, in turn, might be resident in any country).

This might be used as an indicator on the trend of travel (debit) and outbound tourism

consumption. The information to be collected may refer to: types of clients

(business/personal), destinations, number of operations and total value of transactions,

treating separately those that correspond to travel on package or without package.

Nevertheless, such a measurement might be fragile as households/persons are increasingly

using the Internet to plan their trips, and thus have direct access to other online travel

arrangers, that might be resident in other economies, and thus escape from this measurement.

ii. Because, within the perspective of International Trade in Services, travel agency services, and

more generally, reservation services paid for by international transport companies,

accommodation service providers, etc are treated as purchase of services, these fees should be

measured separately in order to be included in data corresponding to trade-related services if

they correspond to resident-non-resident transactions.

6.77. In the particular case of international transport, obtaining information is complicated because

of the multiplicity of travel agents and international carriers worldwide, the different modes by which

the payments are collected from the final clients by travel agencies and the way their amount is

assigned among the different stakeholders, the complexity of arrangements among airlines (in

particular code sharing and interlining, by which whoever sells the service might not be the one that

provides it). All of this results in the fact that the value that can be reported by resident travel

agencies about the services sold to nonresident service providers might not be accurate, although it

may represent useful information to be possibly combined with other sources. Improvements in the

measurement of resident-nonresident reservation services could be gained through the possible use of

databases generated by the International Air Transport Association (IATA) regarding the clearing

system between airlines and travel agents (the Billing and Settlement Plan (BSP6)) and from a better

understanding of the roles and modes of remuneration of the Central Reservation Systems (CRS) and

the Global Distribution Systems (GDS), whose residence should be accurately considered.

C.8. Construction surveys

6.78. Construction is a sector with such special characteristics that compilers should consider to use

a single survey to respond to various information needs, notably those of trade in services between

residents and non-residents and of FDI/FATS. The main reason for this is that international

transactions for the construction sector are sometimes difficult to separate. For example, when a

construction company provides its services through a physical presence over a long term period (more

than 12 months) but without creating a legal entity in the country of the client, and if the operations

are substantial enough, then the compiler may need to consider that a notional institutional unit needs

to be considered from a statistical point of view. In this case, the corresponding international

transactions will be recorded as foreign direct investment financial flows, income and position, and

the data corresponding to its operations should be considered as FATS (see also section D of this

chapter). If the above conditions are not met, the international transactions will be considered trade in

services between residents and non-residents.

6.79. By reviewing all the information obtained through a single survey, the compiler can

subsequently (and coherently across surveyed firms) make decisions as how to use the data, i.e.

classify transactions as trade in services between residents and non-residents or FDI and use some of

this information for FATS (i.e. sales/turnover, see also section D). Such a unified survey could also be

used to collect additional operational data on the activities of these service providers.

6.80. In order to correctly compile construction it is particularly important to precisely identify the

residence of the enterprise realizing the construction work. Indeed, a construction enterprise

established in one economy may undertake construction of projects in another economy through a

subsidiary or a branch; i.e., via a direct investment relationship. In other cases, it may decide to

conduct services directly from its home base. In the former case, the construction activities are

regarded as the activities of foreign affiliates and the corresponding international transactions are

considered direct investment, whereas in the latter case they are considered export of services. For a

number of cases (i.e., for larger projects that take more than one year), the delineation between trade

in services between residents and non-residents and activities of foreign affiliates may be difficult to

establish. A number of criteria to consider are suggested in BPM6 and MSITS 2010 and are described

further in Chapter 14. Given the difficulties in establishing a clear delineation, it may be useful, in

particular for countries where (many) big contractors have projects abroad, to collect all information

on their activity through a single survey, thereby providing the necessary information for compilers to

then distinguish between exports/imports of construction services or FDI/FATS transactions.

6.81. When classified as trade in services between residents and non-residents, construction

transactions may be considered as mode 3 supply, i.e. commercial presence, or mode 4, that is

presence of natural persons, to account for cases involving the presence of resident workers

(employed by the resident construction enterprise or self-employed) in the non-resident/host

economy. It should be noted that, although in general mode 3 concerns mostly domestic sales of

foreign affiliates, the construction services for works carried out in less than one year may also be

regarded as commercial presence according to the GATS..81

6.82. Although business surveys are designed to collect information on both the transactions of

construction companies and those of their clients, the coverage of the latter could be more difficult in

the case of construction. The services provided by the contractor are likely to be closely related to the

sector of activity of the enterprise (i.e. construction). This is less true for the clients, i.e. any

household or companies of any industry may buy construction services. In addition information is

needed on both the value of the construction project and on the inputs, in particular those bought in

the country where the project is taking place. Hence, for construction a specific survey may be more

appropriate, in particular for those economies which are specialised in the exports of construction.

C.8.a. Country experience: Italy

6.83. In Italy construction data are compiled by the central bank (Bank of Italy), in the wider

framework of BoP statistics. Construction-related information is collected through a Quarterly non-

financial transactions questionnaire (TTN), consisting of regular reports on other services (i.e.

services other than travel and transport), intangible assets, unilateral transfers and compensation of

employees. Therefore, the construction item compilation is based on a general purpose sample, both

for credits and debits (see Chapter 14 – Section B.3.c., paragraphs 14.118 – 14.124 for data

compilation of construction).

6.84. Among the around 3,000 firms sampled with the TTN survey, about 450 enterprises are

mainly engaged in construction activities, according to the reported NACE code. They cover about 23

per cent and 30 per cent, respectively, of the population total turnover (around 180 billion euro) and

foreign turnover (65 billion euro).

6.85. The TTN questionnaire begins with a general part. Construction specific information has to

be reported in a subsequent dedicated section of the questionnaire, where constructions abroad and

constructions in Italy are distinguished. Despite the fact that the TTN survey is meant to mainly

address non-financial items, the construction section aims also at contributing to the compilation of

FDI, including the related flows of income.

81 MSITS 2010, paragraphs 5.53-54.

82 The foreign turnover is estimated on the basis of a survey carried out by the National Builders Association

(ANCE) in 2012 on 40 Italian construction enterprises (ANCE, Rapporto 2012 sulla presenza delle impres e di

costruzione italiane nel mondo, http://www.ance.it/ docs/docDownload.aspx?id=8546).

6.86. Firms are required to list the construction projects in which they are involved either as

contractors or clients and the counterpart is a non-resident entity, and to provide detailed information

for each project to according to the guidelines of MSITS 2010.83

6.87. In Italy’s system, the attribution of the status of “branch resident in the host country” is based

on a simplification criterion: the entity carrying out the works is considered a resident branch of the

host country if the project lasts one year or more. Consequently, depending on the estimated duration

of the works, the construction activity is either regarded as an FDI-related operation, if the

construction work extends over a period of at least one year, or as a service transaction in the opposite

case.

C.9. Other specific surveys (e.g. health, legal, IT enabled)

6.88. Given the high interest in specific sectors, in particular for exports, it may be useful to

consider establishing a specialized survey to collect more detailed data on a particular service (e.g. a

detailed breakdown of the services products or activities, detailed information on partner countries, on

modes of supply used in these services international transactions). Often, the collection of statistics is

motivated by a strong policy demand for more detailed information on one or more service category,

when for example this category accounts for a substantial share of the economy or employment.

6.89. Although such a survey may be specially tailored to respond to the specific (national) needs,

it is important that the information collected is compatible with the international definitions as

outlined in MSITS 2010 for example for residence, detailed services items and modes of supply. The

MSITS 2010 in particular indicates that for further breakdowns by type of service the CPC is used as

a guide (see EBOPS 2010-CPC Version 2 correspondence table84).

6.90. Finally, it should be noted that if a specific sector and its international transactions are very

important for a country, compilers may wish to consider collecting all the required information

through a single survey (i.e. not only trade in services between residents and non-residents, but also

structural business statistics and/or FATS), and then make decisions as to how to use the data (i.e.

classify transactions as trade in services between residents and non-residents or FDI and use some of

this information for FATS (i.e. sales/turnover). Such a survey could also be used to collect additional

operational data on the activities of these service providers

C.9.a Country experience: India’s compilation of education services

6.91. In order to better analyse trends in trade in higher education in India, the Directorate General

of Commercial Intelligence and Statistic of India (DGCIS) initiated a survey on international trade in

education services, under the overall guidance of the Central Statistics Office, Ministry of Statistics &

Programme Implementation. The scope of the survey was restricted to Higher Education services, i.e.,

technical education, management education, medical education and general discipline (University

level courses). The survey period was year 2010-11, as all financial information for that year had

already been audited and was accessible. The fieldwork of the survey as well as processing and

compilation of data has been outsourced to the Indian Institute of Foreign Trade under the overall

guidance and supervision of DGCIS.

6.92. A stratified sampling method was used to select the institutes/universities providing education

services under each of the categories of education, and by mode of supply, across eight cities in India.

Further, all the important Universities and Technical and Management Institutes in India enrolling

foreign students were within the coverage. The questionnaire was developed in consultation with

83 MSITS 2010 paragraph 3.133.

84 http://unstats.un.org/unsd/tradeserv/TFSITS/msits2010/ebops2cpc.htm.

relevant agencies to collect detailed information on trade (both export and import) in higher education

from Indian Universities / Institutions. The questionnaire has 16 subsections, covering among others

(a) identification of the service provider, (b) transactions with non-residents, (c) employment by type

of staff, (d) details of revenues / receipts from foreign universities / institutes (including foreign

students studying in India and in-house Indian faculties visiting abroad), (e) details of expenses /

payments to foreign universities / institutes (including Indian students studying abroad and foreign

faculties visiting India), and (f) identification of trade barriers in higher education services.

C.9.b. Country experience: India’s compilation of software and IT exports

6.93. In view of the growing importance of exports of Information Technology and Information

Technology Enabled Services (IT & ITES), the Reserve Bank of India (RBI) has conducted annual

surveys on software and IT exports services on regular basis from September 2008 onwards. It covers

elements of the EBOPS 2010 categories computer and information services as well as a broad range

of other business services, which have the particularity that they may have a strong IT component

(either to produce or to deliver the service). The survey is designed to collect detailed disaggregated

level information on export of software services broken down by activity, type of services (on-

site/off-site) and country of destination along with the four modes of supply. For determining the

proportion of each mode of supply within the services transactions, survey respondents are asked to

report the estimated value of services provided through modes 1, 2 and 4. This information is sought

both on a fiscal year basis as well as on a quarterly basis. No treatment different to what is applied to

other results of this very detailed survey (i.e. for non-response etc.) is applied for modes of supply.

The survey also collects information on the software business of foreign subsidiaries/associates of

Indian companies (foreign affiliates), distinguishing between software business done in host country,

with sales to either India or to other countries. The collected statistics are cross-checked and validated

with the information collected independently by two other sources, namely, the National Association

of Software and Services Companies (NASSCOM) and the non-physical (off-site) software exports

figures collected through a different format called Softex.

D. Foreign affiliate statistics and the international supply of services

6.94. This section deals with the collection through surveys of enterprises of data necessary for

FATS. For most countries that are compiling FATS, business surveys are usually the most appropriate

way to obtain the information needed to provide meaningful FATS in a reliable and cost-effective

fashion. The elements for data collection detailed in this section focus on the specific aspects of

services. The main definitions of the FATS conceptual framework are briefly described in Chapter 1,

whereas more details as to the definitions of some of the variables are provided in Chapter IV of

MSITS 2010. Needs in terms of compilation are described in chapter 15. As most of the variables are

directly drawn from the data collected, it is important that these definitions are considered when

designing the survey form as well as the accompanying explanatory notes.

6.95. There are two basic approaches to collect FATS through enterprise surveys. These two

approaches are not necessarily mutually exclusive. The first approach, which can be used only for

inward FATS, identifies from existing data on resident enterprises the subset that is foreign-

controlled. The second approach entails conducting surveys that request information directly on the

operations of resident affiliates of foreign enterprises and foreign affiliates of domestic enterprises

(either through a dedicated survey, that can be specially tailored to respond to needs, or through an

existing FDI survey which offers more limited options as to the information that can be inquired).

MSITS 2010 recognizes the advantages and disadvantages of each approach and the need for

compilers to demonstrate flexibility in adapting the FATS data collection to each country’s statistical

infrastructure while maximizing the use of existing data.

6.96. A usual precondition for the establishment of a foreign affiliate is the development of

investment flows leading to an FDI relationship. An understanding of the FDI universe provides a

strong basis for developing an understanding of the FATS universe and, therefore, ensuring a sound

data collection mechanism for FATS. The FDI universe of enterprises has a broader coverage than the

FATS universe, but a data collection program for FDI statistics can provide a base for a data

collection program for FATS, either directly or indirectly. The direct use of this data collection is that

key FATS variables might be incorporated into existing FDI surveys. Alternatively, if the information

is not available from the FATS data source itself, links to existing data on FDI could be used (i) for

inward FATS to identify the data of interest in existing sources of information on resident enterprises

(i.e. to identify the foreign controlled subset of firms) or (ii) for both inward and outward FATS to

identify foreign-controlled affiliates for which FATS variables could be collected on a separate

survey. Finally it is important to note that in the case of regional headquarters which report data on

behalf of affiliates further down in the chain and located in various countries, the respondent should

be required to report the data on a non-consolidated basis, i.e. allocating the variables describing the

operations of the affiliates to the affiliates' actual country of location.

6.97. Three types of surveys are particularly useful to compile FATS: Structural Business Surveys,

FDI surveys, and specific FATS surveys. These are discussed in more detail below. It should be noted

that the collection of FATS does not need to be a stand-alone exercise and that compilers can choose

to collect FATS data and other information in a single survey, as described in B7 and B8.

D.1. Structural business surveys

6.98. Structural business statistics (SBS) surveys represent a class of surveys designed to provide

detailed economic and financial data about the activities of domestic resident business enterprises.

They may be encompassing all types of activities or could be specifically tailored for firms primarily

engaged in specific sectors (e.g. wholesale and retail trade activities). Reporting and statistical units

for these surveys can be identified at several levels of consolidation, ranging from establishments

(single physical locations or local activity units) to fully-consolidated enterprises that may include

several subsidiaries and operate in several different sectors of the economy.

6.99. SBS surveys can be used to provide FATS measures only for inward FATS, by identifying

the subset of resident domestic corporations that meet the relevant criteria for statistical units and for

which the recommended data items are either already collected for other purposes or can be added to

the surveys to meet the FATS requirements. As described in Chapter 15 this approach requires the

existence of indicators of foreign ownership in the domestic business register, a sample frame that

meet the FATS requirements, or the ability to link SBS data with FDI survey or an FDI register

through the use of common identifiers. An example of this approach was implemented in the United

States; i.e. the linking of inward FDI enterprise data with the more comprehensive and detailed data

collected every five years at the establishment level in the economic censuses. Where existing

domestic statistics are used as the source of information, links to FDI data can be used to supplement

the SBS data with information, such as by identifying the country of the controlling entity.

6.100. In general SBS surveys already cover most of the variables of interest identified in MSITS

2010, or include the relevant elements to compile them. However in many cases some of the elements

or breakdowns are absent. When envisaging the use of SBS surveys for FATS, compilers are advised

to coordinate with statisticians in charge of the structural business statistics data collection program,

to identify what is already available, and what would need to be added in the survey(s). This would

need to be established according to the priorities identified, keeping the burden for respondents to the

minimum as SBS surveys are generally already quite long. The FATS variables often covered by

existing surveys are the following: sales, employment, purchases of goods and services for

intermediation consumption, as well as those for resale (often only covering goods), assets,

compensation of employees, taxes on income, investment. Some breakdowns of these variables are

often included and compilers will need to investigate how these could be used in the context of

MSITS 2010. Some variables, for example on R&D, may be included or covered by supplementary

surveys. Finally the forms may include some additional variables of interest to the compiling

economy.

6.101. The additional characteristics which are often absent from existing structural business surveys

but are of interest in the context of services are the following:

i. For sales/turnover: a breakdown into sales of goods and sales of services (in first

instance), and if possible a further breakdown into main categories of services (a longer-

term goal), at least those of interest to the compiling economy, and on a basis compatible

with EBOPS 2010.

ii. Identify separately (i) sales (of services) made in the host economy, (ii) the exports to the

economy of the UCI and (iii) to third economies.

iii. Other geographical breakdowns of sales/exports as well as for purchases/imports (of

services) would also be useful. If possible a distinction should be made between

affiliated and unaffiliated parties. However given the higher burden this may entail, the

possibility offered by structural business surveys may be limited (see also Chapter 15

sections E.1 and E.3).

iv. For employment, identify non-resident employment, of which intra-corporate transferees.

6.102. Using SBS surveys to collect FATS data has a few advantages. The FATS variables will be

compatible with measures of the domestic economy. Moreover, it allows FATS variables to be

compiled with no (or little) added burden to reporters and with fewer resources than a separate data

collection program. However, it may be difficult to include the full range of recommended FATS data

items due to limitations in the domestic statistics.

D.2. Foreign direct investment surveys in the context of FATS

6.103. Where there are existing FDI surveys, registers used for FDI would typically be used to

identify foreign-controlled affiliates that qualify for FATS treatment. Alternatively, key FATS

variables could be incorporated into existing inward or outward FDI surveys. Many countries have

inward and outward FDI surveys, and the use of these vehicles to collect some basic FATS can be

considered as a quick and cost-effective solution. In particular for outward FATS. However,

compilers need to keep in mind that there are a number of drawbacks, some of which are listed below.

6.104. The priority would be to cover the main FATS variables, namely sales/turnover (if possible

with an estimated breakdown into total goods and total services, excluding income elements) and

employment (if possible distinguishing employees recruited from overseas and intra-corporate

transferees). If not available from other sources, the survey should enable the identification of (i)

subsidiaries and branches (possibly including further qualitative information on the subsidiary), (ii)

the principal activity of the affiliate, and (iii) the country of establishment of the affiliate for outward

and of the UCI for inward. All affiliates should be covered whether directly or indirectly controlled.

However given that FDI surveys often only gather information on immediate relationships, in the first

stages of implementation only data on direct control could be collected, but a medium to long-term

objective would be to also gather information on affiliates indirectly controlled.

6.105. Compilers should note that incorporating FATS-related questions in FDI surveys may

increase the response burden imposed on enterprises that are not part of the FATS population. In

addition FDI surveys may need to be conducted more frequently (for example, quarterly), whereas

FATS may be needed less frequently (for example, annually, at least in the initial stages of

development of the FATS framework at the national level). If a country conducts an annual survey of

direct investment as well as monthly or quarterly surveys, it may be appropriate to only incorporate

FATS variables in the annual one. Concerning the possible extension of FATS variables and

breakdowns to be covered in FDI surveys, this should also be carefully assessed given the main

reasoning behind FDI surveys, and the broader population covered by those. This is why compilers

are advised not to go beyond the list of items identified above, and that if there is a need to go beyond,

then that a survey complementary to the regular (annual) FDI survey is developed, which could also

be used to collect more detailed FDI data.

6.106. Extended business registers might also be a suitable means of maintaining such information.

This approach has already been adopted in some countries which use them to maintain data on foreign

ownership.

6.107. While FDI statistics have several differences from FATS variables. FDI statistics may provide

useful indicators relating to commercial presence for those countries that have not yet begun to

compile FATS. In particular, FDI positions can serve as an indicator of a country’s interests in using

commercial presence to supply services internationally. In addition, FDI statistics can be used in

conjunction with FATS to indicate the extent to which the operations of affiliates were financed with

funds from direct investors, as well as the extent to which the income generated by affiliates accrued

to direct investors.

D.3. Foreign Affiliates Surveys

6.108. Some special surveys could be designed to collect FATS which would complement existing

data collection systems such as SBS or FDI. These surveys would be limited to the subset of the FDI

population that qualify for FATS and may be conducted as an extension of the existing surveys or less

frequently than the FDI surveys. Naturally information from the business register or the FDI register

would be necessary to identify the target population. Such surveys could be conducted separately for

both inward FATS and outward FATS, or would enable more possibilities in terms of collecting

detailed data, in particular for outward FATS. This approach may also be appropriate when an

existing FDI data collection program is not already in place or cannot be easily adapted for the

requirements of compiling FATS. In general separate surveys would be required for inward FATS and

outward FATS due to the distinctly different populations, although in certain circumstances this

would not be the case, such as when for outward FATS many of the mother companies of the

compiling economy are themselves controlled from abroad. It is also important to note that the ability

to conduct separate surveys may be limited by legal and institutional conditions in the compiling

economy.

6.109. One of the main drawbacks of conducting a dedicated FATS survey is that it may be costly

and burdensome to develop additional surveys. However, such a solution has also a number of

advantages as it can be specially targeted towards the relevant inward and/or outward population.

More importantly, it can be targeted to the needs of users and its design can more closely follow the

international recommendations, including the development of detailed guidelines for survey

respondents. Such a survey could have all or most of the various dimensions as listed in MSITS 2010.

As a general consideration, one should note that again it may be easier to approach the inward FATS

population for detailed data, than it is for the outward. As an alternative approach, the existing SBS

could be extended with questions for the inward foreign affiliates, which could be overall more cost

effective.

6.110. The information that can potentially be covered in a FATS survey includes all the

requirements of international manuals (MSITS 2010) and guidelines (BD4 and HEGI). In the context

of the international supply of services, these are also listed in Chapter 15 of this guide. The

information to be covered will also depend on the national needs identified. At least in the first stages

of development of a FATS survey, the collection could cover the following aspects:

i. If not already covered by the register(s) or related FDI surveys, information on the type of

affiliate (subsidiary, branch, associate), its main activity, the country of the UCI (for

inward) and the country of establishment of the affiliate (for outward).

ii. Variables: sales/turnover (if possible with a breakdown into total sales of goods and total

sales of services), employment (if possible distinguishing employees recruited from

overseas and intra-corporate transferees), purchases of goods and services for

intermediation consumption, as well as those for resale.

iii. For sales identify separately (i) sales (of services) made in the host economy, (ii) the

exports to the economy of the UCI and (iii) to third economies.

iv. Other details and breakdowns could then be sought as experience in the use of the FATS

survey develops, and depending on the results obtained and the use that can be made of

these.

D.4. Country experiences

D.4.a. Country experience: the United States

6.111. In 1976, the International Investment Act authorized the U.S. BEA to collect data on the

finances and operations of foreign-owned enterprises in the United States and of U.S. parent

enterprises and their foreign affiliates.85 The Act was expanded to include trade in services in 1984.

The Act made responding to BEA’s surveys mandatory and required the BEA to maintain the

confidentiality of the data collected. Another act passed in 1980, the Paperwork Reduction Act,

governs the collection of data from the public by any government agency. The Paperwork Reduction

Act requires agencies to minimize the burden they place on private businesses and citizens in

collecting information.

6.112. BEA’s surveys of the operations of MNCs collect data on balance sheets; income statements;

sales; employment and employee compensation; research and development expenditures; property,

plant, and equipment; taxes; trade in goods; and the components necessary to estimate value added.

While the surveys cover both majority-owned and minority-owned affiliates, more data are collected

for majority-owned affiliates.

6.113. BEA uses a system of benchmark surveys (conducted every 5 years), and annual surveys to

collect data on FATS. Benchmark surveys cover the universe of multinational enterprises, but data

collection is much less detailed for smaller reporters and for minority-owned reporters.

6.114. Annual surveys are conducted between benchmark surveys. The smallest reporters are

exempt from reporting on the annual surveys, and BEA uses statistical sampling for the medium-sized

reporters. Large reporters are required to report annually and provide the most-detailed information.

The reporting thresholds are based on the reporter’s assets, sales, or net income. Estimates are made

for reporters not required or failing to report in a given year, so the published statistics cover the

universe. Smaller majority-owned foreign affiliates report less detail than larger majority-owned

foreign affiliates. To present statistics on the operating data of all majority-owned foreign affiliates,

BEA estimates items that are only collected for large majority-owned foreign affiliates for the smaller

majority-owned affiliates. These estimates are based on relationships among the data items for a

panel of comparable larger majority-owned foreign affiliates.

6.115. Both for inward FATS and outward FATS (regarding the U.S. parents), data are collected on

an enterprise group basis and cover the fully consolidated domestic entity. For outward FATS, the

U.S. parent is required to report on the operations of its foreign affiliates but this tends to be less

consolidated. First, affiliates can never be consolidated across countries. Second, affiliates cannot be

consolidated across industries unless they were part of an integrated production process. Finally,

affiliates cannot be consolidated if they do not have the same ownership structure.

86 Housing censuses may also be of interest. A housing census collects information pertaining to all liv ing

quarters and occupants thereof in a country or in a well delimited part of a country.

6.116. Data are collected on an accrual basis and generally follow U.S. Generally Accepted

Accounting Principles (U.S. GAAP). Data are reported based on the enterprises’s fiscal year. For

outward FATS, items recorded in foreign currency are translated into U.S. dollars following U.S.

GAAP, which calls for assets and liabilities to be translated using the exchange rate on the date of the

balance sheet and for revenues and expenses to be translated using weighted-average exchange rates

for the period.

6.117. For inward FATS, operations are classified by the country of the ultimate beneficial owner

(UBO), which is equivalent to the UCI. However, a few data items are classified by the country of

the foreign parent. For outward FATS, the statistics are classified by the country where the affiliate is

located. That is, where the affiliate’s physical assets are located and where its primary activities are

carried out. In most cases, the country of location and the country of incorporation are the same.

However, in some cases, a business enterprise is incorporated in one country but part or all of its

physical assets are carried out in a second country. If all of its operations are in a single country

outside of its country of incorporation, then the affiliate is treated as a single affiliate in the country of

its physical presence. If the affiliate has physical assets in each country, it is treated as two affiliates.

6.118. For classification by industry, BEA uses industry codes derived from the North American

Industry Classification System (NAICS) generally at 4-digit level. For inward FATS, each affiliate

reports up to 10 industries in which it has sales. These are used to assign a primary industry code to

the affiliate in three steps. First, a given affiliate is classified in the NAICS sector that accounted for

the largest percentage of its sales; NAICS sectors are at the two-digit level. Next, the affiliate is

classified into the 3-digit subsector within that sector. Third, within that 3-digit subsector, the affiliate

is classified in the 4-digit industry for which its sales were largest. For outward FATS, the same

process is followed to assign U.S. parents and each foreign affiliate to a primary industry.

6.119. BEA asks reporters to break out their sales into goods, services and investment income. For

inward FATS, enterprises are asked to further break out their sales of services between sales to U.S.

persons and sales to foreign persons. For outward FATS, BEA asks that sales of goods, services, and

investment income each be broken out by destination: to the United States, to the host country, and to

third countries. For each of these, BEA asks that the reporter further distinguish between sales to

affiliated parties and sales to unaffiliated parties.

6.120. The data reported have to pass a large number of computerized edit checks and reviews for

consistency with data such as quarterly FDI surveys. As a result of this edit and review process, a

number of changes are made to the reported data, usually after consulting with the reporter. In some

cases, usually involving smaller affiliates, estimates based on industry averages or other information

are substituted for missing or erroneously reported data.

D.4.b. Japan

6.121. The Survey on Overseas Business Activities of Japan (outward survey) and the Survey of

Trends in Business Activities of Foreign Affiliates (inward survey), conducted by the Ministry of

Economy, Trade and Industry (METI) serve as Japan’s FATS. They are conducted on an annual basis

and data correspond to those recommended by MSITS 2010, with however some deviations i.e. :

i. In case the parent company is mainly involved in financial, insurance and real estate

industries, it and its affiliates are excluded from the outward survey;

ii. Inward data are based on ownership ratio exceeding one-third, while outward data are

based on 10 percent standard, while the majority standard is adopted by MSITS 2010;

iii. Ultimate investors are not identified in inward surveys.

6.122. The Survey on Overseas Business Activities of Japan (Outward survey) aims at presenting the

actual conditions concerning overseas business activities of Japanese corporations that will serve as a

basis for future industrial and trade policies. Survey targets are parent companies: Japanese

corporations which, as of the end of March, own overseas affiliates, excluding those in the financial

and insurance industry or real estate industry (hereinafter referred to as "Parent Companies"), as well

as overseas affiliates (“Subsidiaries" and "Sub-subsidiaries" are collectively referred to as "overseas

affiliates"). The following overseas affiliates are surveyed:

i. A foreign affiliate in which a Japanese corporation has invested capital of 10% or

more;

ii. A foreign affiliate in which a "subsidiary," funded more than 50% by a Japanese

corporation, has invested capital of more than 50%;

iii. A foreign affiliate in which a Japanese corporation and a subsidiary funded more than

50% by a Japanese corporation has invested capital of more than 50% cumulatively.

6.123. This outward survey is based on Japan’s Statistics Law. For 2013 survey, 8,662 parent

companies comprised the population and questionnaires were sent to the entire population. 76.4% of

those enterprises replied. Survey forms have to be filled out by parent companies. In the case that

multiple Japanese companies are parents, the company with the biggest share in the equity (leading

company in the case that the shares of two companies are the same) of a foreign affiliate should fill

out the form.

6.124. Outward FATS information collected include overseas affiliate profile; investment; operation

status; Decline in control share; Employment on a full time equivalent (FTE) basis employment; sales

turnover; purchase and related costs; profits; appropriation of earnings; R&D expenses; capital

investment; major products broken down in intermediate and final goods.

6.125. The Survey of Trends in Business Activities of Foreign Affiliates (Inward FATS) is conducted

based on Japan’s Statistics Law. The 2013 survey covered 5,463 companies of which 60.3 percent

replied. The following enterprises were covered:

i. A company in which more than one third of shares or holdings is owned by foreign

investor;

ii. A company funded by a domestic company (in Japan) in which more than one third of

shares or holdings is owned by foreign investors, in which the total ratio of the

foreign investor’s direct and indirect investment is more than one third of the shares

or holdings of the company concerned;

iii. Companies that fall under (1) or (2) above, in which the principal foreign investor’s

direct investment ratio is more than 10%.

6.126. Inward FATS Information collected include the company outline; operation status;

employment on a FTE basis; type and function of the establishment (i.e. is the affiliate in Japan a

regional headquarter); sales turnover; purchases of which imports; payments to the principal foreign

investor (dividends, interest on loans; royalties); R&D expenses; plant and equipment investments;

profit and assets.

Chapter 7 Surveys of Persons and Households, and Population Censuses

7.1. Scope. This chapter discusses the issues related to the use of population censuses, surveys of

persons and households and their organization in the context of data collection for measuring the

international supply of services. Section A provides an introduction and a summary of good practices,

The chapter promotes an integrated approach and cooperation between related statistical domains

(e.g., BOP and tourism statistics) by describing these sources and their use in compiling statistics on

the international supply of services (Section B). Section C covers population censuses. Section D

covers household surveys, construction of the target population and sampling frame; conducting a

household survey; measuring travellers’ expenditure using a household survey; seasonality issues; and

reference period. Section E describes labour force surveys, particularly the development of a labour

force survey module for mode 4. Section F deals with border surveys and provides details on

organizing surveys at different border points, including airports, road borders, railways, and cruise

ships. Section G provides an overview of complementary surveys of persons traveling.

A. Introduction and a summary of good practices

7.2. This chapter mainly refers to population censuses, household surveys (including labour force

surveys) and border surveys. Surveys of persons and households can be used to compile international

transactions in services in which individuals (or households), as major purchaser or supplier of

services, can be relatively easily identified for survey sampling purposes. For trade in services this

would typically refer to travel-tourism, transportation, and mode 4 related transactions, but with the

growing use of e-commerce by households, it may be relevant to consider other types of services or

modes. Such sources as well as population censuses can also be used to collect non-monetary

information, again in relation to mode 4 as well as mode 2. With respect to collecting balance of

payments services data for households, compilers should consider if the information is not already

covered by another data source such as described in this guide. However in some cases it may be

necessary to turn to surveys of persons or households, where these are important for trade in certain

services.

7.3. Population censuses, person and household surveys are generally used as major data sources

for other statistical frameworks, such as social and demographic statistics, tourism statistics etc. They

can also be used to collect information on economic transactions. Persons and more generally

households are in many economies important economic agents in the context of the international

supply of services. The usefulness of such sources will need to be carefully assessed by compilers for

each type of information that could be used. Therefore, an integrated approach is imperative to the use

of such sources for the purposes identified in MSITS 2010 and this guide. Following the basic

principle of efficient statistical work – collect once, use many times (multiple-purpose use) – it is

good practice to design a survey such that its results may be used for compilation in several statistical

domains to ensure the highest possible efficiency. Given that the organization and conduct of these

surveys will be the responsibility of different units in a statistical system, it implies that if a need is

identified compilers actively seek cooperation in all stages of the statistical process with these units.

For example, such a close cooperation is absolutely essential in border surveys which have to provide

data for both tourism statistics and statistics on the international supply of services. Such cooperation

will need to be formalised through an institutional arrangement (see Chapter 3). Cooperation with

demographic statistics is important as well, for example, to ensure the proper use of population

censuses in the context of the organization of the household surveys and as a benchmark in grossing-

up their results.

7.4. Population censuses, surveys of households and of persons can be used for various purposes

to collect the required information, but none can serve all needs. This guide suggests the following:

i. Population censuses could be used to gather benchmark information (in particular to compile

outgoing mode 4 data, but not only limited to this) or used for household sampling. This

could be done by adding questions directly in the census, or by developing a tailored module

to the population census.

ii. Household (limited to outbound travel) and border surveys are particularly relevant for

collecting data related to international travel (including transport), such as on the

expenditure/consumption of households or persons while outside their country of residence.

Such sources could also be used to collect other information on characteristics of those

travelling. A breakdown by purpose of travel and by type of product consumed should be

collected to the extent possible (as a first priority according to the recommendations of

MSITS2010/BPM6 and IRTS 2008, and with further items if relevant to the compiling

economy).

iii. For border surveys it is important to ensure that no category of persons are excluded from the

survey (e.g. cover persons beyond the definition of visitors used in tourism statistics), but a

clear distinction is made for each category so the compiler can select the population of

interest to his/her statistical domain.

iv. Labour force surveys can be used to collect various types of information in relation to the

needs of MSITS2010, for example, for the mode 4 variable “number of persons or trips”,

either by adding directly questions in the labour force survey, or by developing a specific

module (see suggestions in Box 7.3). A labour force survey could be used for collecting more

targeted information on outbound business travel (mode 2 consumption for personal purposes,

mode 2 consumption for business purposes).

v. Household surveys could also be used to collect data on

o consumption of other services (e.g internet purchase/consumption of services, mode

4),

o International provision of services of members of households, in particular for self-

employed persons (modes 1 or 4)

vi. Complementary surveys of persons traveling (e.g. at places of accommodation or in sites of

tourism interest) could be used, but it is not a general recommended practice (could be done

under certain circumstances). Indeed there are a number of challenges in using these sources,

i.e. identification of non-residents, subsets of the population, stay not terminated at the time of

surveying, etc

vii. There could be interest in having some surveys targeting categories of persons given their

specific (spending) characteristics (e.g. students, patients).

viii. The use of household surveys or surveys of persons should be carefully looked at given the

cost of them and the likely prevalence or sparsity of the activity within the broader

population. Increased response burden on the households/persons and the burden for the data

collection as well as the reliability and relevance of data obtained should also be considered.

ix. A particularly useful source for mode 4 (and related mode 2) would be business travel

surveys. Synergies could also be found in this context with labour force statistical sources

(e.g. comparing/joining samples).

x. Given that there are strong synergies with related statistical frameworks (e.g. tourism

statistics, labour statistics) or that surveys of persons or households or population censuses are

primarily designed to serve other information needs and given that it is considered good

practice that one source serves multiple needs, compilers are strongly encouraged to find

synergies and discuss the possibilities of using these sources to respond to the MSITS 2010

data needs. Chapters 2 and 3 provide more information on legal and institutional frameworks.

xi. When designing the data collection system using surveys of households or persons, special

attention should be brought to the sampling/selection of households or persons, selection of

informants, cost, response burden, sparsity of responses obtained etc. Compilers should

weight how these sources could be used for the various data needs identified. In particular

increasing the size of samples may significantly increase costs and alternatives may involve

using auxiliary information to better target the population to be covered.

B. General Purpose and Description of Population Censuses and Persons and Households

Surveys

7.5. A population census, hereinafter referred to as a census, provides at a specified time reliable

data on social, demographic and economic characteristics, of all persons in a country or in well

delimited parts of a country, especially for small geographical units. This includes information on the

size, composition and spatial distribution of the population in addition to socio‑economic and

demographic characteristics. It is a major source of social statistics, with the obvious advantage of

providing reliable data—that is to say, data unaffected by sampling error. In general the census

collects information for each individual in a household, usually for the whole country or for well‑

defined parts of the country. Censuses are conducted periodically in the majority of the countries in

the world. The international recommendation is that a national census be taken at least every 10 years.

Some countries carry out censuses more frequently because of the rapidity of major changes in their

population and/or its housing circumstances. For more information on population censuses, compilers

are encouraged to refer to the Principles and Recommendations for Population and Housing

Censuses, Revision 2 (UN, 2008).86

7.6. SNA 2008 defines a household as a group of persons who share the same living

accommodation, who pool some, or all, of their income and wealth and who consume certain types of

goods and services collectively, mainly housing and food.87 In other words they are groups of persons

with common economic interests.

7.7. The internationally endorsed recommendations for the organization of household sample

surveys are contained in the UN publication Designing Household Survey Samples: Practical

Guidelines.88 The publication provides recommendations and good practices in such key topics as the

planning and execution of surveys; sampling strategies; sampling frames and master samples;

documentation and evaluation of sample designs; construction and use of sample weights; estimation

of sampling errors for survey data; non‑sampling errors in household surveys; data processing for

household surveys. Many countries have in place household survey programmes that include both

periodic and ad hoc surveys.

7.8. The compilers should familiarize themselves with the recommendations contained in the

publication referred to above in order to be in a better position to participate in the planning and

86 Housing censuses may also be of interest. A housing census collects information pertaining to all liv ing

quarters and occupants thereof in a country or in a well delimited part of a country.

87 SNA 2008, paragraph 24.12. SNA 2008 recognizes the importance of the household surveys, but, at the same

time it is noted that the conventions adopted by su rvey statisticians and those of national accountants are not

always the same. A household expenditure survey for example may not include estimates of imputed rental of

owner-occupied dwellings or own account production. It may measure income after tax and measure

expenditure on a cash and not on an accrual basis. Compiler should be aware of these limitations when using

these sources.

88 Available at: http://unstats.un.org/unsd/publication/seriesf/Seriesf_98e.pdf.

conducting of the household surveys in their countries for purposes identified in this guide. Household

surveys are a widely used statistical tool89 . Many countries have therefore developed their own

detailed methodological guidelines on their design and conduct90. Such guidelines are periodically

reviewed and amended as necessary. It is good practice that compilers actively participate in this

process and develop amendments which would ensure that relevant needs identified in MSITS 2010

are taken into account.

7.9. Compilers are also advised to review the IMF publication International Transactions in

Remittances: Guide for Compilers and Users which suggests that household surveys or labor force

surveys could be used to collect information relevant to mode 4 by including a number of specialized

modules or questions in existing surveys, or that specialized surveys could be conducted through

which relevant households would be identified. This would help analysts understand the relations

among the supply of services, employment status, etc. This should be done by identifying ways of

specifically targeting the population of interest in order to avoid increases in the cost of using such

sources, the lack of results obtained, as well as the possible increase of response burden.

7.10. As any sample survey, entities (enterprises or individuals) surveyed must be representative of

the population. Since there is no register for those traveling, compilers should look at administrative

records or other sources that could play a role of register. For some countries, even measuring the

number of people crossing the borders represents a challenge; for example, cases in which there are

border unions (as is the case for EU countries).

7.11. A survey of persons is a data collection pertaining to (specific groups of) individuals.

Household surveys provide access to persons by first selecting households. Compilers could transform

household surveys into a sample of persons by the following procedure: at the beginning of the

interview, the interviewer asks how many persons above a certain age are permanent members of the

household. From this range of persons the target person (e.g. the oldest, the second-oldest, etc.) is

chosen by a random procedure. The interview is then conducted with this randomly chosen target

person only.

7.12. Due to the unique nature of tourism (as described later in this chapter), sample surveys of

households and of persons (e.g., border surveys) are often used to collect information for travel

imports (debits) and tourism expenditures. Thus, given the importance of tourism and travel, some

parts of this chapter will frequently refer to the surveys conducted for tourism statistics purposes.

Compilers should therefore have knowledge of the basic tourism statistics concepts in order to make

appropriate use of such surveys in the context of MSITS 2010. Basic concepts of tourism statistics are

provided in box 14.2 of chapter 14 of this Guide. For more detailed information, also see

International Recommendations for Tourism Statistics 2008 (IRTS 2008) and its accompanying

compilation recommendations.91

C. Population census

7.13. Population censuses can be used to benchmark some of the data collected through other

means or estimated.92 It could also be used as a sampling frame for surveys. This could be relevant for

89 See also the International Household Survey Network at www.surveynetwork.org.

90 An example, household surveys are extensively treated in the Statistics Canada publication “Survey Methods

and Practices”, available at: http://www5.statcan.gc.ca/bsolc/olc-cel/olc-cel?lan g=eng&catno=12-587-X.

91 See IRTS 2008, paragraphs 2.4 – 2.12. Add referenc e to ITRS 2008 compilation guide.

92 It should however be kept in mind that an increasing number of countries are moving from traditional

questionnaires to census a population to a register-based census, which may reduce the potential use of this

source in the context of this Guide.

persons moving temporarily abroad under a mode 4 regime and to obtain a sense of medium to long-

term developments. This includes information on the importance of outbound mode 4 for the country.

More specific surveys or modules may then gather additional detail focusing on employment at home

and abroad and additional questions relevant to mode 4. For example, to identify more specifically

persons who went temporarily abroad in the context of mode 4, one could add the following

questions:

i. Did you travel abroad for work in the past [x] 93 months? Yes/No

ii. If Yes, for what purposes?

- fulfil a contract.

- negotiate a contract or establishment of affiliate.

To avoid any confusion with the work related movements not covered by mode 4 work, questions and

response alternatives are needed to identify the country of residence of the employer at the time.94

7.14. If this is identified as a potential source of information, compilers are encouraged to approach

the staff in charge of the census. The contents of the questions respond to various needs, and it is once

again necessary to analyse if and how such a source could be used (i.e. either existing information or

by adding a module/questions to the census). Given the long preparation time necessary to develop

and conduct it, compilers need to contact the staff in charge of the census at the early stages of its

design.

C.1 Country experience – Canada

7.15. At the time of writing Canada did not collect mode 4 data. However, some of the questions

could be useful. For example, the Canadian census questionnaire95 identifies if the person is a self-

employed or an employee, his/her occupation, the industry of the firm, and if this person was

generally working in or outside Canada during the previous week. Some countries which often have

part of their population travelling abroad for work purposes may be interested in knowing more on the

purpose of such travel to determine whether they are mode 4 relevant. When information is collected

on the duration of residence, information could also be gathered to find out if the employer is a

multinational or not, or if the person is in the country for mode 4 relevant purposes or not (i.e. with

employer based in country of origin or not).

D. Household surveys

7.16. As indicated above, household surveys are primarily used to collect socio and demographic

information, but can also be useful sources for collecting information as identified in MSITS 2010, in

particular for the following purposes:

i. For households as consumers of services (debits/imports):

- Collect information on expenditure patterns of households, or some of its members,

which may have travelled abroad. This information will mainly be used to compile the

payments for international passenger transport or travel (as well as on outbound tourism

expenditure). Socio-economic characteristics of these households as well as the

characteristics of their travel abroad may also be a useful source of information in

relation to the variable number of trips/persons for mode 2.

93 Number of months to be determined by the frequency of and period covered by the census.

94 See Chapter 1 and Box V.2 of MSITS 2010 for more information on the identification of the employer-

employee relationship.

95 http://unstats.un.org/unsd/demographic/sources/census/quest/CAN2006enL.pdf.

- Collect information on expenditure of households on payments/imports for (other)

services. This may particularly be relevant for Internet-based transactions or services

provided through telecommunication networks, in particular expenditure related to

intellectual property products (e.g. software or audiovisual products), as well as when the

supplier is physically present to provide his services (e.g. health services providers,

cleaning personnel).96

ii. For households or its members as suppliers of services (credits/exports):

- Collect information on the supply of services to non-residents by members of the

household:

1. Members of the household supplying services to non-residents by traveling

abroad (i.e. mode 4), either as self-employed (value of contracts and information

on characteristics of business travel abroad, e.g. business-mode 4- trips) or on

behalf of their employer (only information on characteristics of business visits

abroad). A labour force survey may be particularly relevant in this context (see

section E).

2. Members of the household supplying services to non-residents without traveling

abroad, e .g. through the Internet (mode 1) or through the presence of these non-

residents in the premises of the household (mode 2), most likely to be accounted

for under travel credits (or inbound tourism expenditure or consumption).

7.17. Some specific household surveys, such as business travel surveys could be a timely and

relevant source on outbound temporary labour mobility, which could be useful to collect (detailed)

information on mode 4 (see the example of Netherlands below), as well as mode 2 for this particular

category of business travellers. There may also be scope to think further into the direction of

extending the usefulness of both business travel data and labour force data by joining samples.97

7.18. Section B provided a general introduction to household surveys. In principle, all resident

persons are attached to one resident household and only one. Therefore, in order to survey residents,

resident households can be used as the sampling frame, as it will ensure total coverage, if the

sampling frame is up-to-date. 98 The information can be collected by interview, through the visit of an

interviewer to the household. This is the most common procedure, as it facilitates the control of the

survey.

D.1 Household surveys and services items of EBOPS 2010: travel, transportation and

other services

7.19. Using a household survey to collect information in relation to residents traveling abroad (i.e.

outbound travel) will serve the needs of the balance of payments (travel and passenger transport

items) as well as the needs of tourism statistics in particular with respect to international tourism

consumption (including international passenger transport). Residents as members of households will

be asked (among other questions) about their travel abroad, the circumstances and characteristics of

96 Compilers will have to ensure that only service contractual relationships will be taken into consideration, see

Chapter 1, Chapter 14 and Chapter 16.

97 For a discussion on the principle of modular and integrative data collection refer to

https://circabc.europa.eu/sd/a/45f2b51e-9ba4-4ad1-a b9a-d09a5bb02af4/DSS-2014-Sep-

07.6%20VIP%20streamlining%20and%20integration%20of%20the%20European%20social%20surveys.pdf.

98 Note that some special dwellings may be more diffi cult to enumerate - for example, retirement and pal liative

care homes, trailer parks and long-stay hostels, re sidential colleges, holiday homes, etc.

the travel, and the expenditure attached to them (products and values). It should be underlined that

travel (and tourism) refers to individuals, not to households. Nevertheless, when persons travel

together and belong to the same household, data on (shared) expenditure by the travel party can be

collected. Households are used exclusively for selection purposes, but not for providing results:

households as such do not travel.

7.20. The fact that household surveys are generally conducted at the home of the household will

facilitate the possibility for the persons been interviewed to check some information, for instance

credit card invoices, etc. The interviewer can collect the information on paper questionnaires, or using

some electronic device which makes it possible to have a first control of the consistency of the

information (see Chapter 21). Such procedures can be costly; as a consequence some countries use

rather telephone interviews: the procedure is cheaper, but with less possibility of asking more

sophisticated questions. The telephone interview could also be used as a first step to approach

respondents through some simple questions, and then the respondents could be asked if it is possible

to send a questionnaire with deepening questions.

7.21. The travel item of resident/non-resident trade in services statistics (as well as tourism

consumption) is expenditure oriented. Compilers will need an estimate of the value of expenditure per

person in a given period, and this value will vary depending on numerous factors. In addition the

information on characteristics of those traveling and their travel itself may be of interest to compile

other variables. Compilers will therefore need information as shown in Box 7.1. The information on

characteristics of travel which has to be collected might differ from person to person within the same

household, even though they have travelled in the same party for this trip (e.g. their purpose of travel

might be different, and also their expenditure).

Box 7.1 Information needed for international passenger transport, travel and their

breakdowns, as well as for mode 2 number of persons/trips

The points below summarize the information to be collected from surveys of persons or households to

compile statistics on the international supply of services (e.g. international passenger transport, tr avel and its

breakdown). As shown below this is strongly related to information needs on tourism expenditure.

Information is needed on:

i. The characteristics of travel (such as, main purpose identifying clearly the different tourism and other

travel purposes, duration, origin and destination, modes or transport, forms of accommodation used,

organization -i.e. with or without package, traveling alone or in a party, with persons of the household or

with others, etc.). This usually does not present major difficulties;

ii. The characteristics of expenditure: Expenditure to be included refers not only to that part directly paid

for by the persons traveling themselves, but also that paid by others for their benefit. This is true, both for

travel and for tourism expenditure. The consequence is that, for each trip, and each category of expen diture,

it is necessary to ask: (i) whether there has been an expenditure, and the value of expenditure, (ii) who has

paid for it (oneself, a business, the government, other person of the travel party, another person, etc.), (iii)

the type of payment used (such as credit cards, cas h, travelers checks, etc.), (iv) the number of pers ons to

which the reported expenditure corresponded to, as an individual might pay for him/herself and for any

other persons within a travel party; and

iii. The breakdown of expenditure. Finally, it is important to take into consideration both the breakdowns

suggested in tourism statistics and in resident/non- resident services transactions.

Tourism expenditure should be broken down into the following functional categories. These

categories have been defined so as to facilitate re sponse.

1) Package travel, package holidays and package tours

2) Accommodation

3) Food and drink

4) Local transport

5) International transport

6) Recreation, culture and sporting activities

7) Shopping

8) Others

In balance of payments and in international trade in services statistics, the recommended breakdown

is:

1) International passenger transport

2) Travel, broken down into the following categories:

a) Goods

b) Local transport services

c) Accommodation services

d) Food-serving services

e) Other services

Of which,

Education services

Health services

7.22. Reference period. Additionally, because of memory effects, the period of reference to be

used, both regarding the travel/trips and the expenditure associated to them, has to be very short. This

Guide considers as a good practice if a month is used as a reference period in order to reduce

telescopic errors (improper date assigned to trips) and recalling errors (improper characteristics and

expenditure), see box 7.2. As a consequence, because most persons might not have made any trip

during such a short period of reference, the selected sample should be sufficiently large so as to

collect enough valid information.99 A solution could be to ask about travel in the last X months and

then deal with the memory effect by weighting up information relating to older travel.

99 However cost, burden and sparsity of responses con siderations are also needed. Alternatives to increa sing the

size of the sample may involve using auxiliary information to better target travellers in household surveys.

Box 7.1 (continued)

It is important to note that beyond the breakdowns recommended above, compilers may also identify othe r

breakdowns of importance at the level of their econ omy (see CARICOM proposal for creative/cultural

services). In addition the breakdowns of expenditures in tourism and trade in services statistics are not totally

equivalent, as the orientation of the tourism statistics classification is by purpose, whereas in trade in services

statistics it is by types of products; meaning, for example, that expenditure in fuel for the car would be

classified as “transport” in tourism statistics, an d in “goods” in balance of payments statistics. To compile

recommended breakdowns it will therefore be necessary to collect the necessary (detailed) information to

respond to all needs. Due to these circumstances, d ifferent designs of forms are possible: to observe

separately and with different frequencies travel and average expenditure per day; or to observe both,

flows and expenditure, simultaneously using a unique questionnaire. The same source could also be

used for associating information related to mode 2 trips/persons.

Challenges in collecting information on expenditures/consumption by type of product consumed. Regarding

the collection of data on the expenditure by persons traveling, there are a number of challenges in ob taining

data by type of product consumed. Visitors frequently share expenditure within a group of persons traveling

together. Persons traveling do not always know the amount of expenditure attached to their trip as the y do not

pay directly for all the expenses (accommodation, transportation, etc.): there might be agreements in

receiving some implicit or explicit payment in kind (transport, meals, accommodation); this happens fo r

residents traveling for personal purposes but this case might be even more frequent for those traveling for

business purposes. Persons traveling usually perceive their expenditure by "family" of products, not

necessarily being able to single each (detailed) type of products they are actually consuming. For instance,

separating goods from services might not be as stra ightforward as it seems such as for medical expense s

which may include drugs and services, education expenses which include cost for lectures and include books

and other services, transport might include goods ( like gas), etc.). Persons traveling for business purposes

(mode 4 and others) , or those that move frequently from their country of residence to their country of

employment might not have a clear perception of the expenditure associated with each of their travel (in

particular for expenditure such as accommodation, e tc.). These aspects need to be taken into consideration

when devising questions in the survey form to collect such information.

Seasonality of travel and the survey organization. Travel is often highly seasonal; it cannot be observed over

a reduced period of time, and then be extrapolated to the whole year as travel, in particular that for personal

reason, will be influenced by climate conditions in the country of origin and of destination, periods of

vacation, etc. As a consequence, frequent observati ons will be required. It is a good practice to collect

information on a continuous basis, though results might be produced with a different frequency: quarterly, or

with other types of groupings, for instance, the peak season, and the low season, though seasonality might be

different depending on the purpose of the trip (business, work, study, personal, etc.).

Box 7.2 Research on the effect of expanding the period of reference for reporting

tourism trips in Spain100

Research carried out by the Spanish Instituto de Estudios Turísticos (IET) confirms how

relying on a respondent’s memory for information covered by a domestic and outbound

tourism survey can cause two distinct types of errors entirely unrelated to sampling, that

have often opposite signs:

 Telescopic error: the actual date of an event (an expense, a trip) is unconsciously and

erroneously moved up to a more recent date.

 Pure memory effect: an event that in fact occurred during the observation period is

simply omitted, because, subjectively, by the time of the interview, it seems to have

occurred long before.

The IET developed a complex observation methodology using three overlapping samples, in

which respondents were asked about trips taken three months, two months and one month

before being contacted. As a result of this study, it appears very clearly that the longer the

delay in contacting respondents after the observation period, the fewer the trips they report.

For example, three statistically validated measurements for the number of trips taken in June

2006 by residents of Spain are as follows:

 12,991,044 if observed in July

 12,745,211 if observed in August

 12,247,920 if observed in September

Source: Guardia, T. and Garcia, S. (2008)

7.23. Issues to consider. As to the process of selecting households, individuals and travel/trips,

various possibilities are conceivable and each of them has their pros and their cons. Regarding the

selection of households:

i. All households might be selected with equal probability; or with different probabilities,

taking into consideration differences in propensity to travel (case of the rural population

for instance; or when countries have a stratified universe according to level of income

as higher income is often positively correlated with propensity to travel); or

ii. A moving panel of households can be used, that is renewed periodically; this allows to

design profiles of behaviour overtime; nevertheless, persons who frequently travel and

thus are absent when requested to answer the survey will tend to be substituted by more

sedentary persons that tend to travel less, thus skewing the results of the survey.

7.24. Regarding the selection of informants:

i. Select randomly one person within the household that will inform on his/her travel and

expenditure; the drawback is that much of the cost of visiting a household will be lost,

particularly taking into consideration that traveling over a short period is not so frequent

so that the randomly selected person might not have travelled but other persons of the

household might have;

ii. Include only persons over a certain threshold (10 years, 15 years,…); this looks

attractive, but small children usually travel with other persons of the household, and

though the children usually do not pay themselves for their expenditure, their

100 Memory Effect in the Spanish Domestic and Outbound Tourism Survey (FAMILITUR) A paper presented

by Teresa Guardia and Sandra Garcia from the Spanis h Instituto de Estudios Turísticos to the OECD 9th

International Forum on Tourism Statistics, Paris, N ovember 2008.

participation in a travel party decreases the average expenditure per person per day of

all the members of the party; or

iii. Include everybody: this is often the method followed.

7.25. Regarding the selection of travels:

i. All travels can be selected both for description of the trips taken and the attached

expenditure; this is often the method followed but when some persons travel frequently,

it might be a drawback with too large a questionnaire (but this might not be so frequent

if restricting to outbound trips); or

ii. All trips can be counted (outbound and domestic, i.e. in relation to tourism information

needs) but the characteristics of the travel and the expenditure are only collected for one

of them (usually, the most recent one); this is usually the principle mostly followed by

compilers.

7.26. Using a household survey to collect the above-mentioned information could be done in

various ways. It is possible to attach a “travel/tourism” module to an existing household survey

(usually, a labour force survey or an income and expenditure survey), or to a design specific

observation procedures to observe the required variables. Because of the particularities of tourism and

travel mentioned above, the first alternative, though usually considered initially by countries, does not

result in obtaining all necessary data and should be complemented by a specific survey to observe

tourism and travel. Further information is provided in the ITRS 2008 compilation guide.

7.27. Data for other BOP services items could be collected through a household survey, such as for

example on the services consumed by households on-line, downloaded or received by e-mail or

telephone (e.g. legal services, medical advice, audiovisual or software downloads, gambling).

Although households may easily identify the type of online purchases they make, it may be difficult

for households to identify whether they are buying their service locally or if they are importing a

service and from which country. An additional difficulty is that the country of billing or marketing

may not necessarily be the one which is actually supplying the service to the household. Services

provided through mode 4 could be easier to identify, i.e. when the supplier of the service is physically

present to render the service. This identification of mode 4 transactions for relevant services could be

particularly interesting to serve the needs identified in this guide. However it will be necessary to

ensure that respondents understand the difference between an employment relationship and a service

contract. This information could be collected through existing household surveys (e.g. expenditure

and income survey, specialized survey on the use of the Internet or telecommunications network by

households), or could be collected by developing a specific module or survey. For all these other

services sampling will be important to consider, as any household could potentially be a buyer of

services. In addition many of the payments will most probably be low, and may be below thresholds

that have been established in the data collection system. Many of the indications provided above on

the selection of households and informants to collect information on travel/tourism and transport is

also relevant for other services. To summarize, although it may be appealing to approach households

to collect data for payments for services other than travel/tourism expenditure or related information

(including international passenger transport), compilers need to consider if such an approach would

provide meaningful and exploitable results for compiling other balance of payments services items.

D.2 Household surveys and (mode 4) receipts for exports of services

7.28. If the population of self-employed persons can be clearly established within households, it

may be relevant to collect data on the value of the contracts for services provided abroad by these

persons. Separately identifying those who travelled abroad to provide their services would be

particularly relevant to obtain a breakdown by modes of supply for self-employed persons. However

the issues identified above on identification of the population, informants, sampling (i.e. relevance of

this data source) are even more prominent in this context as the number of self-employed exporting

their services abroad may be relatively small and difficult to identify through the use of a (specialized)

household survey. Some specialized survey could help collect some information, such as the business

travel survey which is described below.

7.29. To collect information concerning mode 4 it can be considered to add a specific question in a

household survey about the reason for the trip (“business trip”). In combination with the socio-

demographic characteristic “self-employed” it can be used as a basis. If such a survey is conducted as

a telephone sample compilers have to be aware that self-employed persons are difficult to reach and

therefore consider using a specific sample of mobile phone numbers in addition, or use a web-based

survey.

D.3 Household surveys and mode 2 and mode 4 number of persons/trips

7.30. Data on the characteristics of mode 2 and mode 4 trips (i.e. contractual service supply), or the

persons who are themselves traveling, could naturally be collected at the same time as the

expenditure/receipt data described above. The type of the information that could be collected through

household surveys is the following:

i. on mode 2 for outbound travel (i.e. those traveling for personal purposes and those for mode 4

or other work purposes);

ii. on mode 4 for outbound travel, i.e. contractual service supply, intra-corporate movements and

services selling/establishment of commercial presence; and

iii. on mode 4 for inbound travel, i.e. import of services by households through mode 4-

contractual service supply/inbound; or inbound intra-corporate transferees if these become/are

residents of the compiling economy. For the latter the issue of identification of the relevant

population is particularly difficult.

7.31. Some compilers may use some household surveys to collect specifically information on

outbound business travel. As indicated above if such a survey is conducted as a telephone sample

compilers have to be aware that frequent business travellers are difficult to reach and therefore

consider using a specific sample of mobile phone numbers in addition or the development of a web-

based survey. In general when using a household survey one would focus on a specifically targeted set

of the population, i.e. those travelling for business reasons, and may serve multiple needs such as for

national accounts, balance of payments or trade in services statistics. As it is targeted survey, some

specifically tailored questions could be included to help the compiler gather some information that

may be of interest for mode 4 in particular. Of course, as for other data collection described in this

chapter, the level of detail one can expect from such a data source is relatively limited. However by

targeting some of the questions, there are some possibilities to obtain more details on those categories

of specific interest to the compiling economy. Considering confidentiality issues and the sample size,

mode 4 data could be presented or aggregated to broad economic or geographical categories.

D.4 Country experiences – Austria

7.32. In Austria sample surveys of the Austrian population proved to be the most efficient solution

to gather information on domestic and outbound tourism expenditures. Every quarter a representative

sample of the Austrian population is asked about their travel behaviour with the help of computer

assisted telephone interviews (CATI). In the Austrian questionnaire travel expenses include “all

expenses related to the trip”. During the interview it is clearly stated that goods and services, bought

in the name of the traveller and made available without compensation (i.e., as a gift or invitation)

should also be included (for example invitations to dinner, expenditures for goods and services).

During the interview it is mentioned that imaginary rent for free accommodation should not be

included.

7.33. The advantage of CATI is that the spoken text can be standardized and better monitoring of

the interviews is possible. Supervisors, interviewer training, pre-tests and interviewing instructions

ensure the quality of the interviews. Plausibility checks are integrated to prevent typos and outliers.

Warnings are programmed for example to pop up during the interview if the stated expenses are

below specified expenditure minimums. This gives the interviewers the opportunity to mention again

that expenditures made on behalf of the respondent have to be included. These consistency checks

make sure that typos and outliers are identified (signals) and replaced (hard errors) immediately.

D.5 Netherlands - Survey on outbound business travel

7.34. The CBS of Netherlands has purchased a new survey on business travel to measure their

expenditure. It also extended the list of purposes of the trip, which could be (somehow) related to

mode 4. The Continuous Business Travel survey (CBS) is a web-based survey for outbound business

travel using the TNS-NIPO-base101 which consists of more than 150.000 people and is held every

second year whereas one measurement (retrospective) every quarter in the respective year is executed.

The CBS is measuring business trips (overnight stays), same day trips and number of travellers. The

sample consists of Dutch residents aged 18 years and older, identified as working population and who

did at least one business trip abroad in the period of review. Every quarter of a year 10.000 panel

members from the TNS-Nipo-base receive a screening question to determine if they belong to the

sample. Out of them 1.000 Dutch residents receive electronically a complete questionnaire (to be

returned within two weeks). The survey is a computer assisted web interview. Travel item is grossed

up to the stratification remarks of the traveller going abroad (gender, age, region, municipality and

education) to the total of the Dutch working population.

7.35. The questionnaire was extended regarding the purpose of the trip which can be related to

mode 4. It suggests 15 types of activity conducted abroad (of which "marketing and sales",

"installation and repair", "research, teaching, consultancy", "visit to clients", "visit to head office,

branches" etc.) as well as indications about the nature of employment (self-employed, employee and

civil servant). Additionally, the survey contains variables on the professional group e.g. farmer, higher

professional educated, owner of an enterprise etc. as well as on the level of education.

7.36. Therefore, the group of business travellers providing services abroad can be narrowed down

in the sample. This information could give first indications on the number of persons and could be

linked to the value of service in the respective service category. However, to derive statistics on mode

4 transactions, one would need to make assumptions, in particular on the size of the activity. The

business travel survey gives some fist views about the number of persons carrying out activities

abroad and also their allocation to some service categories. For analytical and trade negotiation

purposes the partner country (destination country of the trip) might be interesting as well (the

questionnaire contains a separate question on which countries were visited during the business trip

abroad). Considering confidentiality issues and the sample size mode of supply data could be

presented or aggregated to broader economic or geographical categories: e.g., EU-28, other country in

Europe, Asia, Africa, NAFTA, and ASEAN.

E. Labour force surveys

7.37. As indicated above, a labour force survey (LFS) is a standard household-based survey of

work-related statistics. In the context of statistics on the international supply of services, LFS could be

used for the following purposes:

i. The most relevant use of this source is to collect information on mode 4 outbound

movements, i.e. contractual service suppliers, intra-corporate transferees/employees directly

recruited by foreign affiliates and services sellers/responsible for setting up commercial

101 TNS-NIPO is a Dutch survey agency.

presence (and to a lesser extent inbound for the two former, of course if the persons become

resident).

ii. Collect information on consumption/expenditure of those travelling abroad for business

purposes (mode 2, relevant for travel debits and outbound tourism expenditure), i.e. goods

and services actually consumed by the person in the context of his travel, not on behalf of his

employer.

iii. Collect information on acquisition of services on behalf of their employer, or more generally

on a business to business basis (mode 2).

iv. Collect information on sales/exports of services on a business to business or business to

consumer basis, which will mainly be relevant for self-employed persons (modes 1, 2 or 4).

7.38. Labour force surveys are widespread and reasonably standardized. To these surveys, modules

might be added for multiple-purposes. For example, such a module could be designed to get

information on persons moving in the context of mode 4. Another possibility is to use the survey

system but change the subject-matter in each round, i.e. from questions on the labour force to

questions related to mode 4 movements.

7.39. Labour force surveys can identify the individuals in the household that are self-employed

(employers or not) or employees, as well as the occupation of their (main) job and the industry or the

type of production of the employer if the individual is an employee (and in some instances the size of

the company), or that of the self-employed persons. This is of interest in the context of mode 4.

However the important factor for identifying mode 4 is whether the individual went abroad in the

context of his/her work, but remains based in the home country where his place of employment is.102

7.40. To use labour force surveys with the purpose of separating mode 4-related movements from

international labour mobility, requires including a limited number of questions on (recent) visits

abroad by household members for the purpose of work. For example, questions about the contracting

parties, the duration and forms of payment, etc. This possibility may be mainly relevant for sending

countries in respect of mode 4 which covers contractual services suppliers and those travelling for

negotiating purposes. In the case of intra-corporate movements as well as migration of self-employed

persons, these surveys could also be relevant for receiving countries, but with a different set of

questions.

7.41. For those countries/regions where mode 4 is potentially important and/or the population is

relatively well covered by the sample, it may prove useful to add appropriate questions in the surveys.

A specific module could be developed similar to the one proposed by ILO for labour migration.103 In

order to identify such movements, some questions as illustrated in box 7.3 could be added to the

questionnaire (or developed in a specific labour force survey module on mode 4). If deemed relevant

other questions could be added to gather more information as outlined at the beginning of this section,

however it is once again important to note that compilers need to analyse the eventual benefits and

mainly the costs associated with the use of such a source, in particular if they want to go further than

the purely mode 4 information needs.

7.42. It is recognised that such an approach cannot be generally adopted without a thorough

analysis of the importance of the different mode 4 categories for a country. Some are more concerned

with the fact that their workers are temporarily sent abroad to fulfil services contracts, whereas others

are more in the position of receiving many self-employed persons, or intra-corporate movements of

personnel (i.e. incoming) who operate from a base in the host economy (as per relevant modes 3 and 4

102 See chapter 1 and MSITS 2010 box V.2.

103 At the time of writing the module for labour migration had already been applied in Thailand and Armenia

commitments, often combined). In addition, this may be limited to a specific region within a country;

and such an additional module may then only be envisaged for respondents of that particular region.

7.43. Potential benefits could exist if countries with an LFS would be willing to cooperate at the

national and/or regional level on producing such labour migration or mode 4 statistics for mutual

benefit. The employment status in combination with demographic indicators has the potential to be

useful for the compilation of mode 4 statistics. Another potential benefit of cooperation or

coordination could be to ensure consistency with enterprise surveys that have similar subject matters.

7.44. It is therefore good practice to cooperate with other agencies which have common or close

interest in collecting such information, e.g. national accounts, balance of payments, migration or

tourism statisticians. Integrated enterprise and social surveys such as the Structure of Earnings Survey

or the Canada Workplace and Employee Survey, USA National Compensation Survey, could also be

built to have information on duration at workplaces abroad collected and they could be potentially

valuable sources covering information on wages, industry and other relevant characteristics. It is

therefore important that compilers contact the units who are in charge of the respective surveys or

subject matters. Chapters 2 and 3 provide more information on legal frameworks and institutional

arrangements.

E.1 Country experiences – European Union member states

7.45. The European Labour Force Survey (ELFS) programme is an example of the (at the time of

writing unexploited) possible use and benefits of cooperation at the regional level on producing such

labour migration or mode 4 statistics for mutual benefit, given that all member countries of the

European Union and EFTA have (reasonably well) coordinated their LFSs. 104 An additional

illustration of the possibility offered by related sources is the European Working Conditions Survey105

which provides an overview of working conditions in Europe using different indicators for working

conditions of both employees and the self-employed. The employment status, which is included in

this survey, as well as demographic indicators, once combined, have the potential to gather

information useful to compile mode 4 statistics.

104 For more detailed information on the results, com mon practices, methods and definitions of the European

Labour Force Survey, see the EU LFS dedicated section on Eurostat's website at:

http://epp.eurostat.ec.europa.eu/portal/page/portal/employment_unemployment_lfs/introduction.

105 Source: http://www.eurofound.europa.eu/surveys/ewcs/index.htm.

F. Border surveys

7.46. Border surveys are a type of survey of persons. Border surveys apply to persons who are

traveling. They are counted and/or surveyed when they enter or leave the country. Such sources can

be used to collect information on characteristics of trips/travel, and are useful for deriving estimates of

travel and tourism expenditures as outlined in Box 7.1, however, they could also be used to collect

information to compile data on the number of mode 2 and mode 4 trips/persons. In 2005, UNWTO

carried out a study “Tourism as an International Traded Services” in which 26 out of the 34

responding countries (in a sample of 48 countries considered to be representative of a wider group of

countries) specified using border surveys. Given the strong link with tourism information needs, it is

good practice to identify how stakeholders could cooperate to collect the details necessary to respond

to all information needs. Chapter 2 and 3provide more information on the legal and institutional

arrangements.

Box 7.3 Sample questions for inclusion in a labour force survey module on mode 4

The following questions could be included for sending countries:

A. Did you work in a country other than your country of residence in the past period (e.g. year,

months)?

B. In the past year were you employed in a country outside your country of residence?

C. If so, in which country is your employer?

D. Were you employed by an employment agency?

The following questions would then be necessary to capture further information on contractual service

suppliers (i.e. those who are self-employed, or tho se who are resident and employed in the compiling

country, i.e. those who replied "No" to question B):

E. In the context of your work did you travel abroad in the past year?

F. How long did you stay abroad?

G. How many trips did this entail?

H. Did you travel abroad to fulfil a service contract in the destination country:

i. with a third-part client?

- was it a firm?

- was it a household?

ii. with an affiliated firm?

It may be of interest to obtain further data on service sellers/persons negotiating the establishment of

commercial presence:

I. Did you travel abroad to negotiate a contract?

- Was it a service contract?

J. Did you travel abroad to negotiate the establishment of an affiliate/branch?

Some questions could be added to identify if an employee travelled abroad on his/her own, or with

colleagues,:

K. If you are an employee, did you travel with some of your colleagues? If so how many?

Compilers should pay attention to the issues of double counting, interpretation and extrapolation of

information obtained for this question. A solution could be to design processing algorithms to avoid

double- counting.

For a self-employed/employer the following question could be asked:

L. Did you send some of your employees to fulfil a contract with a client abroad? If so, how many?

For receiving countries it may be useful to gather information for intra-corporate transferees and self-

employed migrants. The identification of the country of residence (origin or in last period) may be a first

indication. If the individual comes from a foreign country, then the following questions would be useful:

M. Did you come to work in an enterprise affiliated with your previous employer?

N. Did you enter this country to develop a business?

7.47. When to survey? The circumstances in which information is collected are relevant for the

quality of the data. In the case of inbound flows, this information has to be collected from the person

as he/she is leaving the country in which he travelled. In the case of outbound flows, this information

can be collected, either at the moment of re-entering the country of residence, or after the travel,

within the usual environment of the person. This allows observing actual expenditure because they are

interviewed once and this expenditure has already taken place. If they would be asked about their

expenditure before their travel ends (e.g. at entrance for inbound travel and at exit for outbound

travel), then we would be observing their expected expenditure. The particular case of inbound travel

makes the observation challenging, as time is short upon departure, and the person might not be in the

appropriate mood to answer a complicated questionnaire. Additionally, if the flows of certain

categories of persons are small, it would possibly require a sample of a relatively bigger size or a

deliberate over-sampling with suitable correction methods. It is strongly recommended that a specific

set of questions is designed to enhance the accuracy of estimates and break them down into

categories.

7.48. UNWTO developed a model border survey included in the IRTS 2008 Compilation Guide.106

The model questionnaire covers 5 parts: A. - Travellers, B.- Means of transport, C. - About your stay,

D. - Acquisition of services in your country or other country before arriving in our country, E. -

Acquisition of goods and services in our country booked or paid either before, during or after the trip.

The UNWTO Compendium of Tourism Statistics also presents a broad range of data and indicators

that are being collected by a significant number of countries in line with the IRTS 2008 which could

give an indication of what data should be collected to compile a basic set of data.

7.49. Organization of border surveys. Border surveys need to have very different organizations

depending on whether they refer to airports, land borders, sea ports, ports on rivers, or to the case of

cruises. The more extended practice refers to airports. The type of organization of the surveys, the

sample design, and the questions that can be asked differ also extensively, because of the different

circumstances in which the surveys can be held, in particular the time that can be assigned to the

interview or to filling in the questionnaire.

7.50. Means of conducting border surveys. As other surveys the border survey can be conducted

through different means such as (i) distributing the questionnaires on paper to pre-selected persons

and having them answer (provided the questionnaires are available in different languages, with clear

instructions and easy to understand); (ii) using a paper questionnaire, but filled by an interviewer; or

finally, (iii) an electronic questionnaire with an interviewer using a handheld device and collecting the

information and feeding it directly into a validation program. In comparison to a household survey,

border surveys have the characteristic that it is impossible or difficult to get back to the informant if

some information turns out to be inconsistent. 107 Consequently the questionnaires should be clear

enough to minimize errors in the provision of the required information. For example, a well-designed

electronic questionnaire to be filled directly on a tablet computer by a person as he is leaving the

country visited - at some strategic location where he/she has to wait anyway - could facilitate the

conduct of face to face border/travel surveys.108

106 International Recommendations for Tourism Statistics 2008 Compilation Guide, annex 1.

107 Some countries have tried returnable questionnaires, but this has not proved being very useful, as those that

actually return it are very few, and possibly do not have the same profile as those that neglect to answer.

However, New Zealand developed an on-line questionnaire where random sampling is done after airport

security, and respondent provide information at a later stage.

108 The Computer-Assisted Personal Interviewing system (CAPI) technique was used in 2013 in Morocco for the

first time in the survey on travel conducted by the Ministry of Tourism at borders. The CAPI technique ensures

conducting interviews by means of tablet computers in which questionnaires are installed. Answers are entered

in computer and data is sent in online to the database after predefined checks and control processes. This sort of

tool helps improve quality, reduce costs and save time.

7.51. Treatment of traveling parties. Because visitors often travel in parties, in which the most

important expenditures are shared, some countries have tried to use different questionnaires for

persons traveling alone and for those traveling in parties so as to facilitate the collection of

information (since common expenditure would only be collected once for the whole party, while

personal characteristics of party members need to be collected for each of them). This might be a

good practice, especially if dealing with travel for recreational purposes.

7.52. Working with specific characteristics. For borders in which the flow of persons is almost

permanent (land borders, airports), and in which it is difficult to maintain the periods of observation

overnight, it may be useful to work with specific characteristics (for instance, in air, given origins or

destinations often group flights in certain time brackets).

7.53. Finally, an observation should be made on the survey procedures themselves: when observing

the flows of persons over the border (with the exception of cruise ships), it is not possible to

determine a priori whether the person is a resident (leaving or returning) or a non-resident (arriving or

leaving) yet only those having terminated a trip should be interviewed on their actual trip. The

imbalance in the questionnaire responses corresponding to the different situations might result in false

information.

7.54. Compilers should refer to Box 7.1 for information on the characteristics and breakdowns

needed. Box 7.1 in particular outlines the difficulties regarding the breakdown of expenditure by

product and on issues of seasonality and the conduct of the survey. Care should be taken nevertheless,

that the extension and details that can be collected will depend to a large extent on the duration that

can be assigned to the interview. For example, in the surveys at a land border, the time that can be

dedicated to the interview is very short so that it might not be possible to enter in many details and the

questionnaire should contain only the most essential types of questions.

7.55. It is important to ensure that no category of persons are excluded from the survey (e.g. cover

persons beyond the definition of visitors used in tourism statistics), but a clear distinction is made for

each category so the compiler can select the population of interest to his/her statistical domain.

F.1. Details on the organization of the surveys at different border points

7.56. Airports. The observation of travel flows through airports and their corresponding

characteristics and expenditure should be relatively straightforward as the flows are clearly defined

(various types of administrative records should be available from airlines, customs control, airport

administration, etc.) and persons traveling have time to answer (either when they leave: after checking

in and before boarding; or when they arrive: after disembarking and before leaving the terminal). This

makes it possible to interview them at the end of their travel and observe the corresponding

expenditure. In some cases, it might also be possible to distribute questionnaires on board the aircraft,

before arriving or just after take-off, provided that all airlines cooperate.

7.57. In the case of airports, the statistical design should take into account the information provided

by the airlines on anticipated flights, their origin or destination, their capacity and expected number of

passengers. On this basis, and making some assumptions on the proportions of passengers residing

abroad or in the country of reference, it is possible to define a sample. For a given flight, some

countries might decide to survey all passengers, whereas others prefer selecting respondents (on a

quota basis or systematically), or even allow the interviewers to select the persons they interview. For

the sake of completeness and accuracy, it is preferable to interview all persons of a selected flight.

Quotas, usually based on country of residence, provide skewed results, as the country of residence is

not a good explanatory variable of expenditure, if not associated with others, such as duration of stay

or purpose of trip. In the case of interviewers selecting informants, the skew can be all the greater. An

additional difficulty may reside in interviewers who do not have access to airline lounges for the

conduct of surveys and can only access potential respondents at departure gates. It is suspected that

those that use the services of airline lounges have significantly different expenditure patterns from

those who do not have access to the lounges, which can be a serious bias for the estimates.109

7.58. Land borders (road). The situation at land borders (road) is very different from that

previously described for airports as, frequently, the flows of persons over the border is not well

known, either because there is no control at all (such as the case of the European Schengen countries),

or because the control is limited to a certain subset of flows (as is the case with the existence of

bilateral agreements that often facilitate the movements of persons living in the vicinity of the border

post), or even because of the physical impossibility of the border control authority to control all the

(legal or illegal) border-crossings. Therefore, it is a good practice to measure the flows of persons

over the border and to qualify them subsequently as either visitors or other categories of persons

traveling. This might be done automatically with counting devices that capture vehicles (private cars,

buses, trucks), to which an average number of passengers can be imputed, and also capture the license

plate, from which the country of residence of passengers in private cars can be derived. In the case of

buses, in most countries, a list of passengers and their nationality should usually be available.

7.59. Land borders (railways) In the case of land borders crossed on international railways, the case

is relatively similar to that of airports. The railway companies should be able to provide the number of

passengers (and in some instances on some rough characteristics, e.g. 2nd class versus 1st class

passengers). A sample could be designed, on the basis for example of the persons seated in a given

place, which is the kind of design that railway companies use for their satisfaction surveys.

7.60. Cruise ships. For some countries, such as those in the Caribbean, persons arriving aboard a

cruise ship represent a very significant share of total arrivals and travel expenditure. The number of

passengers aboard and their characteristics in terms of residence are known, as well as the

characteristics of the crew. In the case of cruise ships, ferries, yachts and all types of recreational

vessels, the captain is usually requested to provide the port authority with a list of passengers and

crew on board (a manifest), indicating name, surname, nationality, passport number, and any

additional information that authorities might decide to request. Expenditure in the country visited

occurs when cruise passengers disembark, although they might also purchase packages on board to

visit places of interest. Cruise ships necessarily use specific moorings, and embarking and

disembarking are controlled by customs officers. It is a good practice to apply a simplified

questionnaire, either to all passengers or to a sample, in order to collect information on their

expenditure.

F.2 Border surveys and number of mode 4 trips or persons

7.61. Border surveys could also be used for collecting further information on mode 2 and 4 trips or

persons (or details) if there was already an initial indication of the purpose of travel (e.g. obtained

through the counting mechanism identified above or through administrative records, e.g. E/D cards or

immigration counts). . The relevant questions in existing questionnaires should relate to travel for

personal, business or professional purposes, the two latter being more closely related to mode 4.

Information on characteristics of mode 2 and 4 border crossers could be obtained by adding

supplementary detail to the existing border surveys/passenger surveys questionnaires. However, it is

important to note that the information collected in such sources will most likely relate to number of

trips rather than number of persons. When it comes to mode 2, the former would be the preferred

option, whereas for mode 4 there would be an interest in both.

7.62. If the flows of certain categories of persons are small (and this might happen for some

detailed categories of service suppliers) it would possibly require a larger (and more costly) sample or

a more targeted one than when fewer categories are considered, in order to obtain sufficient

109 Note that many mode 4 persons may transit through airport lounges.

information. For mode 4, a mechanism to target more specifically business travellers would be useful

(e.g. airport lounges).

7.63. IRTS 2008 already suggest the collection of information that would be very useful for

approaching the number of mode 4 trips/persons. Recommended elements include a breakdown of

purpose of stay into personal and business and professional activities. Among the professional

activities, self-employed are explicitly mentioned as well as other types of persons travelling for

professional reasons (businessmen, investors). Information on attendance of meeting, conferences or

congresses, trade fairs and exhibitions is also recommended110. The compilers should further consult

the IRTS 2008 Compilers Guide and closely cooperate with the compilers of tourism statistics in

order make the most effective use of such a data source.

7.64. A starting point for identifying mode 4 would be to identify people travelling internationally

for business or professional purposes. As previously described such information could potentially be

available from arrival and departure card data which could be used for a first stratification/selection

for identifying business travellers (also see chapter 9). However, not all of the people in this group

will represent mode 4. For example, people travelling overseas to receive a service (like attending a

conference or workshop) are also likely to select business or professional as their purpose of travel in

an arrival or departure card unless these cards include a separate option for this category.

7.65. Some small modifications can be included in existing surveys to capture mode 4 movements

of natural persons. Adding such questions to border surveys will require close cooperation between

those in charge of tourism and trade in services statistics. The questions suggested in IRTS 2008 on

the purpose of the business trip could, for example, be extended as shown below. This would allow

the differentiation between persons attending meetings, conferences, trade fairs and exhibitions and

those who are of interest for mode 4.111 The suggestions below are built from the perspective of

incoming persons. Similar questions could be developed from the perspective of outgoing persons.

7.66. If business or professional visit/trip

Are you here for

Attending meetings, conferences, trade fairs and exhibitions

Other business and professional purposes

The next question in order to identify mode 4, combined with the information on the length of stay,

could then be formulated in different ways. Two options are given below. :

110 The scope of this business and professional category is described in paragraph 3.17 of IRTS 2008: “Business

and professional. This category includes the activities of the self-employed and employees as long as they do

not correspond to an implicit or explicit employer-employee relationship with a resident producer in t he country

or place visited, those of investors, businessmen, etc. It also includes, for example, attending meetings,

conferences or congresses, trade fairs and exhibiti ons; giving lectures, concerts, shows and plays; promoting,

purchasing, selling or buying goods or services on behalf of non-resident producers (of the country or place

visited); participating in foreign Government missions as diplomatic, military or international organization

personnel, except when stationed on duty in the country visited; participating in non-governmental organization

missions; participating in scientific or academic research; programming tourism travel, contracting

accommodation and transport services, working as guides or other tourism professionals for non-resident

agencies (of the country or place visited); participating in professional sports activities; attending formal or

informal on-the-job training courses; being part of crews on a private mode of transport (corporate jet, yacht,

etc.), etc.

111 Care should be taken about the use of the non-specific term "meeting", meetings can be with a specifi c client

to deliver a particular service and would be of int erest under mode 4.

First option:

Are you employed

from domestic economy?

from abroad?

or are you self employed?

Second option, set directly more focus on the mode 4 supply of service:

Are you here to fulfil a service contract?

as a self-employed

as an employee sent by your employer

(alternative: Did your employer send you abroad?)

Are you coming to work in an affiliate of your employing company?

as a services sales person?

to negotiate the establishment of a (services) affiliate?

It is important that these questions be formulated to be understandable by respondents, for instance

using explanatory notes.

7.67. Information on the occupation of the person could be collected, possibly presenting a short

list relevant for the compiling economy. For example, specific information could be sought for those

supplying maintenance and repair services as this is a category of particular interest for many

economies. Alternatively a choice of activities of the service supplier (i.e. the employer) could be

proposed, e.g. specify the service activity of your employer: "Agriculture, forestry and fishing",

"Water supply; sewerage; waste management activities", "Construction", "Information and

communication" etc. The activities of the employer (preferably consistent with ISIC) could also be

listed in the notes attached to the questionnaire, but this would be considered as a second best

solution.

7.68. Some persons moving internationally under mode 4 (especially intra-corporate transferees)

will be staying abroad for longer than 12 months, so could be excluded from (tourism/travel) border

surveys if respondents are told not to respond if this is the case. However, it would be a good practice

to adopt an integrated approach – to design and conduct the border survey to collect also information

on all respondents, and then the compiler would select the information that is needed for different

statistical domains (e.g., for tourism statistics only select visitors with trips of less than 12 months,

while other persons, either visitors or those traveling for other purposes, with stays of various lengths

could be of interest in the context of MSITS 2010.)

7.69. In addition compilers need to take into consideration the national treatment with regards the

duration determining whether or not an international traveller will be required to register as resident

rather than be regarded as a visitor. This may also imply to adapt the data collection method.

7.70. As indicated above some rough estimates may be derived with no or little additional cost in

the collection system. Unless it is possible to develop some specific modules towards well targeted

mode 4-related samples or identifying ways to better exploit the existing data collection, estimates for

mode 4 derived from border/passenger surveys may only be done with a certain degree of

approximation.112

7.71. At least in some countries using border surveys to collect additional mode 4 information may

involve certain challenges, such as costs, the size of the sample which may need to be enlarged to

ensure the representativeness of small sets of the population, the interview duration (and consequently

112 See chapter 16 for more information. The UNSD webs ite provides information on the existing border surveys

and the compilers are advised to familiarise themse lves with the questions relevant for mode 4.

the survey total cost) may increase or the survey form may be become more complex or lengthy.

Compilers must not forget that border survey managers are already pressed by other users, in

particular the tourism sector users, who are willing to expand the questionnaire for tourism-related

aspects. This is why it is important that there is a strong co-operation between the (potential) users

(i.e. tourism, balance of payments, trade in services, etc.) of such data to identify the synergies and

priorities according to the specific information needs of the economy.

F.3 Italy – border sample survey

7.72. International tourist flows are very important in Italy. Bank of Italy uses an extensive border

sample survey. The size of the survey and its sample design enables the production of high-quality

analytical statistics on many aspects of international tourism in the country. The intended objectives

of the data collection system are essentially: (i) Quality of the statistics of the “travel” item of the

balance of payments and a better adherence to statistical standards established at the international

level and (ii) the provision of disaggregated data on a large number of characteristics of the tourism

market, for use by central and local government bodies, the tourism industry and researchers. The

technique used for the collection of the data consists in interviewing a representative sample of

persons crossing borders, both residents and non-residents, in transit at the Italian borders, while at the

same time estimating the number and nationality of those in transit. The sampling is carried out

independently at each type of border (roads, railways, international airports and ports), which are

selected as representative. The general logic of the survey provides estimates of expenditure on

international tourism in Italy through the application of two distinct operations at border crossing

points chosen: the counting operation and the interview.

7.73. The counting operation is mostly based on the technique of systematic sampling, that is, with

the observation of one unit each “n”, with “n” predetermined. The counts provide the number of

persons traveling at each border point disaggregated by country of residence. The counting operation

is necessitated by the lack of administrative information on physical flows of persons with the

required level of coverage, detail and timeliness. The face-to-face interviews provide the estimate of

the expense and a set of attributes that allow its disaggregation and qualification. The interviews are

conducted using a structured questionnaire submitted to a random sample of persons traveling at the

end of the stay abroad (i.e. when residents are re-entering Italy and non-residents are leaving it). This

technique involves fewer errors in the respondents’ memory of the expenses incurred than, for

example, does a telephone survey conducted some time after the travel is complete.

7.74. The questionnaire is the same for all border points. The main information - with varying

levels of detail – that is requested include: Sex, age and occupation, Location, Means of transport used

(with possible detail of the airline or ship used), Reason for the trip (if "vacation", the type of

holiday), Place visited (foreign country for residents of Italy, Italian province for residents abroad),

Number of nights spent during the trip, Type of accommodation used, Travel arrangements (inclusive

or not inclusive), Total expenditure, broken down by type of product (transportation, lodging,

restaurants, shopping and other services), Method of payment, Level of satisfaction about various

aspects of the place visited and of the stay .

7.75. In 2011, 145,000 interviews, or about 1.1 per thousand of total Italians and foreigners

crossing the borders of the country, and about 1,550,000 counts of persons traveling, have been

carried out. The sample is stratified by different variables for each type of border. The stratification

variable "direction", with the two modalities "to Italy" and "to abroad" and the variable "type of

carrier", with four modalities (road, rail, air and sea), are recorded exhaustively; i.e., respondents are

Italian and foreigners crossing all types of borders. The survey covers 82 border points (42 for roads,

5 for rail, 24 for airports and 11 for ports), i.e. the most important in terms of annual flows, although a

limited number of small border points were selected to capture origin-destination routes that were

otherwise poorly represented in the survey. The selection was based on ISTAT (Italian statistics

office) data when the survey was begun, and thereafter updated through the evidence of the border

survey itself, which monitors some border points on a rotating basis. The border points considered

cover the percentages of the total, according to ISTAT and ENAC (National Civil Aviation Authority)

data. The choice of number of border points sampled was reduced over time to optimize costs. Some

specific procedures for conducting the counting operation and the interviews were established for

each type of border.

F.4 Philippines – Measuring Inbound Tourism

7.76. The main source of inbound statistics in the Philippines is the arrival card which is filled up

by all travellers entering the Philippines. The Philippine Department of Tourism (DOT) and the

Bureau of Immigration (BI) are jointly responsible for encoding, processing, and generating reports

on the volume of international visitor arrivals, as sourced from the arrival card, which has been

identified as a “Designated Statistics” for tourism under Executive Order in 1996. Though a proposal

to remove the arrival card has been raised, the DOT and BI are continually working together to

improve the appearance and dynamics of the arrival card to ensure that it remains a vital and critical

data source for decision-making by the government and the private sector with regard to tourism

development and promotion. The critical data in the arrival card relevant to tourism are the country of

residence and purpose of visit.

7.77. A Visitor Sample Survey (VSS) is also being administered by the DOT on a regular basis in

all international airports of the country to generate statistics on visitors’ demographic or profile, their

travel characteristics, including psychographic information. The most critical data in the survey is the

determination of length of stay and average expenditure of visitors, which are important parameters

for estimating visitor receipts. The VSS complements the data gathered from the arrival card as a

major source of information for inbound tourism statistics and the tourism satellite account (TSA)

F.5 France – characteristics of international visitors and tourism trips

7.78. In France, a border survey is conducted every quarter (20,000 questionnaires) by a private

subcontractor. Entitled “Enquête auprès des Visiteurs de l’Etranger” (EVE), the survey permits the

collection of quantitative data on trips (same-day visits included) in France by non-resident visitors,

and is conducted just before they leave French territory. One major purpose is to collect data on

physical flows of non-resident visitors (arrivals, tourist nights, same-day visitors, etc., broken down

by country of usual residence). Another major purpose is to provide data requested by the statistical

service of the Central Bank (Banque de France) for use in estimating the travel receipts item for the

French Balance of Payments. The survey also collects data requested for French tourism market

analysis (categorical data on non-resident visitors, main purposes of trip, places visited in France,

activities during their stay, types of accommodation, modes of transport used, etc.). The General

Directorate for Competitiveness, Industry and Services is interested in both monetary and non-

monetary variables. The sample is stratified in order to calculate results for 22 countries or group of

countries. Manual headcounts are conducted and EVE questionnaires are used at the same locations,

except in the case of questionnaires relating to travel by road, which are used at car parks along

motorways near the French border. Dates of arrival and departure are indicated by the respondent.

G. Complementary surveys of persons

7.79. It is possible to survey non-residents traveling in the compiling economy either in places of

accommodation mainly (hotels and other kinds of accommodation) or in sites of tourism interest.

Although this type of procedures presents some limitations many countries use it as an

alternative/complement in cases where border control systems are incomplete or not reliable. The

information to be ideally collected is outlined in Box 7.1. It could also be used to collect quantitative

and qualitative information on mode 2 or mode 4 as deemed relevant.

7.80. The first challenge is to identify the non-residents among the guests of the means of

accommodation. In the case of the observation of these persons at the collective accommodation, two

major limitations usually exist. First of all, not all stay at collective accommodation. Studies in many

countries have shown that the form of accommodation is a determinant of average expenditure per

day, so that such variable observed for those staying at collective accommodation cannot be

extrapolated to others. Another limitation is associated with the fact that when surveying at places of

accommodation, they still have not terminated their stay, so that their average expenditure per day

cannot be extrapolated to their expected length of stay as expenditure is not uniformly spread over the

whole duration. Additionally, a person on a unique trip might use more than one hotel, a situation that

alters the probabilities of being selected.

7.81. A similar situation occurs in the case of surveys at visitor attraction where the drawbacks are

as follows: not all persons traveling visit those attractions, the probability of visiting an attraction is

not known, and a given person might visit more than one attraction. As a consequence, information

based on surveys at visitor attraction could be biased. Any derived information for the whole

population should take into account this bias.

7.82. Finally complementary data could be collected on specific sets of the population traveling.

This could be particularly relevant for health patients or students. Indeed given the particular

characteristics and expenditure patterns of some categories of persons, it may be relevant to capture

information through a dedicated survey, e.g. expenditure survey of foreign students (other than

education fees if these can be collected through other more relevant means).

G.1 Country experience – Austria and below threshold establishments

7.83. Austrian accommodation statistics provide information about the number of arrivals and

nights spent in rented accommodation establishments in Austria. The data is based on a cut-off

sample. About 1600 municipalities (two third of the total number of municipalities) are selected

according to the number of nights spent (at present the threshold is 1000 nights spent per year) and

report the data to Statistics Austria. The data includes all rented accommodation establishments, i.e.

no threshold concerning the number of beds per establishment is applied. The results of the

accommodation statistics show the importance of rented private accommodation in Austria. Based on

Regulation 692/2011, Austria reported to Eurostat 77.16 million nights spent by non-residents in

2012, but this figure only represents 81% of the total number of nights registered in rented

accommodation establishments, because in addition to the 77.16 million nights, 17.89 million nights

were registered by non-residents in rented private accommodation establishments. So in 2012, 19% of

the nights registered by non-residents in rented accommodation establishments in Austria were spent

in rented private accommodation establishments, which are out of the scope of Regulation 692/2011.

G.2 Country experience – Australia and survey of students

7.84. Education related travel services, one of the largest contributors to service exports in

Australia, are derived using a modelled approach. This approach combines data on the number of

foreign students studying in Australia with estimates of expenditure by foreign students on course fees

and on other goods and services.

7.85. Estimates on the number of foreign students studying in Australia are based on quarterly

stock data for a range of study related visa sub-classes provided by The Australian Government

Department of Immigration and Border Protection. Estimates of student numbers for the inter-

quartile months are compiled using information from the ABS's Overseas Arrivals and Departures

data with a small adjustment made to account for permanent migration.

7.86. Monthly estimates of course fees per student registration are derived from International

Student Fees data supplied by Australian Education International. This data set is supplied by

educational sector on a per-semester basis which is then split into months according to the number of

students studying in Australia for each month in that semester (as estimated above).

7.87. Monthly estimates of per-capita expenditure on other goods and services by foreign students

are derived from data collected in the Survey of International Students Studying in Australia

conducted by Universities Australia. This survey provides estimated average weekly expenditure on

goods and services for selected educational sectors, which is then converted to a monthly

estimate. As this survey is conducted irregularly, most recently in respect of the 2010 calendar year,

estimates are interpolated between survey years and extrapolated to the most recent period with

reference to the ABS's All Groups Consumer Price Index.

Chapter 8 International Transaction Reporting Systems

8.1. Scope. One of the sources used for statistics on international trade in services is the

international transactions reporting system (ITRS). This chapter describes how ITRS can be used and

discusses its advantages and disadvantages as a data source. It should be noted that the MSITS 2010

and this Compilers Guide deal with the use of the ITRS for the compilation of statistics on

international trade in services. In doing so, they keep consistency with IMF’s Balance of Payments

and International Investment Position Compilation Guide (BPM6 CG) that discusses the ITRS113 as a

source for compiling the Balance of Payments and International Investment Position statistics.

A. Summary of good practices

8.2. It is advised that compilers using ITRS as a source for statistics of international trade in

services review the advantages and limitations of this data source, as summarized in table 8.1, and

assess their relevance and comparative importance in the context of their countries. In particular, it is

a good practice that compilers explore to what extent it is possible to mitigate the limitations of this

source (e.g., under-coverage of small transactions in the case that reporting thresholds are in place,

absence of data on services that cannot be measured or identified via ITRS, problems with the

recording of partner countries, as well as lack of information on breakdowns by modes of supply) by

using additional data sources such as surveys.

Table 8.1 Summary of advantages and limitations of ITRS

Advantages Limitations

- Timeliness and high frequency

facilitating data compilation

- Comprehensiveness (new reporting

entities can easily be covered)

- Limited number and stability of

respondents (banks can report on

behalf of their clients)

- Burden of reporting and compiling is

not heavy once it is implemented

- Reporting is often mandatory

- Use of thresholds (simplification or exemption)

has effects on data accuracy

- Transactions approximated by settlements

- Possible misclassifications of services items, in

particular for some of the detailed EBOPS 2010

items

- Geographical allocation may be biased (country

of settlements versus country of transactions)

- Difficult to manage with an increased number

of transactions and growing share of inter-

company transactions with netting practices

B. General description and purpose of ITRS

8.3. The ITRS is a system of collecting data of individual international settlements and/or

transactions as reported by banks, enterprises and/or households.114 In this Compilers Guide, the ITRS

system in which reporters are resident banks that report to the authority (the central bank in most

cases) on behalf of transactors (enterprises or households) is called a bank ITRS, while an ITRS based

on reports to the authority from transactors themselves is called a direct reporting ITRS.

8.4. In most countries that maintain ITRS, the reporting is mandatory. Because the ITRS is often a

by-product of present or past foreign exchange controls, the data collected involve settlements (as

113 See BPM6 CG for more information on the use of ITRS for other parts of the Balance of Payments at

http://www.imf.org/external/pubs/ft/bop/2007/bop6comp.htm

114 See also BPM6 Compilation Guide, paragraph 4.2.

opposed to transactions115). The most comprehensive ITRS collects data on: (1) settlements with non-

residents through resident banks, (2) settlements with non-residents through non-resident banks, (3)

settlements with non-residents through intercompany accounts and (4) transactions without cash

settlements.116

8.5. Historically, the ITRS started with settlement reports by resident banks in most countries.

However, as resident transactors increasingly started using non-resident banks for international

settlements, direct reporting from these transactors (i.e., not through resident banks) became necessary

to maintain the completeness of data collection. In addition, requests of resident banks to reduce

reporting burdens have made data collection depend more on reporting from transactors.

8.6. When the bank ITRS is complemented with direct reporting, the information included in the

ITRS can be extremely useful to identify the major players involved in international trade in services,

especially if the reports not only include settlement amounts, but also the name of transactors.117 In

some countries, the framework of ITRS is maintained even after the introduction of surveys exactly in

order to capture international settlements with large amounts. By accumulating such information, a

balance of payments enterprise register can be established, which can be used when conducting

periodical surveys to measure small value transactions or adopting survey systems in place of the

ITRS (see the chapter 5 on business registers and surveys frames). For a proper maintenance of such a

of transactions in services conducted by individual enterprises.

8.7. Finally, in addition to its use for statistics on the international trade in services, the ITRS can

also be used for statistics on other financial transactions, as the ITRS could cover a wider range of

financial operations, including currency exchanges in foreign exchange companies and banks’

information on settlements, as well as position and flow data regarding foreign assets and liabilities.

C. Using the ITRS for collecting data on international trade in services

8.8. There are many reasons why ITRS can be useful to collect data on international trade in

services. First of all, the data are collected in a timely and frequent manner.118 Data can be reported as

soon as international settlements are done, in an exhaustive way, at least when there is no reporting

threshold or it is very small. The transaction codes included in ITRS that identify the purpose of

settlement generally facilitate the classification in conformity with the recommendations of MSITS

2010, except in some cases where it is difficult to obtain the appropriate information (such as FISIM

and construction), and for certain detailed EBOPS 2010 classifications, as discussed below. Indeed,

classification of international settlements according to the type of transaction (although with

precautions against misclassification) is the most important condition for ITRS to be used in

compiling statistics of international trade in services.

8.9. An additional benefit of ITRS is that it can be maintained with relatively light burdens of

reporting and processing data119. In the bank ITRS the reporting burden is concentrated in banks

where the procedures of reporting are relatively mechanical (once ITRS is implemented) and can be

115 In countries where the ITRS was not maintained after the abolishment of foreign exchange controls, surveys

have become main sources for statistics on trade in services and the focus has already shifted from se ttlement to

transaction data.

116 Ibid., paragraph 4.3.

117 This point is especially important for countries changing their collection system from banks ITRS to direct

reporting and surveys.

118 BPM6 Compilation Guide, paragraph 4.69.

119 Although setting up or restructuring ITRS may be costly and may require a period of more intense contact

with respondents to inform and train them on the reporting forms, procedures, and coding systems.

computerised. Data compilation is generally also efficient because its procedure is also mechanical

and compilers do not have to depend on complex statistical techniques that are often used for grossing

up survey results. In addition, new reporting entities can easily be covered if they have significant

transactions. This makes data reporting more comprehensive and stable and reduces compilers’

burdens significantly.

8.10. When assessing the 12 BPM6 main services components individually, data from ITRS may

be useful in compiling statistics on international trade in services for 1) manufacturing services120; 2)

repairs and maintenance; 3) insurance 4) charges for the use of intellectual property n.i.e.; 5)

telecommunications121, computer and information services; 6) other business services; and 7) personal,

cultural and recreational services. ITRS is also useful for financial services with the exception of

FISIM, whose amounts are often estimated based on accounting figures of financial corporations, as

discussed in Chapter 14. ITRS captures construction but it has certain limitations, as discussed in

paragraph 8.18. ITRS can be used partially for transport and travel. Since the compensation for

transport services is often included in the total price of the goods that are transported, they are

difficult to identify corresponding international settlements. In addition, in the case of travel, an ITRS

may not ensure appropriate coverage in countries belonging to monetary unions (as the euro area), as

the residents of these countries who are traveling will spend using the same currency as their own

during intra-area journeys. Consequently, this mode of payment cannot be tracked by banks and other

financial intermediaries.

8.11. Although ITRS has benefits for collecting data on international trade in services, it also has

some major drawbacks that compilers should be aware of and should aim to mitigate when using this

system.

8.12. First, resident banks reporting under ITRS may have difficulties in correctly classifying each

transaction to their relevant transaction codes, especially for complex cases (for example, when

services are bundled with other (financial) transactions, in the case of interest payments including

fees). Misclassifications may occur if the information on the purpose of international settlements is

not correctly transmitted by transactors to reporting banks. A breakdown of trade in services by

EBOPS2010 categories (and supplementary items and complementary groupings), as recommended

by MSITS 2010, requires more detailed transaction codes which exacerbates this problem due to the

number of codes used.

8.13. Secondly, the transaction partner country may be incorrectly classified. ITRS generally

includes country codes of counterparties of international settlements. In some cases, however, the

country of the settlements counterparty and the country of transaction counterparty differ from each

other. This occurs when settlement vehicles are used by transacting enterprises, for example.

8.14. Thirdly, small value services transactions may not be captured due to the existence of

reporting thresholds. For example this may be particularly problematic for small value transactions

made by households, e.g., for telecommunications, computer and information services as well as

personal, cultural and recreational services, which can be small taken individually but may represent

large amounts summed up at the level of the total economy. The bank ITRS generally has thresholds

to reduce reporting burdens. The threshold can be either an exemption threshold (no reporting

required under the threshold) or a simplification threshold (a lump sum amount is reported without

indication of the nature of the transactions). The general trend is for reporting thresholds to augment,

120 While ITRS may provide information about the fee charged, it may not provide the data necessary to adjust

the corresponding goods transaction in the trade in goods account

121 However, depending on its set up, ITRS may also su ffer from under-coverage as payments for some

telecommunication services are made on a settlement (net) basis). Care should be taken to ensure the gross

reporting of transactions (see BPM6 CG: para 3.11 and page 287).

100

as the regulations related to foreign exchange controls are gradually lifted. For example, in EU

countries, since the reporting threshold was raised from EUR 12 500 to EUR 50 000, a considerable

loss of information has been observed. Box 8.1 explains options how the lack of information due to

thresholds may be mitigated.

8.15. A fourth caveat to address is that ITRS-based data may not accurately reflect the timing of the

transaction, as the transaction and the settlement time may not always match122. Under ITRS, the time

of settlements is the only choice for recording the time of transaction. However, there are cases where

settlements are deferred or advanced for some reasons, e.g. in construction and in insurance services.

8.16. Regarding construction, as noted in Chapter 6C(i), the use of ITRS may give rise to several

biases. First, it may prove difficult to correctly identify the relevant settlements corresponding to

services transactions, in particular, in defining the residence of units conducting construction projects

(for example, from a balance of payments perspective a site office may be regarded as a resident if

substantive (long term) construction work is undertaken, even if legally they are not necessarily

treated as residents in the host country). Second, difficulties may arise in collecting data with the

required level of detail (e.g. for the identification of goods and services sourced from the economy

where the construction is taking place, and used as an input in a construction project). Third, the ITRS

thresholds set in some countries may be too high to properly cover some of the payments related to

construction projects (especially for smaller-scale work or especially in the case of fractionated

settlements)..

8.17. In some countries, the authorities oblige ITRS reporters to use foreign exchange rates fixed by

the government, rather than prevailing market foreign exchange rates. If large discrepancies exist

between fixed rates and market rates, due to fluctuations of market rates and/or the time lag between

transactions and settlements, reported data do not reflect the economic reality of international trade in

services.

8.18. Netting contracts can make the settlements amounts smaller than transaction amounts. Netting

is a common practice for telecommunication, postal services etc. It is also common for MNEs using

treasury centres. Ideally, reporting under ITRS should be made based on the data on a gross basis, i.e.,

before netting. In that case, a direct reporting ITRS is more appropriate compared to a bank ITRS with

indirect reporting. If transaction data, rather than settlement data, are reported on a gross basis using

the prevailing market exchange rates, most of technical limitations of the ITRS could be overcome.

Although the timeliness of data reporting might be sacrificed to some extent, such an evolution of the

ITRS could be beneficial for the improvement of the accuracy and completeness of reported data.

8.19. Finally, ITRS is not a complete source of information. It does not provide adequate detail for

all service categories recommended by MSITS 2010 (as mentioned above in 8.10), nor for preparing

the recommended breakdowns (e.g., for government goods and services n.i.e.); in such cases

administrative data may provide useful information especially if government’s international

settlements do not go through private banks.

8.20. As regards statistics on the international supply of services by mode, MSITS recommends

that each EBOPS components be allocated either to one dominant mode, or broken down by mode. In

particular, it is often difficult to identify modes of supply (e.g. modes 1 and 4) in the ITRS

transactions, as well as partner countries, although those transactions may be reflected in transfer of

funds or exchanges of foreign currency with a certain time lag.

122 Also see chapter 11 Comparing Data Sources for a more in-depth discussion of the pros and cons of using

the ITRS as a data source for selected service cate gories.

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D. Country experiences123

D.1. Country experience: South Africa

8.21. The Research Department of the SARB, responsible for the compilation and dissemination of

quarterly BoP statistics, relies mainly on ITRS (managed by the Financial Surveillance Department),

to compile statistics on international trade in services. The electronic ITRS was introduced in 2001,

replacing the previous paper driven system, as a compulsory reporting system to be used by all

Reporting Entities (banks and bureaux de changes) using the UN EDIFACT international electronic

reporting standard. In the transition (which coincided with the liberalisation of exchange controls),

special care was taken to ensure that the data needs for compiling balance of payments were covered.

In ITRS, the Reporting Entities provide all details of payments made to foreign parties by South

African residents as well as payments received by South African residents from foreign parties,

irrespective of the value.

8.22. SARB considers that ITRS is a cost effective reporting system that provides accurate, timely,

and reliable information which is validated via the SARB Data Exchange Architecture (SARBDEX).

The information contains comprehensive details of all transactions including the names, surnames,

addresses, ID numbers, company registration numbers, telephone numbers, and physical addresses of

transactors. The confidentiality of the data is guaranteed by using Internet encryption, SARBDEX

senders’ validation and SWIFTNET.

8.23. The South African ITRS has been enhanced several times since its introduction. The most

recent improvement (end 2013) has also ensured a better alignment with the requirements of BPM6,

although this required an additional substantial investment by reporters. The ITRS is used to assist the

compilation of balance-of-payments statistics in general, but from the point of view of the SARB has

special benefits for collecting trade in services data. Given that the South African ITRS has no

threshold, it can identify potential new services traders well, and can serve as a sampling framework

for surveys aimed at better understanding specific transactions in international trade in services.

8.24. The ITRS is seen as a primary tool to obtain statistical information for statistics on

international trade in services. To mitigate any potential downsides related to inaccurate reporting

(e.g., misclassification) the Financial Surveillance Department conducts regular onsite and offsite

inspections. In addition, the systems of the Reporting Entities are certified annually to ensure

compliance.

D.2. Country experience: Japan

8.25. The core data source for compiling statistics on international trade in services in Japan is

ITRS, which is regulated by the Foreign Exchange and Foreign Trade Act. Under Japan’s ITRS, all

residents who made payments to or received payments from non-residents under a certain condition124

are obliged to report their underlying transactions. Resident transactors must report their cross border

transactions to the Minister of Finance through the Bank of Japan (BOJ). Transactions via non-

resident banks are reported directly.

123 A more elaborate description of the French and South African country examples in this chapter is avai lable

online. Also the Japanese example is described more elaborately online, and includes coding schemes, example

forms, and more detail on the below-threshold statistical estimation methods.

124 There are some exemptions from reporting requireme nt, including transactions below the reporting threshold

(current reporting threshold is 30 million JPY or the equivalent in foreign currency per transaction, in principle)

and payments/receipts related to export/import of goods which crossed Japan’s custom. Other exemptions are

also specified in the ministerial ordinance.

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8.26. Information reported includes information on the transactor, the counterparty, the date, type

of payment (payment or receipt), currency used, value, and the classification and description of the

purpose of the transaction. For this last variable, reporters use a BOP classification code to report their

purpose of transaction, choosing from a list of 186 BOP codes as provided by ministerial decree (61

of which relate to trade in services).

8.27. Under Japan’s ITRS, transactions that do not involve cash payments are required to report on

gross settlement basis. For example, if a resident imports and exports services under offsetting or

netting arrangements, not only the amount settled, but also the underlying transactions on gross basis

must be reported.

8.28. The Japanese ITRS reporting threshold has gradually increased to a relatively high level (30

million JPY). Therefore, a considerable amount of transactions may be missing, especially small

value service transactions. In order to estimate trade in services (other than transport and travel125)

below the threshold, Japan will employ statistical methods starting with the implementation of BPM6.

Empirical researches suggest that the frequency of transactions increases exponentially as a value of

transaction decreases. Statistically, a Pareto distribution fits the data well. Assuming that transactions

below the threshold also follow Pareto distribution, data below the threshold can be estimated. These

estimations are made on annual basis, for each service item.

8.29. Compared to using information on transactions from before a threshold increase, the Japanese

approach to estimating below-threshold transactions has the advantage as the estimations can be

updated periodically with recent data. This means that structural changes and price changes over time

can be captured. Further, since the fit of the Pareto distribution will be assessed on a regular basis,

statisticians are able to choose another statistical approach if the implemented method does not fit the

data well.

D.3. Country experience: France

8.30. France used ITRS as a data source for statistics on international trade in services up to 2010.

Under the French ITRS, banks reported all payments between residents and non-residents registered

in their books, whether the transaction was on their own account or on the account of their clients.

8.31. Since 1990, the data from Bank was complemented by direct reporting by firms with annual

cross-border transactions greater than EUR 30 million. This system still exists and covers

approximately 500 firms. These firms are required to report all transactions (on a monthly basis) and

positions (on a quarterly basis) with non-residents conducted through accounts with domestic banks or

banks abroad or through intercompany accounts.

8.32. The French ITRS had several advantages. It delivered information in a very timely and

frequent manner and it was highly detailed, allowing in principle for an almost exhaustive knowledge

of international services transactions. In addition, compiler’s data access was facilitated and cost-

efficient because data processing and compilation occurred at Banque de France DG Statistics, and

Banque de France is also the institution overseeing payment systems and operations of resident banks

in payment systems.

8.33. However, the French ITRS also displayed serious limitations common to other national ITRS

such as misclassifications, stemming from the fact that the largest part of transactions was classified

by intermediaries (banks) on behalf of their clients. Potential remedies would involve either additional

resources or increase the risk of substantial data omission.

125 Transport is captured mainly by direct reports. Travel is estimated by using boarder survey, household survey,

and official statistics.

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8.34. Also, transactions are registered on a cash basis, while BPM6 recommends the accrual basis

of recording. Furthermore, the system did not capture all transactions that did not have a payment

counterpart, such as intra-group transactions and was able to register transactions made via non-

resident banks. As the evolving patterns in international trade show increased settlements through

non-resident bank accounts and in intra-group flows, these limitations become progressively

prominent.

8.35. Finally, ITRS is vulnerable to administrative changes imposed for other motives, but that

may have negative consequences for collecting and producing statistics. For example, in Europe, the

creation of the Single European Payments Area (SEPA) that aims to improve the smoothness of cross-

border payments and to lower their cost, implies that banks’ reporting obligations are adjusted and

reporting thresholds are increased (up to 50.000 EUR as of 2008).

8.36. In order to assess the magnitude of the ITRS limitations, Banque de France has organized a

parallel run between the “old” ITRS-based system and the new system based on the ‘Enquête

Complémentaire sur les Echanges Internationaux de Services’ (ECEIS), in order to perform all the

appropriate testing on the ECEIS survey (see Chapter 6F(i)). The results indicated that ITRS could be

replaced by a direct reporting system. It should however be noted that some traces of the old system

are kept in the new gathering system: ITRS still provides data from all transactions higher than EUR

50 000 that intermediaries complete for their clients vis-à-vis counterparties located outside the

SEPA. This survey is particularly useful to identify firms that have to be integrated into the direct

reporting system.

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Chapter 9 Administrative Records

9.1. Scope. This chapter describes main advantages and limitations of administrative records as a

source of data needed for measuring the international supply of services. Advantages include

reduction of costs, reduction in reporting burden by companies, filling of data gaps, and improvement

in statistical business registers. Typical limitations are restrictions on access to information due to

confidentiality, methodological differences with the statistical standards, consistency issues,

timeliness, and other quality concerns. The chapter also presents good practices in the use of

administrative records, which demonstrate that when their limitations are well understood and

effectively addressed, such records can be a valuable data source in statistical compilation. The

chapter consists of the following sections: a summary of good practices (section A); general

description of administrative records (section B); examples of administrative records for use in

statistics on the international supply of services (section C); and country practices (section D).

A. A summary of good practices

9.2. It is a good practice that administrative records are used in the compilation of statistics on the

international supply of services, as well as in the maintenance of the SBR and the trade in services

satellite register, following the policies adopted in the national statistical systems, that national

legislation and/or regulations grant the compiling agency adequate access to the administrative data

sources (see Chapter 2), and that appropriate institutional arrangements are in place between the

compiling agency and the administrative authorities (see Chapter 3).

9.3. Compilers should fully understand and document relevant aspects of the administrative data

sources, including (a) information on how these data are processed, registered, and stored, (b)

methodologies and definitions, (c) coverage, (d) periodicity and timeliness, (e) changes in regulations

pertaining to the administrative data being collected and (f) budgetary constraints at the administrative

authority. In particular, compilers should be well aware of how the concepts and definitions used in

administrative sources match with those necessary for the compilation of data on the international

supply of services. The use of unique identifiers of economic units by all administrative authorities

(as is done in increasingly done in many countries) would greatly facilitate the integration of the

administrative records into the statistical system and help to eliminate duplication in coverage.

9.4. In particular, this Guide advises to use customs records as a source for trade related transport

and insurance services while immigration records and entry/departure cards (E/D cards) - as a source

for measuring the flows of inbound and outbound visitors. Compilers are encouraged to consult

UNWTO’s list of proposed items for inclusion in E/D cards.

9.5. Compilers are encouraged to use immigration records for estimation of the movements,

numbers, and presence of foreign natural persons under mode 4 of supply of services and for

compiling some FATS variables, if the immigration authority collects work permits containing

information on foreign entrants applying for work.

9.6. Finally, it is advised to use records of tax authorities, especially value added tax (VAT)

declarations, as a source on values of trade in services, foreign affiliate relationships, and the

movement of natural persons. Moreover, tax records often include information on the ownership

relationship between businesses and employment, and on income from foreign sources separately

from income earned from domestic operations, which can also complement other sources in order to

identify enterprises and individuals with investments abroad.

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B. General purpose and description of administrative records

9.7. Administrative records are compiled for regulatory purposes or to support and document the

administration of various government programmes, such as immigration regulations, social security

benefits, education, and public health services. Important potential sources of data for the compilation

of statistics on international trade in services include customs records, records of immigration

authorities, and records of tax authorities.

9.8. The use of administrative data has become a cornerstone of economic statistics programmes

in many countries126 . Administrative data are a valuable source for updating statistical business

registers. However, other sources with similar information should also be considered, such as income

statements made by public enterprises and public quasi-corporations.

9.9. In some cases, statistical outputs are produced at the national level from information obtained

from different administrations and/or from various levels of the same administration. The

characteristics of each source are important, as are the differences between the sources and how these

differences affect statistical output. For example, different regional offices of the same administrative

agency may experience different changes to their budget, capacity and workload, which may

influence the timeliness and consistency of the data are processed and registered.

9.10. It is important, therefore, to collect, understand and document information (metadata) about

the administrative data sources which is critical to the design of the data compilation system. Also,

such documentation will improve coherency of the resulting statistics by helping users to assess the

advantages and limitations of data obtained from different administrative sources. The information

which compilers should document include: details of how the source data are processed (e.g.,

collected and stored), concepts and definitions of data variables, changes in data collection

methodologies, available metadata on the coverage and number of data reporters, changes in sample

size and/or in sample composition, breaks in series for any reason, time and date when the

administrative data were processed and revised, as well as features of the environment in which the

system of administrative recordings and which can influence quality of such recording (e.g., such as

changes in regulations pertaining to the scope and composition of administrative data being collected,

level of permanency of the mandate to collect such data, resource requirements and possible

interruptions to staffing and technological needs, and budgetary constraints, among others).

9.11. Ideally, access to the administrative sources should be guaranteed to compiling agencies by

national legislation. However, availability of legislation is not a sufficient condition for the efficient

use of administrative records. A cooperative approach to the development and utilisation of

administrative records for statistical purposes is likely to be far more effective in obtaining access to

administrative records than an approach based on legal arguments. Managers in organisations

gathering administrative information should be made sensitive to the importance of the data and

contribution of each data provider to the overall statistical system.

9.12. With the increasing role of administrative data in the overall statistical process, clear

arrangements between statistical offices and administrative authorities must be in place and reviewed

regularly to ensure continuity of the use of these important data sources in the statistical system.127

The agreements should contain clauses about confidentiality, coding, data transfers and their

frequency and the content of the administrative database. Strict measures should be taken within the

statistical agencies to ensure the administrative data records remain confidential, are treated as survey

micro data and used only for statistical purposes.

126 See Guidelines on IES, paragraph 5.98.

127 See chapter 3 for more information on effective institutional arrangements.

106

B.1. Advantages and limitations of administrative data

9.13. If administered and maintained properly, administrative records can offer strategic and

statistically important advantages over direct collection of corresponding data from respondents. The

advantages and limitations of using administrative data must be considered, including the following:

i. Methodological soundness. As administrative recording must comply with relevant

legal and other administrative concepts and requirements, the resulting records typically

adhere to the adopted administrative standards of methodological soundness and consistency

in terminology. Therefore, the use of administrative records for statistical purposes normally

implies their certain transformation to better approximate statistical concepts. When the

adequate transformation procedures are developed and systematically applied, administrative

records can be a reliable and valuable primary and complementary source of statistical

information (see paragraphs 9.11 – 9.13 below);

ii. Cost. Administrative records are a relatively inexpensive source of information

compared to surveys and censuses, which is an important factor for statistical agencies faced

with tightening budgets. However, the cost to statistical agencies may be higher than

anticipated if the administrative data require complex transformation and/or processing to

meet statistical requirements;

iii. Coverage. Due to their nature, administrative records usually have the advantage of

covering a large segment of the economy, if not the entire economy. Moreover, due to the

administrative character of the data, non-response is normally negligible and data are subject

to substantial scrutiny, which should generally ensure their accuracy. However, statistical

compilers should be aware that the coverage and content of administrative records can be

subject to discontinuities resulting from changes in regulations or administrative practices.

Also, not all variables in administrative records may receive the same level of attention; for

example, revenues may be examined closely, whereas less effort may be devoted to ensuring

that industry codes are correct. Nonetheless, with the increasing demand to produce statistics

for small domains, where sample surveys may be difficult to implement, administrative

records represent a valuable alternative or complement to sample surveys, when the

limitations above are considered and addressed;

iv. Periodicity and timeliness. The availability and timeliness of administrative records

may not align well with data release deadlines of statistical agencies. For example, individuals

and/or entities may not be required to report to administrative agencies at common intervals,

resulting in some data being reported monthly, while others are reported quarterly or

annually. Moreover, annual data may be presented in administrative records on a calendar

year basis or on a fiscal year basis. There may also be delays before the administrative data

can be used and procedures established for allocating the records to the proper period;

v. Response burden. Administrative records allow for the reduction of the burden of

statistical inquiries made by compiling agencies. Administrative records can be adapted and

compared against data collected by other methods (e.g., surveys) for validation purposes.

Linking administrative records to other administrative data sets, survey data or census data is

increasingly being performed to produce richer datasets for statistical utilization;

vi. Data compilation. Administrative records can be used to complement survey data and

in the absence of information, such as non-response to surveys, administrative data can be

very useful in the imputation process.

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9.14. In order to make administrative records useful to statistical compilation, it is necessary to

show how the concepts, definitions and classifications of administrative data can approximate the

economic variables required by the statistical system. For example, a correspondence table can be

established that describes how business accounting type data are linked to the economic variables of

the statistical agencies. Methodologies should be developed on how the administrative data can be

used as extrapolators for economic data collected from official surveys and censuses using economic

accounting concepts and definitions.

9.15. Additional work is needed to link the legal entities used by administrative authorities to the

enterprises and establishments used by statistical agencies. One of the prerequisites in using

administrative data is to establish rigorous mappings between the various structures of entities

maintained by administrative departments and the statistical agencies. This is necessary to ensure that

there is no duplication in coverage and to match up information from various sources. Some countries

have a unique identifier of economic units which is used by all administrative authorities. This clearly

greatly facilitates the integration of the administrative records into the statistical system.

9.16. When using administrative records, it is good practice that the file(s) used for statistics are

separate from the system in which the administrative records and transactions are stored for

operational use. This separation enables compilers to manipulate the data without interfering with the

administrative processes. It also helps to maintain the integrity and consistency of the data and

preserves the confidentiality of the outcomes of statistical editing and adjustment.

C. Examples of administrative records

C.1. Tax records

9.17. Records of tax authorities can be a very important source of information on values of trade in

services, foreign affiliate relationships, and the movement of natural persons. For example, tax

records, especially value added tax (VAT) declarations, may include the value of services transactions

between residents and non-residents, as well as the location of the service transactors. Moreover, tax

records often include information on the ownership relationship between businesses, which may be

useful for compiling FATS. Additionally, tax records on businesses may include employment

information. This information can be combined with individual tax return records, which identify

independent service suppliers or employees of service providers who go abroad to supply a service, to

compile data on the movement of natural persons. Tax records often also identify income from

foreign sources separately from income earned from domestic operations. These records can be useful

especially for conducting surveys or for checking information obtained from other sources128 and to

identify enterprises and individuals with investments abroad.129

9.18. Use of tax records for statistical business registers purposes. Tax records are one of the

sources for business registers and survey frames, as they contain unique identifiers, names, and

incomes of businesses. The systematic and persistent updating and maintenance of business registers

based on tax records will normally lead to significant quality improvements in the business register

(coverage, timeliness and accuracy), reduction of operational costs and business compliance costs.

9.19. Where a VAT has been introduced and includes services, the VAT declarations also belong to

the potentially very promising administrative data for statistics to identify the mode of the

international supply of services (especially modes 2 and 4). The information is often reported

monthly, covers most business units in the economy and, since the main principles of a VAT system

128 As used by tax authorities, definitions of the terms foreign and income may differ significantly from those

used in the compilation of statistics on the international supply services. The compiler should take care, in using

tax data directly in compilation of such statistics, that any such differences are accounted for.

129 IMF, Balance of Payments Compilation Guide, paragraph 6.46.

108

are similar in different countries, there are common features, items and even details that could be used

for statistical purposes in many countries.

C.2. Customs records for estimating value of resident/non-resident trade related transport

and insurance services

9.20. Customs records are one example of how administrative sources can be used by compilers of

trade in services statistics. In general, customs declarations include the freight charges and insurance

for shipments of merchandise and can be used to determine the value of trade related transport and

insurance services.

9.21. If foreign merchandise trade statistics provide both the FOB and CIF values of imports then

the values of freight costs and insurance premiums can be obtained from such statistics. However, a

method also needed to be developed to separate freight costs from insurance premiums. When both

valuations are not available on a regular basis, it may be possible to analyze the supporting import

documentation supplied to customs to obtain freight costs and insurance premiums. Such analysis

could be achieved by means of a properly designed sample survey of the customs records. In some

countries, import documentation may also provide the name or registration of the vessel carrying the

imported goods. The compiler could match this information against the lists of vessels operated by

residents; if no match is found, it could be assumed that the transport service was provided by a non-

resident operator.130 If customs data can also be used to measure freight on imports—for example, by

taking the difference between imports CIF and imports FOB and deducting an estimate for insurance

premiums—these data could be matched with information on the vessel to determine transport

services provided by vessels operated by non-residents.131

C.3. Immigration records and entry/departure cards

9.22. In most countries, immigration records and entry/departure cards (E/D cards) are a valuable

source of information on the movement of persons across borders, even as the increasing mobility of

persons and facilitation of the free movement of persons across borders, in some parts of the world or

under certain circumstances (e.g., in the case of the European Schengen area) is changing this picture.

9.23. Migration statistics usually distinguish between visitors, other short-term individuals traveling

abroad and migrants, where migrants could – for instance – be defined as persons staying in the

country for a period longer than 12 months.132 The number and characteristics of migrants and short-

term visitors are usually part of international migration statistics,133 guidelines for which may be

found in Recommendations on Statistics on International Migration, Revision 1 (1998).134

9.24. Both short-term visitors and migrants are of interest for the compilation of statistics on the

international supply of services by mode of supply. For short-term visitors, information could be used

to measure earnings and expenditure of resident short-term visitors abroad and non-resident short-

term visitors in host countries.135 This information could also be of interest in the context of gathering

information on the number of mode 2 and mode 4 persons, which is further described in chapter 16.

9.25. Some common examples of the categories covered by migration statistics and their relation to

travel and tourism statistics are presented in box 9.1. However, it should be highlighted that

immigration records or E/D cards have been put in place for purposes other than to measure trade in

services. Records of these administrative procedures should, therefore, be carefully evaluated on a

130 IMF, Balance of Payments Compilation Guide, chapter 12, box 12.2.

131 IMF, Balance of Payments Compilation Guide, chapter 12, paragraph 12.58.

132 IMF, Balance of Payments Compilation Guide, paragraph 304.

133 IMF, Balance of Payments Compilation Guide, paragraph 306.

134 Available at: https://unstats.un.org/unsd/pubs/gesgrid.asp?ID=116.

135 IMF, Balance of Payments Compilation Guide, paragraph 305.

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country-specific basis to understand the degree to which they could be useful. This exercise might

even lead to adoption of the administrative records for improved measurement of trade in services (as

well as tourism). Such adaptations are more likely if it can be demonstrated that they lead to

improvements in the procedures used for registration and/or monitoring of the movement of persons

across borders being done by the responsible agency.

9.26. Immigration records contain information provided by travellers when applying for visa as

well as passport information recorded at the time of border crossing. Entry/departure records contain

information provided by a traveller to immigration authorities when crossing the country border. The

Box 9.1. Common categories of visitors, other short-term individuals traveling abroad and

migrants captured in immigration records and their relation to travel and tourism statistics

Holiday,

leisure

Religion,

pilgrimage

Education

purposes*

Health

purposes*

Employ

ment**

Business

visit ***

Tourism X X X X X

Travel X X X X X X

Business

purposes X X

Short term

workers, etc. X

Other

business

purposes

Personal

purposes X X X X

Education

related X

Health

related X

Other X X

Mode 2 number

of persons X X X X X X

Mode 4 number

of persons

Only to

work in

foreign

affiliate

* For tourism would only qualify if for less than one year, for travel no time limit if residence (i.e ., centre of

predominant economic interest) does not change.

** For the purpose of being employed in host economy; i.e., employer-employee relationship in host country.

*** Employer-employee relationship remains in home country.

information available from these two sources and reconciled by the immigration authorities are often

the basic source for establishing the flows of inbound and outbound visitors. The E/D cards usually

collect information136 on a census basis on name, sex, age, nationality, current address, date of arrival

(and/or departure), purpose of trip, main destination visited and length of stay.

9.27. Usually, immigration authorities provide data based on arrivals, in which case, for inbound

travellers, the data that are collected refer to the expected length of stay. Some countries reconcile

entry and exit cards by matching their identification number in order to establish the actual length of

stay.137 Some difficulties might arise in this operation owing to the existence of unmatched cards as a

136 See the UNWTO publication Tourism as an international trade service (2005), page 40 on the results of

survey of country practices in the use of E/D cards, available at: http://www.unwto.org/statistics/border.pdf.

137 For example, the Australian Bureau of Statistics c ompares the actual length of stay to the expected length of

stay on the entry card, which allows for calculatio n of a "realisation ratios" so that numbers of visitors expecting

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consequence of errors in the process (e.g., lost cards or errors in the capture of the data), lack of

coordination in recording authorizations of change in status, or change in expected stays (illegal

immigrants who entered as tourists being also a possible source of discrepancy). However,

notwithstanding the existing challenges and limitations, the compilers should make most use of them

for compilation of statistics on the international supply of services.

9.28. Immigration records and E/D cards can be combined with information on patterns of

expenditure and compensation of employees to form the basis for a data model to estimate travel

services by multiplying the actual number of trips of short-term travellers and the estimate of per

capita expenditure from surveys of actual expenditure. Preliminary estimates for a period can make

use of data on the expected length of stay and anticipated expenditure.

9.29. Immigration records and E/D cards can be an important source of information on mode 2

movements of persons as such persons may constitute a large proportion of those recorded in these

sources. However, E/D cards are not seen as a sufficient source for mode 4 movement of people, as

E/D cards are meant to collect data for immigration control purposes, not for the identification of

natural persons crossing the border to supply a service. Mode 4 types of movements only represent a

very small proportion of total entries/ departures as registered by E/D cards. Moreover, the

identification of mode 4 persons is not an issue for compilation of tourism statistics, as such persons

are part of the visitor population, regardless of the fact they are travelling in order to provide a

service.

9.30. The use of E/D cards requires that statistical compilers have a clear understanding of their

coverage and content, most importantly:

i. The geographic coverage of E/D data needs to be clearly stated to assess how representative

the cards are for the full population of persons crossing borders. It is, for example, important

to know if E/D cards are used at all border crossing points or their use is restricted in some

way (e.g., covers air passengers only, or applies to other types of arrival such as by sea, by

land, by river, etc.). This is particularly relevant for countries with long and open international

land borders or borders delimited by rivers, where geography makes crossing the border easy

or where border controls are absent at some crossings. Border control authorities usually will

have an estimate of what is beyond their present control procedures, but this estimation might

need to be permanently monitored to detect changes over time.

ii. What categories of persons are covered? Are there specific conditions that exclude certain

persons from border controls, in addition to those represented by the non-controlled crossing

points (e.g. nomads, refugees, border workers, etc.)? In many countries, nationals are often

exempted from border controls or detailed reporting requirements. Frequent border crossers

may have special permits, may not be registered for each crossing, may be excluded from the

controls altogether, or may be covered only by a global estimate. Finally, certain types of

border crossing might be subject to less cumbersome procedures (for instance private airports,

or land borders used by nationals of neighbouring countries).

iii. What is the actual content of the data? Access to detailed micro-data should be ensured to

allow for corrections and controls. In general, compilers should not expect border control

operations to provide all the information needed to measure movement of persons across

borders and to provide all the required variables and the type of distinctions that would be

needed for description and analysis. A recurring example is that many E/D cards do not

request the residence of the respondent, only the nationality. Additionally, not all controls in a

to stay more (or less) than a year can be adjusted at the time of arrival to allow for an estimate of those who will

actually stay for the amount of time they expected.

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given country will be the same at all border points, nor will contain the same questions (e.g.,

questions at land borders might be kept to a basic minimum, because of the time constraint).

iv. Quality of the data collected has to be assessed. There are various repeated inconsistencies in

the information taken from administrative sources that stem from their specific functions. The

main interest of border authorities, for instance, is controlling the flows of non-nationals and,

as a consequence, other data (e.g., a national’s country of residence, origin or destination –

often different from the origin or destination of the flight, and detailed purpose of trip) are of

less interest to them and are not always well-collected or stored. The concern of border

control authorities is that the declared purpose be consistent with the type of traveller’s visa or

resident permit presented, which may induce travellers to declare a purpose in line with their

visa (e.g., recreation instead of convention/conference, or seeking business opportunities).

Revisions, checks and controls are needed to make E/D card information usable for purposes

other than migration.

9.31. UNWTO proposed that E/D cards should include a number of variables for the measurement

of travellers’ flows useful for tourism statistics as well as for modes 2 and 4,138 such as date of

entry/departure, the gender, age, place of birth, nationality, country of residence, port of entry, mode

of transport, length of stay and purpose of the visit. In particular, if a further differentiation of the

business purpose could be recorded on the E/D card (e.g., the difference between intra-corporate

transferee or employment by a local business) then this information can be used to identify mode 4

movements. The full list of proposed variables on E/D cards can be found in the on-line version of the

guide.

9.32. In countries that require a temporary work visa for mode 4 (at least for citizens of some

countries) administrative records from the visa issuing department (usually the Ministry of

Immigration) may be a more reliable source of information than the E/D card. If there is no

requirement for a specific visa (for instance for the duration of the stay or its repetition), the proposed

E/D card might not always enable identifying mode 4, unless a “purpose of trip/visit” is requested. In

should be noted, however, that the declared purpose of trip may be influenced by the type of

visa/permit that has been issued and not accurately reflect the reality. In the case when business visas

are used, they can be directly identified using immigration data. Moreover, it is usually recommended

that E/D cards identify the different subsets of travellers (such as visitors as defined in tourism

statistics) through indirect observation of derived characteristics.139

9.33. Also, it should be noted regarding mode 4, that the interest might not be on the total number

of trips, but on the combination of number of persons, number of trips taken by these persons and

duration of each trip and total per person. The E/D card could provide information on repetition of

trips, only if the persons are uniquely identified in the E/D card and the registrations at different

border crossing points are stored in the same database.

C.4. Work permits

9.34. In many developed countries where migration regulations are complex, each legal foreign

entrant applying for a work permit is asked to register his/her nationality, occupation, purpose and

place of visit, length of stay, etc. The information on inflow and stock of such persons could be

collected from the immigration authority, and with the help of such information it may be possible to

138 The MSITS 2010 sets out the framework to define mode 4 in the context of the existing tourism and

migration statistical recommendations. Statistical compilers should review this framework and in parti cular table

V.3 in MSITS 2010, which presents the Links between the coverage of the Recommendations on Statistics of

International Migration (RSIM), Rev.1 and that of IRTS 2008 in terms of purpose of trip or migration and

length of stay, and identifies categories of interest for GATS Mode 4.

139 See “Tourism as an International Traded Service” (2005) paragraph 2.45.

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estimate the movements, numbers, and presence of foreign natural persons under mode 4 of supply. In

some other countries, registrations of work permits may be available from the immigration or labour

authority and may include additional information on the foreign resident, such as date of entry into the

country and detailed occupation type, as well as information regarding the resident employer, such as

name, location, type of business, or even gross annual income and number of employees. Such data

could serve as a major source to compile the number of foreign employees of service suppliers or the

number of foreign nationals providing services as an independent supplier. Moreover, such

information could be a complementary source of information for compiling FATS statistics (at least

for those foreign affiliates in the services industry that may be hiring foreign nationals) – both in

terms of identifying such foreign affiliates as well as estimating their sales and/or output and number

of employees. Data derived from documents issued in the context of social security coordination and

employment services could also be useful sources of information.

9.35. Work permits and visa application records. Only those permits relating specifically to mode

4,140 or those that are clearly identified as a sub-group of a mode 4 category, can be used for

compilation of mode 4 persons. While rarely possible,141 immigration registers could, in theory,

include the relevant information.142 A solution could be to add questions to visa/permit application

forms to get more detail on the reasons for migration, visit or permit request, and, to consequently

obtain information more directly related to mode 4 as defined in MSITS 2010, and, therefore, be

comparable between countries. For example, current visa information may indicate the length of stay

or whether a migrant is moving under entrepreneur or skilled migrant categories,143 but may not

indicate whether a person is moving as an intra-corporate transferee or is being directly recruited by

an overseas service producing company. In general, statistics on visas granted for work (or education)

reasons are available; however, further breakdown by reason of stay (employment contract, service

contract, or official residence permits categories) and for short-term visas of less than 3 months are

typically not available.

C.5. Population Records

9.36. Registers of individuals (e.g., population registers, registers used to assist in the

implementation of legislation, or for monitoring specific or overall activities) could be used to

measure the number of mode 4 persons, in particular when such registers relate to a specific relevant

part of the population. Once again, it is important to analyse to what extent such a source can be used

for statistical purposes (i.e., the type of information included, reasons for inclusion in a register, how

the data are stored in the register, etc.). Although the use of such registers is clearly possible from the

perspective of receiving countries, the use of a register source could be particularly relevant in some

140 As defined in MSITS 2010.

141 It is important to note that in certain cases coun tries have established commitments based on existing specific

types of visas or working permits, which may or may not comply with the definition of mode 4 as defined in

MSITS 2010 (i.e. it may have been designed to serve complementary or additional administrative needs). When

this information is used to analyse mode 4, it should be clearly specified that such information relates to the

commitment made, but does not necessarily refer to mode 4 as defined statistically.

142 Actually such information is often used by analysts and policy makers to support decisions, including

concerning labour migration. By ensuring that relevant mode 4 information is also included and reliabl y

recorded in such a source would greatly improve the understanding of the different types and characteristics of

international movements, and consequently help making the distinction between labour migration and mode 4

trade in services.

143 See also: http://epp.eurostat.ec.europa.eu/portal/page/portal/population/introduction. The technical guidelines

for data collection under Art.6 of Regulation 862/2007 – Statistics on residence permits specify under those

called grants of permission to stay to third-country nationals for reasons related to remunerated acti vities,

categories for those activities encompass (e.g., hi ghly skilled workers, EU Blue Card, Researchers, Se asonal

workers and other remunerated activities). The last category could be expanded for mode 4 purposes.

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"sending" countries where mode 4 movements are important and in the case such information is

recorded in a register (e.g., by the labour ministry, or by a specific sectorial ministry such as health,

transport, etc.) or any other official source.

9.37. The statistical compiler must ensure that it is possible to distinguish in the register data

between those going abroad for employment purposes and those travelling for business purposes as

defined in MSITS 2010 chapter 5 (i.e., most likely the registers would include those going abroad on

the basis of services contracts, but compilers must ensure that the register does not also cover those

travelling abroad for negotiating purposes). Registers used to assist in the implementation of a

legislation (e.g., for tax purposes) may by particularly useful for sending countries in the context of

mode 4 self-employed persons (i.e., those who remain residents of their economy of origin). The use

of such a source would be especially relevant if it were possible to link information on individuals

from this source with information on the same individuals from other sources, such as immigration

records. Also, it is important to identify if this linking is legally (and statistically) feasible.

D. Country experiences

D.1. China - compilation of mode 4 person numbers

9.38. According to the Foreign Trade Law of China, qualified enterprises that seek to supply trade

in services supplied through the presence of natural persons or to enter into contractual services with

natural persons need to apply and get approval from the government. The governmental agency

responsible for approving these applications of enterprises or service suppliers also collects and

aggregates data on outflows and stocks of mode 4 persons in the category of contractual services. A

statistical institution has been jointly established by the Ministry of Commerce and the National

Bureau of Statistics in China, to which relevant enterprises are obligated to report required

information, such as service project, outflow and stock of persons, occupation or overseas work,

length of stay, and destination of country, etc. The national authority is responsible for aggregation

and annual publishing of the data.

9.39. Sometimes basic information, such as occupation, purpose of visit, visit destination, etc., is

being compiled separately by different authorities (such as immigration, tourism or labour), each with

their own statistical purpose and measurement scope, resulting in statistics that do not always match

the requirements for measuring the number of mode 4 persons. As a result, it is difficult to extract

useful information from the existing statistical systems. For instance, occupations may be classified

by first category (i.e. manager, technician, professional, etc.), and it may be impossible to further

break this down by industry details. One potential solution to this problem is for compilers to

cooperate more closely with the relevant sectors and ask for additional useful information.

Alternatively, statistical systems of the authorities (other than the compiling authority) could be

redesigned in order to meet the data needs for compiling number of mode 4 persons. Another solution

is that compilers can establish a new and specific statistical system for the compilation of the number

of mode 4 persons. Both solutions require close cooperation among the different agencies involved

(e.g., immigration, labour, tourism and other sectors). Redesigning the existing system requires more

communication and understanding, and increases daily workload for the agencies involved.

Establishment of a new system may improve the coverage and accuracy of the data, but requires a

large capital input, more coordination, and could raise the risk of leaking personal and business

information.

D.2. Philippines and Customs Data for compiling freight and insurance services

9.40. The compilation of statistics on the resident/non-resident trade in services in the Philippines is

heavily based on administrative records of the Bureau of Customs (BOC). These records are

especially useful for estimating freight and insurance services. The cost of cargo insurance is stated in

the attached invoice for Import Entry Internal Revenue Declarations (IEIRD). If the insurance value is

not declared, then the value of insurance is estimated.

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9.41. In 2007, a special survey was conducted for the purpose of input-output tables, which also

enabled a verification of insurance and freight values generated from administrative sources. (See the

on-line version of the guide for the 2007 Survey on Selected Imported Commodities (SSIC)

questionnaire). Freight and insurance costs are also validated by collecting and comparing data

collected from various government and private entities, including the Insurance Commission, the

Bureau of Shippers, Asian Terminal Incorporated, Cargo House, and FedEx-Philippines. For IEIRD,

the freight cost is stated in the customs declaration or in the attached invoice. If the freight value is not

declared then it is estimated. The details of the estimation procedure are given in the on-line version

of this guide.

9.42. Computation/Estimation: exports, insurance and freight cost. For Export Declarations,

insurance and freight costs are not reported on the export document but rather on the attached invoice.

For multiple commodities, freight and insurance costs are computed by prorating, using Total

Insurance/Total FOB or Total Freight/Total FOB as the multiplier and the individual FOB value as the

basis in the computation. Insurance and freight costs are not imputed if not reported.

D.3. New Zealand and tax records

9.43. Statistics New Zealand (Statistics NZ) is in the process of establishing a new business register

(BR), which will also include micro businesses that are not currently recorded. Since the 1920s,

Statistics NZ has used tax data from Inland Revenue (IRD)144 on incomes of individuals, self-

employed workers and companies, which has been integrated with tax data from the Goods and

Services Tax (GST)145 since the mid-1980s. This integration was made possible by linking the BR

enterprise statistical unit to the business tax number of GST-registered businesses

9.44. Increasingly over the past 20 years, as the use of tax and other administrative data to maintain

BR has been extended, Statistics NZ has observed that BR quality has improved in terms of coverage,

timeliness and accuracy; BR operational costs have been reduced; and business compliance costs

resulting from BR update surveys have been reduced. Challenges in transforming administrative data

for statistical purposes that Statistics New Zealand has addressed include: better understanding of the

rules and processes that define the administrative data, including coverage, timing, quality, and

completeness of the administrative data as well as the differences between the statistical units on BR

versus units defined in the tax system; and developing appropriate methodology and processes to

transform the administrative data to the statistical model. Addressing these issues has involved:

i. Reliance on tax data for small businesses with a simple structure where the statistical

unit directly matches the tax unit structure and supplementing the tax data for large and

complex businesses with data collected by Statistics NZ;

ii. Using models to derive the required statistical outputs from tax data. For example,

modelling two and six monthly GST tax returns to produce quarterly data;

iii. Using statistical techniques, such as estimation/forecasting, to address timeliness

issues;

iv. Using tax data that are correlated to a required statistical variable (not available in the

tax system) to model the required variable;

v. Making available to users a very clear definition of the statistical outputs produced

and providing overlaps between series on the old and new definitions;

144 See chapter 3, section D.4, for a description of the MoU between IRD and Statistics NZ.

145 The Goods and Services Tax is a Value-Added tax th at covers almost all business activity.

115

vi. Requesting changes to administrative rules so that the administrative data better fit

with the statistical requirements.

9.45. Maintenance of the BR is conducted continually, based primarily on tax data, as well as on

Companies Office data, survey feedback, media reports, and company reports, among other sources.

Units on the BR are stratified into three tiers on the basis of their structure, GST activity and

employment numbers, thereby allowing Statistics NZ to focus its resources on the largest businesses.

All units are updated using primarily tax data, as well as an annual update survey and other

information to supplement and verify the tax information for the larger enterprises. The BR has a

monthly quality monitoring programme which also identifies opportunities for quality improvement

and extending the use of administrative data.

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Chapter 10 Other Data Sources

10.1. Scope. This chapter describes sources of information which were not intended for statistical

use and are not covered in Chapters 5-9 but which, nevertheless, can be used for collecting data

needed for measuring the international supply of services. In particular, the chapter presents

recommended practices (section A); describes other data sources and Big Data (section B); and the

use of specific data sources, namely payment cards (section C), mobile phone records (section D),

external party sources (section E), and linked micro-data (section F). Each section presents some

related country experiences.

A. Summary of compilation guidance

10.2. It is a good practice that compilers explore the possibilities of improving quality of statistics

on the international supply of services (e.g., coverage and timeliness) offered by the use of additional

data sources and develop action plans to gradually incorporate them into the data collection activities

taking into account both their strengths and shortcomings. . Compilers are encouraged to use of

additional data sources as necessary including payment cards records, mobile phone records, external

party sources, such as financial statements of companies, reports of chambers of commerce, records of

investment promotion agencies, records of business associations, surveys conducted by other

organizations (e.g., various line ministries may conduct special studies on industries they supervise

and may conduct surveys for this purpose), private databases, on-line search engines, on-line travel

booking sites, data compiled by trading partners, and linked microdata.

10.3. It is further advised that compilers consider incorporation of various additional data sources in

the context of Big Data initiatives and undertake pilot projects in selected areas and to weigh the

benefits of using Big Data with the objective to improve timeliness, fill data gaps and reduce cost,

while maintaining a high-level of quality of official statistics on the international supply of services.

Many of the aforementioned other data sources are often placed under the umbrella term “Big Data.”

For the purposes of this Guide, Big Data are sources that can be described as high volume, high

velocity and wide variety of data that demand cost-effective, innovative forms of processing for

enhanced insight and decision making.146

B. Other data sources and Big Data

B.1. Good practices in using other data sources and Big Data

10.4. Compilation of data needed for measuring the international supply of services is a complex

process and requires the use of both traditional and other data sources. Compilers are encouraged to

consider using other data sources in the context of national initiatives to use Big Data as a new

potential data source. This Guide advises that compilers undertake pilot projects in selected areas and

to weigh the benefits of using Big Data in combination with the existing traditional data sources in

order to improve timeliness, fill data gaps and reduce cost, while maintaining a high-level of quality

resulting official statistics on the international supply of services. For instance, Big Data may be

useful in compiling travel and tourism expenditures. However, compilers should be aware of, and be

prepared to address, the challenges in using Big Data, including legislative issues surrounding the

access and use of data; privacy concerns; financial costs in sourcing data relative to its benefits;

management and protection of the data; methodological (in terms of data quality); and technological.

10.5. It is a good practice that any use of Big Data be part of an organized and efficient data

integration process and be subject to strict standards commonly applied in quality control, data

146 See “What Does “Big Data” mean for Official Stati stics,” by UNECE (2012), paragraph 6.

117

modelling, estimation and imputation. All of these modifications to the statistical process should be

done in a transparent way, be part of the quality assurance programme, and be properly reflected in

metadata.

B.2. Purpose and description

10.6. In our modern world, more and more data are automatically generated through a variety of

devices, including mobile phones and sensors, and via many computer applications. The amount of

data and the frequency at which they are produced have led to the concept of Big Data. Examples of

different classes of Big data are:

i. Commercial or transactional data (arising from transactions between two entities);

e.g., credit card transactions, bank transactions, on-line transactions (including from mobile

devices), retailers’ sales records, etc.;

ii. From sensors; e.g., satellite imaging, road sensors, climate sensors, etc.;

iii. From tracking devices; e.g., tracking data from mobile telephones, global positioning

systems (GPS), etc.;

iv. Behavioural; e.g., online searches (about a product, a service or any other type of

information), online page views, etc.;

v. Opinion; e.g., comments on social media, etc.

10.7. Even though administrative data (arising from the administration of a programme involving

collection of certain information, be it governmental programme or not) are usually seen as standard

data source, they do have some of the characteristics associated with the Big data sources, and could

therefore also be included here, if the volume of data and the velocity, in which these data become

available, are high; e.g., electronic records on medical procedures, hospital visits, insurance

transactions, education programmes, value added tax records, etc.

10.8. Major complaints about official statistics usually include lack of timeliness and high costs.

Big Data is often automatically generated and are accessible in real-time. Therefore, it could certainly

be envisioned that Big Data should complement official statistics in order to improve timeliness and

cut costs.

10.9. However, many challenges need to be dealt with in order to effectively use Big Data in

official statistics, such as:

i. Legislative challenges with respect to the access and use of data;

ii. Privacy issues to comply with confidentiality rules, to gain and maintain

public trust and challenges to obtain acceptance of data re-use and link to other

sources;

iii. Financial challenges regarding the potential continuous costs of acquiring,

hosting and processing the large data sources;

iv. Management issues regarding policies and directives about the rules, roles

and regulations to adequately protect and secure the sensitive data sources;

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v. Methodological challenges, specifically with respect to representativeness of

the data, the volatility of data sources over time and the need for adequate estimation

and model techniques in making the data useful and comply with quality standards;

vi. Technological issues related to hosting and accessing the data sources, the

data processing, the system maintenance and the over-time storage of huge amounts

of data.

B.3. Using Big Data for purposes of official statistics on the international supply of

services

10.10. Examples of Big Data which can be used for the compilation of statistics on the international

supply of services include: electronic medical records of hospital visits (may aid in compiling health

services), mobile phone records (are helpful in tracking movement of international visitors); credit

card records (may be useful in tracking a wide range of tourism expenditures and in compiling other

trade in services transactions). Such data can be used provided that involved operators and merchants

are identified in those data as belonging to service industry. More information on such applications is

included in next section of this chapter.

10.11. Compilers are, therefore, encouraged to treat Big Data as a new potential data source and to

undertake pilot projects in selected areas. It should be noted that seizing the potential of Big Data

would require attention to the organization of an efficient data integration process and review of

existing methods on data modelling, estimation and imputation. All of these modifications to the

statistical process should be done in a transparent way, be part of the quality assurance programme

and be properly reflected in the metadata.

B.4. Good practices in using payment cards data

10.12. Payment cards records are considered by this Guide as a potential source for compiling

statistics on international trade in services in countries that have a favourable institutional

environment concerning payment cards, especially if there is a well-established and extended network

of automated teller machines (ATM) and point-of-sales (POS) terminals, along with a massive use of

payment cards in national and international transactions.

10.13. A sound understanding of the processes of payment card transactions and the actors involved

in this process, as well as what to measure, is crucial in order to find and communicate the

specification of data to be collected from the payment cards institutions. Efforts should be made to

obtain standardised nomenclatures, compatible with the statistical classification. Over time the

specification also needs to be reviewed and eventually modified in order to reflect changes in cross-

border payments infrastructures and patterns.

Box 10.1 Country example: Project of Eurostat on using Big Data

Eurostat conducted a 15-month feasibility study on the use of mobile positioning data for tourism statistics.

The project will explore the usefulness of using these data for tourism statistics (and related domain s) and

will assess their strengths and weaknesses. Issues to be studied include access (and continuity of access),

trust (of producers and users of statistics), costs , concepts (in translating the existing tourism statistics

concept to a new data source) and other methodological topics (e.g., representativeness and sampling

within a very large number of observations). The ab ility of handling large data files held by mobile

operators is considered a critical obstacle to overcome if the project is to be successful. The inclus ion of

this project in the work programme is, among other reasons, based on promising research results in a

number of countries.

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10.14. It is a good practice to compare the expenditures obtained from the payment card data with

other traditional sources. For instance, if payment card data are being considered for use to in the

compilation of travel statistics, these data should be compared with surveys on average daily tourist

expenditure conducted by statistical agencies or publicly available from the tourism industry.

10.15. It is advised that an indicator of whether the card was present at the point of sale be collected

from the payment card institution, as this information is useful in isolating cross-border transactions

or for identifying the type of service involved in the transaction, particularly those related to e-

commerce.

10.16. Purpose and description. Payment and bank cards (such as credit and debit cards) are

important payment instruments in national and international transactions in both goods and services.

Records of card-issuing institutions can provide data on international transactions of the card-holders,

be they individuals or companies. A comprehensive payment cards database can provide detailed and

accurate information concerning operations performed with payment cards, with a number of

variables that can be used to characterize the operations, namely related to the geographical

breakdown and the types of goods and services.

10.17. Payment cards data offer an advantage in collection of information on such transactions on

surveys, as it would be difficult to identify those individuals or entities involved in international

transactions by means of surveys. Moreover, individuals often have imperfect recall of specific

transactions, whereas payment card records are generally accurate and complete.

10.18. Using payment card records for purposes of statistics of the international supply of services.

Payment card records can be a valuable source for the compilation of travel statistics. Using the

information reported by payments’ institutions, it is possible to obtain the number and value of

operations performed in resident ATM and POS with cards issued abroad, and operations performed

abroad with cards issued by resident entities, as well as the characteristics associated with the cards

and the type of channel used. Such data provide, on a monthly basis, a significant measure of travel

expenditure, both in terms of credits and debits.

10.19. Payment cards data can also be used as a good proxy for the geographical breakdown of

travel, if it is assumed that the country where the issuer bank is located is the country of residence of

the traveller. However, compilers should be aware that this assumption may not be appropriate for

some smaller countries, where a considerable number of individuals use payment cards issued in

countries other than their country of residence.

10.20. Regarding the purpose of the trip, payment cards data can also be a helpful data source. The

bank identification number (BIN code147), which identifies the cardholder’s designated account as an

individual or a company, allows to distinguish business cards from other types of cards. This

information can be used as a proxy to estimate expenditure made by business travellers and other

travellers. However, an important issue that needs to be considered is the regular use of personal cards

for business travel, which leads to the need for complementary data sources to estimate this

breakdown. A separate alternative breakdown of travel into types of goods and services is required

according to BPM6 and EBOPS 2010, which can be integrated with additional requirements of other

statistical domains, namely the tourism statistics and tourism satellite account. Payment cards

databases can provide important information to meet this new breakdown, using the activity

147 Recently designed as IIN (Issuer Identification Nu mber).

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classification of the goods and services providers. These variables can be used as proxies to identify

the goods and services acquired by travellers.148

10.21. The main advantages of using payment cards data as a source for the compilation of the travel

item are, among others, the wide-ranging coverage of travel-related transactions; the existence of a

limited number of respondents; the timeliness and frequency of the information, as data are available

with a short delay and on a monthly basis; the detailed information on the characteristics of both

travellers and goods and services providers; and, finally, a reduced cost in terms of compilation, since

payments institutions need to process this information for their own use, imposing a reduced statistical

burden. However, coverage with payment cards data will likely change over time.

10.22. Moreover, purchases made with a payment card from a foreign business identified as a

service provider (by an industrial or activity code) in which the card is not present may be an

indication of a mode 1 service provision. Identification of such information may be particularly

relevant for Internet transactions in services related to IPP products (e.g., music, video, software).

10.23. There are some challenges that have to be considered when using payment cards data.

Primarily, there exists the challenge of excluding non-tourist related transactions, such as imports or

exports of goods or services other than travel. For this purpose, the use of the transaction amount

along with the economic activity of the goods and services providers can be used to exclude

transactions that should be classified under other items in the balance of payments. Also, an indicator

of whether the card was present at the point of sale is useful in isolating some of these transactions,

particularly those related to e-commerce.

10.24. Moreover, payment cards data are not comprehensive for travel expenditures, due to the fact

that other means of payment can be used. In this case, it may be useful to compare the travel

148 For this purpose, correspondence tables between nat ional industrial or activity classifications (e.g., between

NACE or MCC) and travel expenditures on goods and different types of services should be developed.

Box 10.2 Country example: Description of U.S. Merchant Category Codes

The U.S.-based payment card industry uses merchant category codes (MCCs) to classify each merchant

and its credit, debit, and cash withdrawal transact ions into industry groups. One or more MCCs are

assigned to each U.S. or foreign merchant by the me rchant’s acquiring financial institution, based on the

merchant’s primary type of business. Each transaction is then assigned the MCC used by the merchant to

process the transaction. Most members of the payment card industry collect detailed data on transactions

by country and industry group, for which the industry classification is determined by the company’s

existing internal MCC groupings.

In total, there are approximately 600 MCCs on the universal list used by the U.S. payment card industr y.

Although the payment card merchant categorization was not specifically designed to conform to the BPM6

main services components, many of the MCCs directly correspond to particular services categories.

However, MCCs are applied broadly in that a merchan t that sells both goods and services may do so under

the same MCC. If transactions data are being used to measure travel purchases, this distinction is not

important, but it may be if it is intended to be us ed for other purposes.

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expenditures obtained from the payment card data with other traditional sources, such as surveys on

average daily tourist expenditure or statistics from the tourism industry.

10.25. Another challenge is the fact that classifications used by payment card processors are not

necessarily the same as those used by statistical compilers. In fact, efforts should be made to obtain

standardised nomenclatures, compatible with the statistical classifications.

10.26. One more task to deal with when using payment cards data is to account for time lags

between the moment of the payment and the time of the trip. An additional potential difficulty is the

development of the global financial and payments systems that may lead to emergence of more

international brands and processors, which brings further complexity to the collecting system.

10.27. Using diverse data sources is crucial to have a comprehensive system that facilitates the

collection of travel-related transactions made by residents abroad and by non-residents in the

compiling economy. One of the main challenges in designing a compilation system for travel item is

integration of different data sources, which have different degrees of coverage, different periodicities

and that may contain overlapping data. There is a trade-off between reducing the impact of possible

double counting and covering the various types of expenditures of travellers as much as possible. The

extensive detail of the payment cards database could allow the compiler to mitigate this risk.

Country experience: Iceland

10.28. Statistics Iceland has been using information on payment card data since 2009 as

supplementary information to the trade in services survey for the compilation of the travel item.

Information is received quarterly from all three payment card companies in the country, of which two

issue credit cards.

10.29. Data on the use of foreign payment cards in Iceland links the ID number of the services

provider receiving payment to the business register (or national registry for those not registered in the

business register) and NACE and EBOPS classifications. For some NACE numbers, like hotels and

restaurants, all transactions are automatically included in travel, whereas all other new ID numbers are

examined manually. In order to avoid double counting with the trade in services survey, businesses

are asked not to report transactions on the survey if the payment was made by payment cards. The

data also includes the country code of the country where the card was issued; the amount of the

transaction; and the date of the transaction.

10.30. Some potential challenges with this data are misclassifications of the NACE category; ID

numbers for which no NACE category is available (however, transactions with such service providers

are typically of small values); missing or incorrect data; double-counting with the trade in services

survey; misclassification of country that issued the payment card (i.e., residents of country A with

payment card from country B); large amounts of data that are ATM withdrawals and cannot be

identified. All ATM withdrawal are therefore assumed to be travel transactions.

10.31. For data on transactions made with domestic cards abroad, only credit cards are included

because the information on debit cards is not sufficiently detailed. Statistics Iceland receives total

figures for the usage of debit cards abroad, which confirms that the use of credit cards abroad is much

more common than the use of debit cards. Given that most of the debit card transactions are ATM

withdrawals, Statistics Iceland assumes that the entire amount of the debit card transaction data are

travel expenditures.

10.32. The data from the credit card companies includes the merchant category code (MCC) ID

name and number, which is linked to the EBOPS classification. While most MCC numbers are

manually examined, some, like hotels and restaurants, are automatically included in travel. E-

commerce data is excluded. The data also includes identification of the card type (i.e., individual or

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enterprise), which may be useful in identifying travel transactions (e.g., if an individual card is used to

purchase goods, it is assumed that these transactions are likely travel-related). The data also The data

can also supplement information on transportation and other business services collected on the trade

in services survey.

10.33. The challenges in using data on credit card usage abroad are the fact that MCC categorization

is imperfect and of unknown reliability; e-commerce transactions are often difficult to recognize; the

volume of different sales/service providers makes individual investigation difficult; transactions are

recorded in the payment card data at the time of purchase, not when the service is delivered,149 and

large amounts of data that are ATM withdrawals and cannot be identified. All ATM withdrawal are

therefore assumed to be travel transactions.

B.5. Mobile phone records

10.34. This Guide encourages compilers to consider employing the use of mobile phone applications

(“apps”) to collect information about mobile phone users’ movements and behaviors. Such apps can

be easily downloaded to users’ devices and can retrieve information to enable data analysts to conduct

very detailed studies of users’ movements and behaviors. It is advised that compilers clearly request

the consent of the mobile phone users before using such apps and describe how the data will be used

for official statistical purposes.

10.35. For all types of mobile phone data, compilers must take precautions to make the data

anonymous and check that confidentiality rules are being applied appropriately. Privacy concerns are

of critical importance and compilers should reassure users that the data will only be used for official

purposes and will be aggregated in order to maintain confidentiality. Again, as recommended in

chapter 2 of this Guide, legal acts on confidentiality of official statistics should be well-established.

10.36. Compilers will likely need to adjust the mobile phone data to correspond with the definitions

of official statistics. It is recommended that algorithms be developed to automatically organize the

data according to statistical definitions as much as possible.

10.37. It is further advised that the residency of a mobile phone user is determined by the residency

of the mobile operator associated with the user’s account.

10.38. Purpose and description. The use of mobile phones is widespread in many countries, which

enables statistical compilers to obtain data on location data (geographical coordinates in time) and

other important indicators about a mobile phone user and his or her activities.

10.39. Data gathered with the help of mobile phones can be divided into active and passive

positioning data. In the case of active positioning, the collector of the statistics contacts phone owners

and asks information about their location, themselves and their behavior(e.g. about their travel). In the

case of passive mobile positioning, data are automatically stored in the memory files of phone

operators or other recording systems.

10.40. Using mobile phone records for purposes of statistics on the international supply of services.

Both active and passive positioning data obtained from mobile phone records can be important

sources for statistics on the international supply of services. In particular, mobile phone records are

advantageous in the compilation of travel item and mode 4 services, as information on the country of

149 Timeliness is particularly an issue for cases in w hich accommodations are prepaid and when Icelanders

purchase fares online from foreign airline companie s using payment cards. Timeliness is less a concern with

regard to other travel expenditures.

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residence and current location of the mobile phone user facilitates the identification of international

travellers, and, possibly, providers of mode 4 services.

10.41. Active mobile positioning. In the case of active mobile positioning, information about the

location of a phone, the user, the travel behavior of the user, and/or provision of services, is found by

making special inquiries, which generally requires the consent of the individuals chosen to participate

in the study. Active positioning is related to surveys and software downloadable on smartphones.150

As a result, it is possible to obtain very accurate information about the movement, means of transport,

expenses, provision of services, and motivation of the chosen respondents. Active positioning data are

geographically accurate.151 Such detailed data enable data collectors to analyze mobility within the

destination, and to conduct market research of a particular region. More study is necessary on how to

engage with mobile phone users; the involvement with users could be limited to turning on GPS with

consent to providing answers actively on a regular basis. Those studies should cover the technical

possibilities of phone applications, their user-friendliness and the incentives for users to participate.

Of course, the treatment of the data should be transparent for those users providing the active mobile

phone data. Recruitment of mobile phone users for outbound travel could be more difficult and more

costly due to the different standards of foreign operators. Still, this area is a very important source of

gathering more detailed statistics for performing various studies on travel/tourism and the provision of

mode 4 services.

10.42. Passive mobile positioning. In the case of passive mobile positioning, statistical data are

obtained from secondary sources of mobile phone use, which are most often the phone use

information automatically recorded in the systems of operators, such as Call Detail Record (CDR),

Erlang, and Anonymous Bulk Location Data (ABLD), among others. The advantages of passive

positioning are the huge masses of data involving all phone users and the relatively cost-effective data

collection method. The shortcomings, however, are protection of the privacy of persons, the

difficulties in obtaining the data from operators and the lack of characteristics included in the data.

The main convention for defining the residence of persons traveling is by the residence of the mobile

operator related with him/her. Other conventions for any other statistical purposes can be introduced

as well. The use of passive positioning data in the area of travel/tourism is rapidly growing, because it

is difficult to get an adequate overview of the movements and mobility of people in the increasingly

mobile world with open borders.

10.43. Call Detail Record (CDR) is one of the most widely used sources among the passive

positioning data suitable for compilation of travel item as well as for tourism statistics. The data are

obtained from Data Warehouse or from the billing record of the mobile network operator’s system;

i.e., from the places where information is gathered about phone users from issuing invoices. The time

of a call, the location of a call, the duration of a call, the cost and other characteristics are recorded as

such information. Production of statistics from such data requires making the data anonymous and

standardized, as well as checking the data, because the privacy of people and business confidentiality

of operators need to be protected. CDRs are usually issued as impersonalized data, either aggregated

for certain types of user groups or pseudonymously with randomly generated IDs. Spatially, the CDR

data are usually issued with the accuracy of a network cell (the cell with its location is called the Cell

Global Identity - CGI). This level of accuracy suits well, for example, for generating the main

variables of tourism statistics and several data collection systems using CDRs were developed for this

purpose. The CGI is, however, not accurate enough for preparing detailed analyses of movements of

persons. For example, CGI can be used for identification of transit visitors in travel (airports and

seaports, main transit lines thru the country, etc.). Moreover, there is noise in the roaming data that

needs to be acknowledged, and travelers in border areas of some countries may pick up cells of

neighboring countries without physically entering the country.

150 Examples of such software are MySense and Posques.

151

Smartphone-based studies in this area commonly utili ze GPS resolution of the accuracy of 1-10 m

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10.44. A caveat on the use of mobile phone records is that some travelers who are in a country for a

period of time (e.g., less than a year) may purchase local subscriber identity module (SIM) cards for

their phones and thus not be covered through mobile phone records.

10.45. The methodology of preparing passive mobile positioning data requires adjusting the mobile

data to correspond with the definitions of official statistics. For example, the duration of a visit, the

number of nights spent and transit tourism are assessed on the basis of ordering single call activities,

with the uneven distribution of call activities in time and space posing a methodological problem. For

this reason, it is necessary to develop algorithms for organizing data, segmenting visitors and the

visits, for example.

Country experience: Estonia

10.46. The Bank of Estonia relies on mobile phone records for estimating travel and the Tourism

Satellite Account (see chapter 14.B.IV and chapter 16.A for mode 2). Estonia compiles the statistics

based on data from Positium Data Mediator, software developed by the Department of Geography of

the University of Tartu.

10.47. In Estonia, algorithms are developed for segmentation and cleaning of data available in the

Positium Data Mediator. For example, special methods are required for eliminating cross-border and

accidental roaming noise. In the preparation of the base models of inbound, outbound and domestic

tourism, Positium Data Mediator uses the data from Statistics Estonia and the results of the surveys

regularly ordered from TNS Emor for calibration. These results are used to prepare a base model of

data, which must be representative of various visitor segments and geographical areas and also take

into consideration the market shares of various operators and the ranges of the radio coverages of

various mobile networks.

10.48. Inbound tourism is determined on the basis of the log files of the roaming service of

operators. The travelers (phone-owners) that have arrived to the destination from abroad are divided

into visitors from different countries of origin on the basis of the registrations of the phones (so-called

resident countries of the tourist or nationality); the duration of a visit is measured by each phone on

the basis of the number of days at the destination when call activities were performed. Outbound

tourism is determined on the basis of the roaming log files of the phones originating from the

countries of origin. Visiting statistics by countries are found on the basis of the temporal and spatial

distribution of the call activities performed abroad; foreign visits are segmented according to the

requirements of statistics, if necessary. Comparison of call activities obtained on the basis in passive

mobile positioning data and data on accommodation nights in Estonia shows high correlation between

these two data sources (see Figure 10.1)

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Figure 10.1Comparison of call activities in passive mobile positioning data and accommodation

nights in Estonia (Positium LBS)

C. External party sources

C.1. Good practices in using external party sources

10.49. External party sources have some inherent limitations. While they can provide insight and a

different perspective than are available from other more traditional sources, compilers should be

aware of the unique challenges with using statistics compiled by other non-statistical entities.

10.50. Primarily, external party sources vary in terms of data quality and timeliness, which

ultimately depend on the quality of the statistical processes in place at the external party. It is

recommended that the compiling agency become as familiar as possible with the data sources,

collection methods, methodology, and statistical rigor of the external institution and document their

strengths and weaknesses. It is strongly recommended that the compiling agency contact the external

source directly to discuss these aspects in greater detail; to alert the data provider that its data may be

used for official purposes; and to open the lines of communication so that any changes in

methodology or timeliness can be transmitted to the compiling agency in a timely manner. Some

external parties may be willing to work more closely with the compiling agency in order to better

meet the official statistical requirements; however, even in this instance, the NSO should continually

monitor the quality of the data and be aware of the limitations and weaknesses.

10.51. The compiling agency should assess whether the data available from the external party is

helping to measure the trade of the service category of interest, or other types of statistics related to

the international supply of services. In many cases, the definition of the industry or other aspects

related to international supply of services will not match the official statistical definitions. Such

misalignments may lead to misinterpretations and misuse of the data. Again, it is strongly

recommended that the compiling agency learns all such definitions and methodological aspects of the

external party source.

10.52. Timeliness and frequency are often weaknesses of external party sources. The compiling

agency should be prepared for breaks in series, changes in methodologies, changes in survey sample

sizes, and complete extinction of the source. In particular, it is recommended that the compiling

agency develops plans for cases where there is a reasonable expectation that the external party

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source might substantially change or expire. It may be advisable to use an infrequent data source as

an input to a data model that estimates the value of the service transactions, or to interpolate missing

years or to fill other data gaps, rather than relying on the data source solely on its own.

10.53. Access to the data may also pose a challenge, especially if the external party typically

charges a fee for access. It is a good practice that the compiling agency contact the external party

source directly to request the best possible terms of use.

10.54. It is further advised that compiling agencies appropriately document all data sources in the

metadata, including in which years the data source was used, and to keep documentation of the

external party source, including historic data, revisions. methodological documents, communication,

and any user agreements.

C.2. Purpose and description

10.55. Compilers could make use of other external party sources, such as financial statements of

companies; reports of chambers of commerce; records of investment promotion agencies; records of

business associations; surveys conducted by other organizations; private databases; on-line search

engines; on-line travel booking sites; and data compiled by trading partners. In particular, studies and

research publications of public or private institutions that include relevant statistical information can

be resource- and cost-effective sources. Ministries also may conduct special studies on industries they

supervise and may conduct surveys for this purpose. Moreover, industry trade associations may

publish research studies on performance of the industry, particularly in international markets, as a

means of promotion. Such data sources could be useful for compilers as a means of identifying

enterprises involved in international transactions, updating the names and characteristics of businesses

in the SBR, validating survey results, and filling in data gaps.

C.3. Using external party sources for the purposes of statistics on the international supply

of services

10.56. National and international organizations that represent services industries often compile

registers of the enterprise members, including names, locations, and contact information. Such

information can serve as a source for updating and maintaining the service providers included in

business registers.

10.57. Such organizations may also survey their members for quantitative and/or qualitative

information on their operations, including domestic and international sales or market share, and

conduct market research to compile estimates or forecasts of sales. Quantitative information from

such studies can be used to validate or complement statistical survey results or to serve as a basis for

estimates when no other data are available.

10.58. National ministries associated with specific industries are also important sources of data and

can range from ministries of tourism and investment promotion to regulatory bodies on insurance,

health, and education. Such agencies may already be providing to the NSO more traditional

administrative data based on regulatory requirements. However, these agencies may also conduct

special research reports or one-time studies that can supply greater detail or cover a different industry

than its routine scope of work. Such data can be used to validate or complement other data sources.

10.59. Financial statements, annual reports, and profit and loss statements of enterprises can also be

a wealth of information for statistical compilers. Often such reports include information and data on

the firm’s international operations, sales, and market share by country or region. The level of detail

that is reported varies widely, depending on the country and type of enterprise. However, this source

should not be overlooked as a means of identifying enterprises involved in international transactions,

updating the BR, validating survey results, and filling in data gaps.

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10.60. Private database companies that maintain databases of financial, statistical and market

information on global companies and private consultant groups are also commonly used by statistical

institutions, either to complement or substitute other data sources. Such private databases are usually

accessible for a fee. Examples of such providers are Compustat, Dunn & Bradstreet, Amadeus

(Bureau van Dijk), Business Monitor, Deloitte and Insight Research Corporation, among others.

These databases can be good sources for updating and maintaining SBRs, as they typically provide

company names, addresses, telephone numbers, names of contact persons, enterprise size by sales

value or employee count, and other basic characteristics, including industry or market sector, market

share, or number of establishments. These private sources often conduct market research studies that

may include analysis of domestic and international sales, market share, actual values of sales, and/or

estimates or forecasts based on historic trends.

10.61. Finally, internet searches of individual company names, industry sectors, or trade groups are

an extremely efficient and cost-effective way of validating information in SBRs and survey results.

C.3.a. Country experience: Australia - legal services statistics

10.62. The Australian Bureau of Statistics (ABS) collects data for legal services my means of a

quarterly survey of resident Australian businesses (the International Survey of Trade in Services). The

ABS captures data from a broad range of respondents, but not a complete range as resource

constraints and collection difficulties restrict data coverage.

10.63. The data from the ABS survey is collected on a country/dollar value basis asking only for the

value of receipts and payments of total legal services. There is evidence that a significant percentage

of international trade in legal services is provided by consultants and sole traders. It is currently

beyond the resources of the ABS to cover and process such a potentially large number of additional

respondents. The true volume in resident/non-resident legal trade, therefore, can only be estimated or

modelled based upon this anecdotal evidence.

10.64. The legal services data currently obtained by the ABS on a quarterly basis is compiled solely

from the Survey of International Trade in Services. The final trade in legal services statistics are

published on a quarterly and annual basis, as part of the International Trade in Services series of

publications, and posted for general access on the ABS website.

10.65. The Australian Attorney-General’s Department in 1990 established the International Legal

Services Advisory Council (ILSAC). Amongst other tasks, ILSAC produces an annual Statistics

Survey on International legal trade. Unlike the ABS survey, the ILSAC survey is sourced from data

representing all four Modes of Supply. ILSAC also noted that when compiling data for international

legal trade, the ABS identifies earnings of overseas branches of Australian law firms as “returns on

investment” rather than “exports”, as the ILSAC survey does.

10.66. Initial results from the ILSAC Statistical Surveys showed that the ABS data were understating

the extent of international trade in legal services. Significant efforts have been made in recent years to

improve the quality of ABS data and as such, the ABS is in contact with ILSAC to better align the

data provided by both organisations. It is now possible to reconcile the differences which continue to

appear on an annual basis between data published by both the ABS and ILSAC. As the two surveys

become better aligned, the size of trade in legal services can be more accurately measured.

C.4. Bilateral or “Mirror” data

10.67. Exchange of statistics between countries (especially main partners) is seen as a particularly

relevant exercise for compilers of statistics on the international supply of services. However,

bilateral (or “mirror”) statistics should not be seen as a major data source on their own, but should

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rather serve as a reference for checking and adjusting collected data. In this connection, it should

be noted that due to differences in applied concepts and data collection/compilation procedures,

such “mirror” data should be consulted with caution and after necessary reconciliation. It is also a

well-known phenomenon that mirror statistics on the international supply of services often contain

asymmetries, due at least in part to coverage, sampling and methodological differences. An

investigation into bilateral asymmetries between the United States and Canada is presented below.

10.68. Mirror data could potentially be useful to collect information on Mode 4 number of

persons as "sending" (i.e., exporting) countries may be able to more easily collect information for

some categories (especially contractual-service suppliers and those travelling for negotiation

purposes) than for others (e.g., intra-corporate movements, self-employed migrants). The

"receiving" (i.e., importing) countries may have such information as well.152

C.4.a. Country example: Reconciliation of the U.S.-Canadian Current Account

10.69. The Canadian-U.S. current account reconciliation, which explains the differences between

the official bilateral statistics published by Statistics Canada and those published by the U.S. Bureau

of Economic Analysis (BEA),153 is undertaken because of the extensive economic links between

Canada and the United States. Reconciliation of the U.S.-Canadian current account has been

undertaken each year between 1970 and 2008, and periodically since 2008. The reconciled estimates

are intended to assist analysts who use both countries' statistics and to show how the current account

estimates would appear if both countries used common definitions, methodologies, and data

sources.154, 155

10.70. Differences occur in the official statistics of the U.S. and Canadian current accounts because

of variations in the definitions, methodologies, and sources used by each country. Some of the

differences are sometimes in components of the current account for which data are preliminary and

subject to revision; these differences may be reduced or eliminated when final data for these

components are incorporated.

10.71. The longstanding Canadian-U.S. current account reconciliation is among the leading

examples of the benefits of international data exchanges. As a part of the reconciliation process,

Canada and the United States have evaluated the accuracy of each other's statistics, and as a result,

each country now includes in its official statistics data that are provided by the other country. The

exchange of data between Canada and the United States for transactions such as trade in goods,

travel, passenger fares, Canadian and U.S. Government transactions, and some large transportation

transactions covers a substantial portion of the value of the Canadian and U.S. current account and

has eliminated some of the differences in the Canadian and U.S. official statistics. In addition, the

reconciliation process has identified areas where errors and omissions may exist helping each

country to target data improvement efforts.

152 More information on potential sources for mode 4, and by direction of movement (ingoing/outgoing), is

provided in table 11.8.

153 U.S. Bureau of Economic Analysis and Statistics Ca nada, Reconciliation of the United States-Canadian

Current Account, 2010 and 2011. http://www.bea.gov/scb/pdf/2013/01%20January/0113_unitedstates-

canada.pdf and http://www.statcan.gc.ca/pub/13-605-x/2013001/article/11772-eng.htm#n1.

154 A detailed article on the methodology was published by BEA in "Reconciliation of the U.S.-Canadian

Current Account" in the November 1992 Survey and by Statistics Canada in Reconciliation of the Canadian-

United States Current Account, 1990-1991. Statistics Canada also published a shortened version in the

December 1992 Canadian Economic Observer and in Can ada's Balance of International Payments, Third

Quarter 1992.

155 To better understand the differences in investment income, each country’s positions on bilateral foreign

direct investment and on some portfolio investment accounts are also compared during the exercise of t he

Canadian-U.S. current account reconciliation.

129

10.72. Although the U.S. and Canadian official statistics are reconciled and extensive exchange of

data take place between Canada and the United States, differences in the official statistics remain.

Complete substitution of the reconciled statistics for official statistics and complete exchange of data

are not feasible for several reasons. For some accounts, the protection of the confidentiality of the

source data bars the exchange of data. A few differences are attributable to different requirements

for integrating the international and national (domestic) accounts in each country.

10.73. To reconcile the official Canadian and U.S. bilateral current account statistics, the official

statistics are first restated to a common basis, that is, they are adjusted for definitional and

methodological differences; and then statistical adjustments are applied to reach the reconciled

values. The framework for restating the statistics to a common basis mainly follows the international

guidelines published in the International Monetary Fund's Balance of Payments Manual. The official

Canadian and U.S. statistics now largely conform to the international guidelines, but some

differences from the international guidelines, and between the Canadian and U.S. statistics, remain

because of data limitations, difficulties in determining country attribution, and differences in

classification. In addition the international guidelines can sometimes provide for more than one

acceptable treatment.

10.74. Definitional adjustments mainly reflect data limitations and differences in country

attribution. Methodological adjustments mainly reflect differences in classification.

10.75. Statistical differences reflect the use of different source data in the United States and

Canada, the difficulty in determining country attribution because of insufficient data, the

preliminary nature of some data (particularly for the most recent year), and the use of sample data

between benchmarks. For both the northbound (United States credit transactions and Canada debit

transactions) and the southbound (United States debit transactions and Canada credit transactions)

statistics, most of the statistical differences are in the categories of services other than transport and

travel and in the investment income accounts.

C.4.b. ECB/Eurostat - Bilateral data exchange – FDI network

10.76. The FDI Network is a joint ECB/Eurostat initiative, which has been developed in close

cooperation with FDI compilers from all Member States. Its aim is to tackle asymmetries in FDI and,

as a consequence, to improve data quality. To reach this purpose, the FDI Network facilitates a secure

exchange of information between national compilers on specific FDI transactions and positions.

10.77. The transmission and exchange of confidential data in the context of the FDI Network is

foreseen exclusively for statistical purposes and in particular for the purpose of increasing the quality

of the EU/euro area balance of payments statistics.

10.78. Transactions taken into account for a specific reconciliation round are related to transmissions

exchanged in a certain period. These transactions were introduced into the template and sent out by

Eurostat asking the FDI Network users to amend the information of those transactions where they

acted as an initiator or – in a second sheet - as a counterpart. The compiler Member State completed

the template for their transactions. A similar procedure is used for the reconciliation of positions.

10.79. In accordance with the provisions of the FDI Network Manual, Eurostat regularly monitors

the results of the reconciliation process of the transactions exchanged through Network. FDI

asymmetries can be analysed from two different points: at EU-28156 aggregate level using data

available from quarterly BoP, as well as annual FDI, and on a bilateral level using mirror FDI data for

156 Croatia is not included in the tables above (as be fore 1st July 2013).

130

those countries more actively using the FDI network. The analysis of the counterpart countries are

based on net figures reported by countries, while the transactions and positions exchanged true the

network are expressed normally in gross values. The asymmetries are calculated separately for inward

and outward flows/stocks. The tables indicate the decrease of asymmetries and the status of several

transactions within a period.

10.80. The bilateral exchange of data (flows/stocks) could improve the quality of transmitted data.

Reconciliation in the FDI network leads to a number of closed cases. When reconciliation cannot be

made, it is typically due to incorrect information received information from the company involved or

some methodological differences in Member States, particularly due to the use of different valuation

methods.

D. Linked microdata

D.1. Good practices in using linked microdata

10.81. In addition to the various data sources that have been discussed in this chapter and the

preceding chapters, it is important to note that the integration of two or more existing data sources can

also provide a lot of additional information relevant for the compilation of the international supply of

services, as is described in more detail in chapter 13. In order to facilitate such microdatalinking, it is

first advised that all economic entities are included in a SBR that serves as the central sample frame of

the statistical system.

10.82. Microdata are the observation data that may be collected on an individual statistical unit,

including an individual person, household, business or other entity.157 Examples of microdata may be

the name and location of a survey respondent; enterprise identification number from the BR;

information on the number and characteristics of employees of an enterprise; etc. Such microdata may

already be available from existing data warehouses within the NSO, or may come from other

administrative data sources or the other sources cited in this chapter. If microdata are being linked

across agencies or across different data providers, it is recommended that an aggregate list of the

entire population of individuals or enterprises from all sources are marked with an indicator of

whether it has been linked or not. A manual review of the entities that have not been linked may

reveal duplicates or other inconsistencies that can be resolved.

10.83. This Guide advises that compilers conduct a thorough review of enterprises with similar

names and multiple establishments, in order to identify the appropriate establishments to include in

the linking exercise and to avoid double-counting.

D.2. Purpose and description

10.84. Compilers may consider using microdata to link characteristics of reporting individuals and

enterprises in order to get a different perspective on a target population, to identify inconsistencies or

overlaps in the data, or sometimes to even fill data gaps.

Often microdata are not publicly released other than for officially-sanctioned research studies, which

typically involves a rigorous approval process.158

157 OECD glossary of statistical terms. http://stats.oecd.org/glossary/detail.asp?ID=1656.

158 See chapter 20 for a more detailed discussion of t he release of microdata.

131

D.3. Using linked microdata for purposes of statistics on the international supply of

services

10.85. Linked microdata on enterprises may prove most valuable in compiling foreign affiliate

statistics (FATS) and data on modes of supply. Namely, linking microdata on foreign ownership

indicators (available from the BR, company financial statements, or other industry sources) will help

to identify the target population for FATS surveys and service transactions through Mode 3.

Moreover, microdata on the characteristics of employees of enterprises that may indicate foreign

residence could also help in identifying these target populations in relation to mode 4.

10.86. Microdata on labor statistics and/or individuals’ residence will also help compilers in

identifying presence of natural persons for compiling supply of services through mode 4.

10.87. Linking microdata can also provide opportunities for the NSO to conduct special research

studies on different aspects of international supply of services which may be of particular interest to

the country, such as the characteristics of domestic firms engaged in trade in services; determinants of

imports of services; and effect of activities related to foreign affiliates and foreign direct investment

on the domestic economy, among many others.

D.4. Country experience: the United States

10.88. The U.S. Bureau of Economic Analysis (BEA) jointly engaged with the U.S. Bureau of Labor

Statistics (BLS) in a microdata-linking study of multinational enterprises based in the United States in

2011.159 The aim of the project was to uncover more about the geographic, occupation, and wage

distributions of employment by U.S.-based multinational enterprises s. While this linking study does

not directly relate to statistics on international trade in services, the methodology employed

demonstrates how such linking is possible and can open the door to future extensions and applications

in the area of FATs and statistics of trade in services by modes of supply.

10.89. The project combined firm identifiers from the BEA 2004 Benchmark Survey of U.S. Direct

Investment Abroad with BLS microdata on employment in establishments of these firms, for a pilot

group of the largest U.S.-based multinational manufacturing enterprises. BEA data on multinational

enterprises based in the United States were used to match a pilot group of U.S. parent firms of

multinational enterprises with their establishments appearing in BLS data. The pilot group consisted

of the largest 500 U.S.-based multinational manufacturers (by primary industry of the U.S. parent) in

the BEA’s firm-level data from the 2004 Benchmark Survey of U.S. Direct Investment Abroad. The

efforts at matching were based primarily on the names, locations, and employer identification

numbers (EINS)160 provided in this survey.

10.90. Identification of the establishments of firms in the pilot group were based on the BLS

Quarterly Census of Employment and Wages (QCEW), which collects information on total em-

ployment by month and total wage bills for all U.S. establishments covered in the Unemployment

Insurance program, as well as detailed information on the industry of main activity (at the six-digit

North American Industry Classification System (NAICS) level) and geographic location (at the

Census block level) for each establishment. These establishments were then matched with those

159 Elizabeth Weber Handwerker, Mina M. Kim, and Lowell Mason, “Domestic employment in U.S.-based

multinational companies,” Monthly Labor Review, October 2011.

http://www.bls.gov/opub/mlr/2011/10/art1full.pdf.

160 The Internal Revenue Service assigns the EIN, or Federal tax ID number, to identify a business entity. Most

large companies with many establishments report more than one EIN to the BLS Quarterly Census of

Employment and Wages. The one or two EINs that comp anies report to BEA in the Benchmark Survey of U.S.

Direct Investment Abroad generally match only a fra ction of these large companies’ establishments.

132

sampled in the BLS Occupational Employment Statistics (OES) survey, which provides data on the

distribution of their employees’ occupations and hourly wages.

10.91. The automatic matching efforts entailed matching EINs between BEA firm-level data and

BLS establishment-level data. BEA firm-level data contain only one or two EINs per firm, while BLS

establishment-level data contain one EIN per establishment, and the establishments of each firm may

report many different EINs in the BLS data. Thus, additional EINs for each firm were found by

matching firm names and addresses with the establishment names and addresses in the QCEW, as

well as by using enterprise family lists (lists of employers that operate under different names but are

part of the same enterprise) from other BLS programs, enterprise information in the Compustat

database, and other sources of data on firms.

10.92. However, such automated matching procedures are imperfect: some firms are matched with

unrelated establishments, while other firms appear to be matched with only a fraction of their

establishments in the QCEW. Accordingly, the lists of all establishments found through automated

matching were reviewed manually, and the establishments matched in error were removed. Then, the

QCEW was searched for additional establishments identified from enterprise Web sites, filings from

the Securities and Exchange Commission (SEC), and enterprise annual reports.

10.93. The firms identified in BEA surveys were considered to be “adequately matched” with BLS

establishment data if the total employment of all matched BLS establishments for a particular firm

was within 20 percent of the total employment reported in the BEA survey. The establishments of the

adequately matched firms were then linked with establishments in the OES survey data. Although a

large portion of U.S. employment of U.S.-based multinational manufacturing enterprises was found in

the QCEW and OES data, the missing employment was not random. The multinational enterprises

that were found to match with the BLS establishment data were different from the firms that remained

unmatched. For example, it was more difficult to match privately owned firms (which generally

disclose less information than publicly owned firms and, in particular, do not file annual reports with

the SEC) and firms that have undergone liquidation or reorganization since the survey date.

10.94. Furthermore, the sample design of the OES survey is intended to produce estimates at the

State and industry levels, not to provide estimates for the unusual subsample of multinational firms

examined in this study. The OES survey collects information from a sample of establishments rotating

in 3-year panels, with sample probabilities that vary by establishment size. The probability that a

larger establishment is included in the OES sample over the course of 3 years is greater than the

probability that a small establishment is included. This difference could affect the distribution of

occupations and wages in the subsample of establishments that are matched with multinational firms.

Consequently, the sample and nonsample variance of these estimates may be large.

10.95. Future research could be based on other information collected by BEA, such as the

magnitude and scope of foreign direct investment, the amount of intrafirm trade, the destination

countries for foreign direct investment, the enterprises’ degree of “global engagement,” and their trade

in services.

133

Chapter 11 Comparing Data Sources

11.1. Scope. This Guide discussed, in Chapters 6 to 10, a variety of data sources including

enterprise and establishment surveys, surveys on persons and households, international transactions

reporting system (ITRS), administrative records and other data sources. This chapter provides a

comparison of the advantages and disadvantages of these sources in compiling the various EBOPS

components, as well as FATS and modes 2 and 4 number of persons and trips. The advantages,

identified with a plus (“+”) sign, and disadvantages, identified with a (“-”) minus sign, are analyzed in

comparison tables by systematically addressing the coverage of transactions (C), the accuracy of

reporting (A), the timeliness and frequency (T), the relevance (R) and the burdens of reporting and

processing data (B) involved in each data source. In doing so, this chapter forms the basis for Chapter

13 where the integration of data from different sources is discussed.

A. Summary of good practices

11.2. Given the fact that the whole chapter is about comparing data sources and good practices for

the collection of five main services groupings (manufacturing services on input owned by others and

repair services, transport, travel, other services, government goods and services), FATS and the

modes of supply, the user is advised to read sections B (resident/non-resident trade in services), C

(FATS) and D (Modes of supply) for specific discussions of good practices in these area.

11.3. It is however generally considered a good practice that compilers, guided by the comparison

tables available in this chapter explore and compare the possibilities offered by the sources readily

available nationally and uses those that present an advantage (identified with a plus (“+”) sign),

relatively to other sources, for collecting the information for the supply of services element under

consideration. If no source is available yet for the topic under consideration, it is considered good

practice that the compiler carefully compares and assesses, which type of data collection or

combination of data collections would be most useful to set up in his national context, using the

guidance of the comparison tables in this chapter,

11.4. To assess the advantages and disadvantages of different sources with respect to their coverage

of the specific service category, the good some collection practices are marked with “++”in order to

illustrate that they, relatively, present most advantages. However, the reader should always be aware

that depending on national circumstances, the suggested source might not always be the best option

for all countries and in practice other existing sources or a combination of available sources can be

more suitable to collect the necessary information.

B. Comparison of data sources for resident/non-resident transactions

B.1. Preferred collection practices and comparison of data sources for manufacturing

services on physical inputs owned by others and maintenance and repair services n.i.e.

11.5. This guide suggests data on manufacturing services on physical inputs owned by others (and

corresponding goods), short, manufacturing services, could be collected most preferably through

surveys that are sent to the manufacturing companies which organise international production (for

imports of manufacturing services) and to processing companies/sole-proprietorships (for exports of

manufacturing services). It is important to explain and verify that respondents understand the scheme

of production networks in which they are involved. Surveys would also be an efficient source for

collecting information on maintenance and repairs n.i.e. (paying special attention to identify

separately maintenance and repairs related to construction and computer services given the definition

of these items).

134

11.6. ITRS is an alternative data source for these items. For manufacturing services it should be

noted that it only captures fees paid to processors, meaning that transactions without settlements (e.g.

between affiliated enterprises), may not be captured. Although customs data may also be used to

derive estimates on manufacturing services, it is widely recognised that the difference between the

value of imports and that of exports of processed goods in general does not represent the processing

fee. Customs data could be useful in identifying companies engaged in processing, could be used for

reconciliation exercises when processing fees are obtained from ad-hoc surveys or could also be

useful to complement other methods or alternatively, as input in a data model (by major type of

manufacturing). Some (regular) benchmark surveys may complement those to validate the model

outcomes. Customs data are also potentially useful for identifying goods being sent abroad for repairs

and maintenance. Although difficult information on fees could be requested in customs forms (see

BPM6). Given the tax concessions provided to some of the firms that may be involved in processing,

eventual statements to tax authorities may provide relevant information.

Table 11.1 Comparison of data sources for compiling manufacturing services on physical inputs

owned by others and maintenance and repair services n.i.e. (import and export)

Enterprise and Establishment

Surveys

(EES)

ITRS Administrative Records

(AR); customs data; Tax

concessions

Coverage

(C)

(++) cover enterprises engaged

in such activities

(-) may not fully cover full

population if threshold, in

particular for resident SMEs

(+) cover settlements related to

transactions

(-) does not cover all

settlements if threshold is

applied

(+) customs data could be

useful for identifying

companies involved in

manufacturing services or

processing and maintenance and

repair, but declaration forms

may need to be adjusted

(-) Most probably not possible

to ask for fee charged.

(+) information from Tax

authorities.

Accuracy in

Reporting

(A)

(+) may require explanatory

notes/follow up when

respondents do not fully

understand the scheme of the

production network

(+) if settlements of processing

fees occur between unrelated

parties

(-) misclassifications; may

include other (goods or

services) transactions between

processing company and its

client

(+) customs data: if gross flows

related to goods for processing

and repairs and maintenance are

properly identified (mainly to

adjust goods). Possible to ask

for fee

Timeliness,

Frequency

(T)

(-) often lag of more than one

month; quarterly frequency

(+) lag of a only few days;

monthly frequency

(+) lag of a few weeks; monthly

frequency

Relevance

(R)

(+) can collect detailed

information on manufacturing

and maintenance and repair

activities

(+) if different processing-

related transactions are

identified by separate

transaction/codes

(-) additional information

needed on corresponding

movement of goods to adjust

general merchandise

(-) difference between value of

imports and exports often does

not reflect manufacturing (or

repair) fee (e.g. holding gains

and losses)

Burdens of

Reporting and

Processing Data

(B)

(-)

(-) in case of difficulty of

grossing up

(-) especially for banks

reporting on behalf of

transactors

(+) once implemented

(+) if no additional work

(+) in terms of coordination

with data collecting units

(+) implies advantages and (-) implies disadvantages in terms of each element.

135

B.2. Good collection practices and comparison of data sources for transport

11.7. Enterprise and establishment surveys of resident and non-resident carriers are the main

sources to collect transport services data in many cases. Compilers are advised to make sure that the

survey is elaborate enough to cover most of the EBOPS categories related to transport services. An

additional difficulty - which applies to all sources for transport - lies with the information necessary

for compiling data based on balance of payments recording rules. 161 Compilers should also be aware

of potential difficulties in obtaining data reflecting the activities of non-resident carriers’ for freight

related services (i.e. imports of freight transport services- debits).However, in many cases transport

operators establish branches or agents in client countries who may then respond to surveys. For

economies with regulated modes of transport (air transportation being the best example) this may

even be more relevant. Alternatively countries can survey resident importers/exporters about their

transport expenditures paid both to resident and non-resident carriers.

11.8. Information on passenger transport services can also be obtained from traveller surveys

including questions on passenger fares of international transportation, although the same limitations as

encountered in travel (the capacity of the respondent to provide the right information, and the

compiler’s ability to know the population) would apply.

161 The reason for this is that, in line with BPM6 recommendations (para 10.78) all freight costs up to t he

customs frontier of the economy of the exporter are shown as incurred by the exporter and all freight costs

beyond the customs frontier of the exporter are shown as incurred by the importer (see chapter 14 and BPM6

CG 12.35).

136

Table 11.2 Comparison of data sources for compiling transport services (including postal and

courier services)

EES PHS ITRS AR; customs data

C <Im/Export>

(++) general enterprise

surveys cover transactions

by residents reporting on

their transactions involving

non-residents (less relevant

for passenger transport

imports)

(++) surveys on

agents/branches of non-

resident carriers cover

imports of residents (for

passenger transport debit

could be targeted to ticket

selling agents)

(++) specific surveys may

cover major resident

carriers providing services

to non-residents (for both

passenger and freight

transport credit)

(-) may not fully cover

resident small carriers

(partly +) household

surveys or border surveys

can cover transport service

(freight and passenger

fares) imports by residents

(-) border surveys can

provide information on

passenger fares incurred

by non-residents.

(+) cover settlements

related to transactions

(-) does not cover

settlements under

thresholds <Imports>

(-) may be difficult to

capture freight export and

import included in goods

(+) customs data could be

useful for identifying

freight costs

(-) do not cover transport

occurring between two

foreign countries

A (-) households/individuals

may not identify cost

components of package

tour; depends on sample

representativeness for

international transactions

(+)but compilers need to

pay attention to partner

country attribution.

(-) difference by types of

merchandise cannot be

fully reflected

T (-) often lag of more than

one month, quarterly

frequency

(-) lag of more than one

month, quarterly frequency

(+) lag of only a few days,

monthly frequency

(+) lag of a few weeks,

monthly frequency

(+) can be designed so that

relevance is ensured

(+) can be designed so that

relevance is ensured

(-) recollection of

information may be

approximate

(-) cannot easily identify

complex transactions

(-) typically cannot

identify freight costs

B <Reporting>

(-)

(-) in case of the difficulty

of grossing up

(-)

(-) in case of the difficulty

of grossing up

(-) especially for banks

reporting on behalf of

transactors

(-) in terms of aggregation

of micro data

(+) once implemented

(+) if no additional work

(-) in terms of aggregation

of micro data or

coordination with data

collecting units

(+) implies advantages and (-) implies disadvantages in terms of each element.

11.8. ITRS may cover most exports and imports of transport services categories, but may not

properly distinguish freight exports under fob contracts where the transporter is a resident, and

imports of freight transport under c.i.f. contracts, as the transport value is usually included in the value

of merchandise. In these cases, compilers need additional information to estimate the imports of

freight transport services. In addition, when using an ITRS, compilers should pay attention that the

country of operations may be different from country of registration or residence of the owners

(especially important in marine shipping).

11.9. Administrative records such as customs documents could provide useful information for

modelling freight costs, as long as they include information about the commodity traded, weight, the

origin and destination, and the mode of transport. Obviously, this also depends on the information

137

available about the carrier involved. For example, administrative records may not have information on

transport costs by type of merchandise. They also will not be helpful for transport of cargo or

passengers occurring between one foreign country to another foreign country by a resident

transporter, and administrative records might also be a weak source to measure transactions related to

auxiliary transport services (such as loading containers, storage or air traffic control).

B.3. Good collection practices and comparison of data sources for travel

11.10. Travel related transactions are unique in comparison with other services in that individuals

are involved systematically in the consumption of the related products. The most efficient way to

collect data from those traveling is therefore through surveys of persons or households where samples

are asked to report information on their spending, while outside their home country. However, there

are certain limitations to such surveys. The first issue comes from the capacity to reach relevant

households/persons, notably non-residents at the time they leave the country. Reaching residents

when they return to their home country is also a difficult task but they can be inquired later (i.e.

through household surveys).

11.11. Secondly, respondents may not have a perfect idea of all their expenses made during their

travel especially if they have to fill the survey while they are on their way to leave the country. Some

expenses could have been paid well in advance such as the hotels or some transport. Expenses

engaged in the context of business travel could be paid or reimbursed by its enterprise (in some cases

he/she may even not know the exact value of the service transactions paid by his employer).

11.12. ITRS could cover payments by resident and non-resident travel agencies as well as large

payments for travel. Payments by travel agencies may include expenses on hotels, domestic transport

and meals during the travel. Transaction data from foreign exchange bureaus could also approximate

travel expenditures, although such data could contain non-travel transactions. Another potential

weakness which can be important in the context of travel is that settlements and service delivery may

not occur in the same time period.

11.13. Other data sources, such as payment and bank card (credit and debit) transactions, could also

be explored. These sources are not perfect, as purchases with credit card or withdrawals with debit

cards could have other purposes than travel spending. Therefore, the use of further information

relating to the credit and debit card transactions should be explored, such as the merchant code and

the information concerning the point of sale, in order to identify the relevant travel transactions.

Compilers should be aware that persons travelling do not always use a card as a way of payment but

may use cash (or transactions may be paid by a third party). However, payment and bank card

information might be very helpful to establish trends and geographical breakdowns and it offers a

much larger sample than any survey on persons or households likely can provide. In the context of

personal and household surveys, administrative records (including information from entry/exit cards)

as well as mobile phone records, often the information is combined in a model to derive travel

information.

138

Table 11.3 Comparison of data sources for compiling travel

EES PHS ITRS AR ODS

(+) cover major

resident suppliers,

e.g., travel agencies,

hotels, hospitals,

education facilities

(+) potential source

for business travel

(-) do not cover non-

resident suppliers

(++) border surveys

capture expenditures

by non-residents

(++) border or

household surveys

capture expenditures

by residents

(+) cover settlements

by resident and non-

resident travel

agencies

(+) capture large

payments

corresponding to

travel expenditure

(+) data of foreign

exchange companies

cover most foreign

exchange

transactions by

individuals if not

paid in advance

(-) does not capture

travel payments

below threshold (as

travel payments are

small)

(-) does not cover

settlements under

thresholds

registration of

immigration office

(including E/D

cards, border

counts), can be used

for identifying

number of persons

crossing borders;

official records may

be used for students,

medical patients

(-) possibility of

abrupt suppression

of sources

(+) payment and

bank card data cover

most payments

(+) partner country

data may be used as

supplementary

source.

(+) mobile phone

records can be used

for identifying both

inbound and

outbound travellers

(+) if respondents

fully understand the

residence of the

customers

(-) possibly depend

on unrepresentative

samples and

frequency of survey

(-) members of

households may not

identify cost

components of

package tours

(-) recalling errors

might exists for

household survey

(-) payments and

services may not be

in the same period

(-)foreign exchange

data do not represent

entire expenditure

and can include non-

travel related

payments

(-) depend on

immigration control,

but some countries

may not identify

relevant population

(-) credit/debit card

data can include

non-travel related

payments

T (-) lag of more than

one month, quarterly

(-) uncovered

periods may exist

when the survey is

not frequently

conducted

(-) lag of more than

one month (border

surveys more

timely), quarterly or

annually

(+) lag of a few days,

monthly

(+) lag of a few

weeks, monthly

(+) lag of a few

weeks, monthly

R (+) can incorporate

breakdown by

products partially

(-) recollection of

information may be

approximate

(+) can incorporate

detailed questions,

e.g. expenditure by

products

(-) cannot be

designed easily so

that details of travel

expenditures are

correctly collected

(-) cannot be

designed easily to

identify relevant

population

(+) if non-travel

amounts can be

excluded

B <Reporting>

(-)

(-) in case of the

difficulty of grossing

(-) response-rate of

household surveys

(-) for border

surveys in operation

costs

(-) if grossing up

survey results is

difficult

(-) especially for

banks reporting on

behalf of transactors

(+) once

implemented

(+) if no additional

work

(+) in terms of

coordination

(+) if no additional

work

(+) in terms of

coordination

(+) implies advantages and (-) implies disadvantages in terms of each element.

139

B.4. Good practices and comparison of data sources for other services162

11.14. For most of the other services, the guide suggests enterprise/establishment surveys could

provide a large share of sources for estimates. The advantage of these surveys is that they could be

designed to collect specific information corresponding to the compilers’ needs.

11.15. Surveys are however costly to process, and are also costly for the respondents as they have to

train employees to complete questionnaires. This is particularly true for transactions in services which

are difficult to extract from accounting documents. Increasing the response burden to small entities

could be counterproductive as it could affect the interest of these small entities to respond to other

surveys for which the presence of these entities is more important.

11.16. To improve the efficiency in data collection, enterprise/establishment surveys could be

designed to target a specific activity or a specific industry in particular for exports. In certain cases

this may also be relevant for imports of services (e.g. affiliated companies, activities for which

outsourcing/offshoring of activities may be important). Respondents could then be asked to provide

more details for services activities in which they are likely involved and less details for other services

where they expect to have negligible impact. In addition it is important to note that collecting

representative data for imports of services may be more difficult than for exports as any resident

entity (large or small) can import services. However, as indicated above, a number of factors could be

used to define those enterprises/establishments which are more likely inclined to be big importers of

services.

11.17. As for any other survey, the degree to which a sample is representative of the population is a

key indicator in the quality of the results. Compilers should take advantage of all other available

sources of data to supplement and validate survey results, and to reduce processing costs and

reporting burdens.

11.18. ITRS has the great advantage of providing a larger coverage than what enterprise or

establishment surveys could do. ITRS comes with a strong degree of obligation for the respondents to

provide the information requested. ITRS data may require low compiling costs, as the compilers can

concentrate their efforts and resources on items that are not sufficiently covered. However, in some

cases, it might be difficult to incorporate details, e.g. EBOPS, in reporting forms.

11.19. Administrative records cover a large part of transactors but may not be sufficient for all

services categories. A promising source in this respect are the tax records which include the value of

services sold or purchased to or from non-residents (Value Added Tax for services) as well as the

location of the service transaction. This information can be particularly useful to identify service

traders. The advantages of these records are their low costs and their timeliness, as well as

completeness (Tax or Finance Departments may have greater powers to convince respondents). The

drawback is that since the main purpose of this source is not to produce statistics, the validation of the

results might not be adequate for the compilers’ needs, and also the compiler has no control over

changes in (or even abolishment of) the data source by the Tax authorities.

162 Excluding manufacturing, government goods and services n.i.e., transport services, and travel.

140

Table 11.4 Comparison of data sources for compiling other services (excluding manufacturing

services on physical inputs owned by others, maintenance and repair services n.i.e., and

government goods and services, n.i.e.)

EES

SPH

ITRS

ODS

(++) surveys cover

major resident

enterprises

(-) may not fully

cover resident

small enterprises;

may be difficult to

ensure

representativeness

of imports data

(+)can cover internet

transactions (e.g.

consumption of

software, audio-

visual products)

(+) Can collect

information on

persons physically

present to provide

services (health,

cleaning)

(+) (targeted) labour

force survey can

cover mode 4

persons supplying

services abroad

(+) Household

survey can cover

self-employed

residents supplying

services through

mode 1

(+) cover

settlements related

to transactions

(-) does not cover

settlements under

thresholds

(+) if transactions can be

identified for some specific

sectors

(+) Tax records can help

identify service traders and

may include the value of

services sold or purchased

to or from non-residents.

(+) data on financial

market and institutions are

useful complementary

sources for estimating

insurance and financial

services

A (+) (-) recollection of

services consumed

through internet may

be approximate

(+)if settlements are

occurring between

unrelated parties

(-) misclassifications

(+) (+)if resident/non-resident

transactions separately

identified

(-) lag of more than

one month,

quarterly

(-) lag of more than

one month, quarterly

(+) lag of a few

days, monthly

(+) lag of a few weeks,

monthly

(+) data are provided

timely and frequently

(+) can incorporate

detailed questions

relatively easily,

e.g. complex

transactions, such

as construction.

Could also be

tailored to target

specific activities,

(+) Can be designed

so that relevance is

ensured.

(+) all the resident

non-resident

transactions can be

captured once the

system is designed

properly

(-) for long term

construction projects

can be difficult to

establish the

location from which

work is conducted

(-) mapping may be

difficult as not designed

for statistical purposes

(-) mapping may be

difficult as not designed for

statistical purposes

(-) in particular for

imports

(-) in case of the

difficulty of

grossing up

(-) large samples to

ensure

representativeness

(-) in case of the

difficulty of

grossing up

(-)especially for

banks reporting

indirectly on behalf

of transactors

(+)once

implemented

(+) if no additional work

(+) in terms of

coordination with data

collecting units

(+)

(-) if statistical techniques

need to be used

(+) implies advantages and (-) implies disadvantages in terms of each element.

11.20. Surveys and the ITRS cannot be used to directly compile some services such as FISIM or

insurance services which need supplementary information and require models to be generated.

However they could provide important partial information for the measurement of these service items

(e.g. insurance payments). Commercial databases on financial institutions could also be useful for

these items if they contain sufficient detail. For construction, surveys may provide more detailed and

relevant data than the ITRS (see also Chapter 8).

11.21. For some specific detailed service categories, surveys on persons and households, which are

primarily used to collect socio and demographic information, could be useful. For example, although

normally small in comparison with enterprises or establishments transactions, purchases of products

downloaded online by individual consumers (software or audiovisual products) or commissions paid

141

directly to non-resident brokers by individuals directly buying or selling securities abroad would most

likely be covered only through such surveys. (see chapter 7)

B.5. Good practices and comparison of data sources for government goods and services n.i.e.

11.22. Similarly to travel, government goods and services n.i.e. are transactor-based (i.e. government

units supply services or purchase goods or services). Compilers should use administrative records for

the majority of services supplied by government units. Administrative data could also be used to

capture data on expenditures by government units abroad, as well of staff (e.g. by obtaining data on

their wages to derive an estimation of their expenditure). For some components, such as goods and

services acquired by government units, by staff and their dependants working in foreign embassies

and military enclaves (for example diplomats or military personnel), these transactions could be

obtained through surveys of the units. For staff and their dependants surveys could be targeted

towards embassies. For example, these could include questions on the number of diplomats and other

government employees, and their earnings, to estimate expenses. ITRS if well designed could capture

expenditures by government units; however it could be difficult to capture transactions with foreign

government enclaves located in the reporter’s economy. In addition, it cannot be used to capture

expenditure by diplomats and their dependents.

Table 11.5 Comparison of data sources for compiling government goods and services n.i.e.

Surveys ITRS AR ODS

C <Import>

(+) surveys (less likely) on

own country’s

governmental agencies

cover goods and services

acquired from non-

residents

(-) surveys on foreign

embassies cover goods and

services consumed by non-

resident

(+) cover settlements

related to transactions

(-) does not cover

settlements under

thresholds

(++) the Central Bank

dealing with international

settlements of the central

government may provide

comprehensive data or

Administrative records

from Ministry of Foreign

Affairs

(-) transactions in kind are

not covered

(+) budget data and

statements of government

accounts provide

information on costs of

government services

A (+) if sufficient responses (-) can include payments of

other goods and services

(+) (-) budget data are mere

assumption

T (-) lag of more than one

month, quarterly

(+) lag of a few days,

monthly

(+) lag of a few weeks,

monthly

(-) publication of

statements not timely

(+) can incorporate

detailed questions (e.g.

earnings)

(+) all the resident non-

resident transactions can be

captured once the system is

designed properly (-)

difficult to capture

transactions with foreign

governments’ enclaves

located in the reporters

economy

(-) Cannot capture

expenditure by diplomats

and their dependants.

(-) cannot be designed so

that necessary data can be

identified

(-) cannot be designed so

that necessary data can be

identified

(-)foreign embassies may

not report

(-) if estimation is needed

(-)especially for banks

reporting on behalf of

transactors

(+) once implemented

(+) very low additional

costs

(+) in terms of

coordination

(+) very low additional

cost

(-) if estimation is needed

(+) implies advantages and (-) implies disadvantages in terms of each element.

142

C. Good collection practices and comparison of data sources for FATS

11.23. For FATS, notably the information on services provided via mode 3 (commercial presence),

enterprise/establishment surveys are the most useful source of information. As noted in chapter 6, an

understanding of the FDI framework provides a strong basis for the establishment of the FATS

universe; key FATS variables could even be incorporated into existing FDI surveys. Administrative

records or commercial database on foreign affiliates are also useful but their forms and questionnaires

cannot be easily designed to provide data useful for statistical and analytical purposes. Thus, they

could rather be used as supplements to the survey on foreign affiliates.

11.24. ITRS, which provides strong sources for resident/non-resident transactions, is not necessarily

useful for compiling FATS, because ITRS only captures settlements between foreign affiliates and

residents, and such information does not measure the activities of foreign affiliates (including the

provision of services).

Table 11.6 Comparison of data sources for compiling inward and outward FATS

ODS

Inward FATS

C (++) survey used to collect

information on a compiling

economy's business structure,(

identifying the foreign-controlled

population of firms, as well as the

country of the UCI)

(++) (key) FATS variables can be

incorporated in FDI inward surveys.

(++) dedicated inward FATS surveys

(-) may be difficult to fully cover

resident SMEs

(+) business registers, tax returns or

regulatory reports cover (most)

resident enterprises.

(+) customs data for the trade

variable, but through linking

exercises

(+) industry associations, commercial

databases, e.g. financial statements of

major enterprises, could be useful

(+) surveys conducted outside the

main statistical program such as by

sector specific ministries (e.g.

research and development surveys)

(-) Partner country data. However

level of detail likely small for use,

and care should be taken over the

interpretation of concepts

Outward FATS

(++) key FATS variables can be

incorporated in FDI outward surveys.

(++) dedicated Outward FATS

surveys

(-) may not fully cover foreign

affiliates of resident SMEs

(+) business registers, tax returns or

regulatory reports could be used to

identify if residents have affiliates

abroad, and use relevant information

if included in records.

(+) industry associations, commercial

databases, e.g. financial statements of

major enterprises

(+) surveys conducted by specific

ministries (e.g. research and

development surveys)

(-) partner country data, However

level of detail likely small for use,

and care should be taken over the

interpretation of concepts

Inward and outward FATS

A (+) (+) (+)

T (-) lag of more than one month,

quarterly

(+) lag of a few months, annually (+) lag of a few months, annually

R (+) can incorporate detailed questions

(-) cannot be easily designed for

statistical purpose

(-) cannot be designed for statistical

purpose

B <Reporting>

(-) FDI surveys: portion of FDI firms

are not part of FATS universe and

FDI surveys may be conducted on a

quick turnaround whereas FATS data

are usually collected on an annual

basis. <Processing>

(-) in case of difficulty in grossing up

(+) if no additional work

(+) in case of the need of

coordination with data collecting

units

(+) no additional costs

(-) in case of the need of statistical

techniques to use data

(+) implies advantages and (-) implies disadvantages in terms of each element.

143

D. Preferred collection practices and comparison of data sources for mode 2 and 4

numbers of persons

11.28. Table 11.7 and 11.8 provide an overview of the different sources from which the number of

modes 2 and 4 trips and/or persons can be derived, as well as some of their characteristics both from

the perspective of the sending (outgoing individuals) and receiving (incoming individuals) country.

Compilers should carefully evaluate how residence is defined in their country, be aware of the laws

and regulations in place for migration and trade in services, and assess how this can be used in a

statistical context.

11.29. Table 11.7 on mode 2 movements of persons show that the sources of interest would most

likely be the same as some of those used for the collection of travel information. ITRS cannot capture

such information, but household surveys and border surveys can capture information on outgoing

individuals travelling for personal or business reasons. Often these surveys will need to be elaborated

to identify the travel motive (business or personal reasons). Labour force surveys and enterprise

surveys constitute appropriate sources to capture the number of outgoing persons travelling for

business reasons. For incoming mode 2 persons, specific surveys targeting students, medical

personnel and tourists could be used as well as border surveys which can be conducted as persons

leave the country. Administrative sources like border counts or entry and departure cards can be used

to get a first and timely estimate of the number of individuals leaving or entering the country to

consume service; but compilers should be aware that it might be difficult to add supplementary

questions to these sources. Often the data will need to be combined, in particular for compiling

breakdowns, to obtain relevant data on the number of mode 2 movements/persons, e.g. through the

use of data models using numbers from border counts E/D cards and information from border or

household surveys.

11.30. Table 11.8 breaks down the categories of mode 4 persons into four categories: employees

and self-employed contractual services suppliers, intra-corporate transferees/foreign employees of

foreign affiliates and service sellers.

11.31. Regarding mode 4 types of persons, enterprise surveys (i.e. trade in services, structural

business or general enterprise surveys) constitute an important source both for incoming and

outgoing employees and of self-employed providing services under a contract (i.e. contractual

service suppliers). Surveys are particularly relevant given that they can be specially tailored, in

particular in the case of trade in services surveys. Inward FATS surveys, if they include variables

measuring exports and import of services of the foreign affiliate could possibly also include

information on the persons (and their numbers) who provide these services as employed

contractual service suppliers. For outgoing persons, outward FATS surveys may provide

information on employees on service contract working in the affiliate located abroad. The number

of intra-corporate transferees/ foreign persons directly recruited by affiliates and possibly service

sellers could also be captured through inward and outward FATS surveys. In particular, outward

FATS surveys could allow the identification of employees of the parent company who work in the

affiliate as intra-corporate employees.

11.32. As in the case of mode 2 persons, border and household surveys can also constitute an

interesting source both for all types of incoming and outgoing employees and self-employed mode

4 persons. Information regarding residence and identification of the employer-employee

relationship of the individuals will be crucial as household surveys only cover resident persons.

Finally, as for mode 2, the data will most probably need to be combined, in particular for

compiling breakdowns, to obtain relevant data on the number of mode 4 movements/persons, e.g.

through the use of data on characteristics sourced from surveys of persons or households,

combined with counts of those crossing borders. Use of data from partner countries may also be

relevant, in particular that it may be easier to capture the relevant information for sending countries.

144

Table 11.7 Comparison of data sources for compiling mode 2 movements of persons

Sources of data

EES PHS AR ODS

(+) enterprise surveys can

include questions on

individuals travelling on

behalf of their employer.

(+) surveys targeting

tourism, education or

health related

establishments can include

questions to non-residents

to whom services were

supplied.

< outgoing>

(++) household surveys

can capture information on

individuals travelling

(++) labour force surveys

can capture data on

individuals travelling on

behalf of their employers

(i.e. in the context of

business trips)

(++) border surveys

provide information

(mainly on characteristics)

of persons travelling.

(-) some adjustments to fit

both tourism and trade in

services concepts needed

(-) sample size might need

to be increased

< incoming>

(-) most likely not relevant

in case of household,

persons and labour force

surveys

(++)border surveys provide

information (mainly on

characteristics) of persons

travelling (often as they are

leaving)

(-) some adjustments to fit

both tourism and trade in

services concepts will be

needed

(-) sample size might need

to be increased

< outgoing>

(+)border counts, E/D

cards or other types of

immigration records can be

used as first estimates of

number of mode 2 persons

leaving the country to

consume services

(+) border counts, E/D

cards or other types of

immigration records can be

used as first estimates of

number of mode 2 persons

entering the country to

consume services

(+) mobile phone records

can be used for identifying

both inbound and outbound

number of persons

travelling

(+) partner country data

may be used as

supplementary source.

A (+) for incoming if

respondent fully

understands the residence

of the customer

(-) depend on

unrepresentativeness of

samples and frequency of

survey

(-) time lag of more than

one month, quarterly

(-) time lag of more than

one month, quarterly

(+) time lag of a few

weeks, monthly

(+) lag of a few weeks,

months

(-) for partner data

(+) can be designed so that

relevance is ensured

(+) can be designed so that

relevance is ensured

(

)

cannot be easily

designed/modified to fit

statistical needs

(-) possibility of abrupt

suppression of sources

(

) for partner data need to

ensure that residence etc. is

compatible with national

definitions

B <Reporting>

(-)

(-) in case of the difficulty

of grossing up

(-)

(-) in case of the difficulty

of grossing up

(+) low costs

(+) in terms of aggregation

of micro data and re-use of

existing data

(-) coordination with data

collecting units

(+) if no additional work

(+) in terms of coordination

(+) implies advantages and (-) implies disadvantages in terms of each element.

145

Table 11.8 Comparison of data sources for compiling mode 4 persons/trips by category of

mode 4

EES SPH AR ODS

Coverage (C)

"Contractual service suppliers (Employees, Self-emp loyed) and Intra corporate transferees"

< incoming persons>

(++) trade in services, structural

business, or general enterprise surveys

(++) inward FATS surveys (for

imports of services of foreign

affiliates, i.e. incoming persons to

provide services to foreign affiliates),

Can also identify intra-corporate

transfers where employment

relationship is transferred to resident

affiliate

(++) trade in services, structural

business, or general enterprise surveys

(++) inward FATS surveys (for

exports of services of foreign

affiliates) Can also identify intra-

corporate transfers where employment

relationship is transferred to non-

resident affiliated unit

(+) outward FATS surveys: for

outgoing persons going to supply

services to non-resident affiliates.

Can also identify intra-corporate

transfers where employment

relationship is transferred to non-

resident affiliated unit.

(+) border surveys

whether when

entering or leaving the

country, to capture

information on

characteristics of

those crossing borders

(-) household/labour

force survey or

population census to

capture information

on characteristics of

those crossing

borders: in general

non-residents are not

covered.

(+) border surveys

whether when

entering or leaving the

country, to capture

information on

characteristics of

those crossing borders

(+) household/labour

force survey or

population census to

capture information

on characteristics of

those crossing

borders, if remain

residents.

(+) E/D cards for

rough estimates

(+) work

permits/visas

/immigration records

(+) legislation

implementation

(-) registers of

persons do not cover

non-residents.

(+) registers of

persons if remain

residents.

(+) commercial

registers(+)

legislation

implementation

(-) for incoming and

outgoing only if

coverage correspond

to MSITS2010

definitions.

<incoming and outgoing

persons>

(++) surveys covering

statistical needs of other

domains, such as surveys

of a sectoral ministry (legal

services, R&D, education,

health)

(+) partner country data,

in particular for receiving

countries

Services sellers/commercial presence negotiations

(++) trade in services, Structural

business, or General enterprise

surveys

(++) possibly inward FATS surveys

<incoming and

outgoing persons>

(+) Border surveys

can cover information

on services

sellers/commercial

presence negotiations

whether when

entering or leaving the

country

<incoming and

outgoing persons>

(+) E/D cards

(+)visas/immigration

records

(-) only if coverage

correspond to

MSITS2010

definitions.

Accuracy in Reporting (A)

A (+) in particular trade in services and

FATS surveys; but requires clear

explanatory notes (in particular to

clearly define mode 4 categories).

(+) for

border/passenger

surveys (but with

limited details)

(+)for outgoing for

household/labour

force surveys and

population census

(-) for incoming for

household/labour

force surveys and

population census

(+) (+)

146

(+) implies advantages and (-) implies disadvantages in terms of each element.

E. Country experiences

11.33. For compiling statistics on the international supply of services, most countries face the

challenge of having to rely on several sources with different coverage. The data collection is often

done in a context of scarce resources and having in mind the necessity to limit response burden.

Therefore the compilers need to make best possible use of available sources. The following

examples illustrate some country practices in dealing with the challenge of having to use and

compare characteristics of different data sources in order to collect relevant information.

E.1. Country experience: Canada

11.34. For the majority of the statistics on services transactions, apart from travel and transport

services, Canada uses a specific survey on trade in services and several industry-oriented surveys.

These enterprise/establishment surveys are supplemented by administrative data recording non arm’s

length transactions with non-residents. Each source has its own coverage and its own collection of

service statistics which are not necessarily equivalent to EBOPS. However, as resources are limited

and as the reduction of response burden is an important objective for the Canadian compilers, there is

a necessity to use several sources to produce the best possible estimates.

11.35. Canada’s Industry-oriented surveys collect different information on revenues and expenses by

enterprises/establishments for specific industries. These surveys offer a broad coverage of the service

industries but the level of detail of the collected information is limited. These surveys are therefore

complemented by a specific survey on International Transactions on Commercial Services (BP21S)

targeting 3500 enterprises and collecting information for 32 categories of services. Transactions are

Timeliness, Frequency (T)

T (-) lag of more than one month,

quarterly

(-) uncovered periods

may exist when the

survey or census is

not conducted on

regular basis

(-) time lag of more

than one month,

quarterly

(+) time lag of a few

weeks, monthly

frequency.

(-) for partner data

Relevance (R)

(+) can collect detailed information on

contractual service suppliers

(employees, self-employed) and intra

corporate transferees, in particular for

trade in services survey which can

collect detailed information on

number of persons in addition to

values. Also useful for intra-corporate

transferees in particular FATS surveys

(-) for self-employed outgoing, only if

covered (i.e. threshold)

(+) all sources can be

designed so that

relevance is ensured.

(-) cannot be easily

designed/modified

(-) for incoming and

outgoing, for all

sources only if

coverage of

categories close to

MSITS2010

definitions

(-) possibility of

abrupt suppression

of sources

(+) can be designed so that

relevance is ensured

Burdens of Reporting and Processing Data (B)

(-) in particular need to keep track of

additional information which may be

stored in other departments (e.g.

human resources)

(-) in case of difficulty of grossing up.

(-) may need to

increase samples

substantially

in case of difficulty of

grossing up.

(+) if no additional

work

(-) in terms of

coordination

(-) keep track of additional

information stored in other

departments (e.g. human

resources)

(-) in case of difficulty of

grossing up

147

reported by country of trade as well as with the relation with the trade partners (either related or not).

The accompanying explanatory notes should in principle improve the quality of the responses.

11.36. Compared with enterprise/establishment surveys, administrative data provide, in principle, a

better coverage as all Canadian legal entities are required to fill the tax form if their total transactions

(not only in services) with their foreign related entities are above C$1 million. For example, for the

year 2010, more than 12,000 entities have filled that tax form and half of them have reported service

transactions. The tax form supplies transactions by name and country of the non-resident entities.

11.37. However, this tax form is limited to transactions with foreign related parties. That limitation

virtually eliminates Statistics Canada’s capacity to use this administrative information as a “data-

replacement” source. In other words, the administrative data could not completely replace survey

data. Furthermore, several service categories are aggregated on the form to simplify the work of the

respondents. Very few definitions come with the tax form which may lead to errors or

misinterpretations by the respondents.

11.38. The files provided with annual administrative data are updated twice a year. As it is an

external source, less quality control could be applied on the information provided. For example, if no

transaction is reported for a certain entity, the reason could be absence of transaction but the

transaction could also not be processed yet. The main purpose of this tax form is not to monitor

transactions in services. Thus, verifications by tax authorities are usually done at a more aggregated

level so transactions for the same unit could be reported under one activity in one year and under

another activity the following year without further verification.

11.39. More information on Canada’s Industry oriented surveys and the more specific International

Transaction in Commercial services survey is provided online.

E.2. Country experience: Japan

11.40. Japan uses ITRS as a primary data source for compiling trade in services. However, as

some transactions cannot be captured through ITRS, various data sources have been implemented to

supplement ITRS. Other data sources include enterprise surveys for specific business based on the

Foreign Exchange and Foreign Trade Act, administrative source, and data provided by private

institutions. Uses of data sources other than ITRS for compilation of trade in services are summarized

in the Table below. More detail of Japan’s experience is given in the online version of the Compiler’s

Guide.

148

Table 11.11 Japan’s sources* of trade in service items

Source data

credit debit

Sea transport ITS, ITRS ITS, ITRS, trade statistics, other

sources

Air transport

ITS, ITRS

ITS, ITRS, trade statistics, other

sources

Other transport ITRS ITRS

Travel Border surveys, AS, ITRS, other

sources

Household surveys, AS, ITRS,

other sources

Manufacturing services ITRS ITRS, survey ordered by written

notification

Maintenance and repair services ITRS, ITS ITRS, ITS

Construction ITRS ITRS

Insurance and pension services ITRS, survey on freight

insurance, other sources

ITRS, survey on freight

insurance, trade statistics, other

sources

Financial services ITRS ITRS

Charges for use of intellectual property ITRS ITRS

Telecom., computer & info. services ITRS ITRS

Other business services ITRS ITRS

Government goods and services n.i.e. ITRS, AS, ITS ITRS, AS, ITS

* note: ITS = International transportation survey; AS = Administrative sources

E.3. Country experience: Philippines

11.41. The Bangko Sentral ng Pilipinas (BSP) is the lead agency in the compilation of statistics on

the international supply of services in the Philippines. The BSP is able to compile all the main

services accounts, mostly from the bank reports in the International Transactions Reporting System

(ITRS), supported by the company responses to the Cross Border Transactions Surveys (CBTS) and

administrative reports from other agencies and industry associations.

11.42. The main challenge of the BSP in the compilation of statistics on the international supply of

services is anchored in maximizing the benefits of the ITRS and CBTS. On the one hand, the

challenge of the BSP in the use of ITRS, is addressing possible misclassification of transactions by the

banks. On the other hand, the BSP is confronted with the challenge of improving the generally low

response rate and the coverage of its CBTS to include other industries, to better capture relevant

international services transactions. The low response rate of surveys stems from the absence of a

specific provision in the charter of the BSP that would allow it to enforce compliance by non-financial

corporations to provide data or information.

11.43. Reports submitted to the BSP by commercial, thrift and foreign banks under the ITRS

contain information on bank positions in foreign currency-denominated assets and liabilities and all

payments and receipts which bring about changes in the banks’ position. This information is being

utilized in the compilation of some of the services sub-items such as transport, travel, construction,

insurance and pension, financial (including FISIM), charges for the use of intellectual property, n.i.e.,

telecommunications, computer, and information services, other business services, personal, cultural

and recreational services.

11.44. In addition to the monthly CBTS, the BSP in coordination with the Department of Trade

and Industry (DTI) is also conducting the annual Information Technology-Business Process

Outsourcing (IT-BPO) Services Survey that covers companies engaged in Business Process

Outsourcing (BPO) activities.

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11.45. The BSP also utilizes administrative-based data provided by regulatory and administrative

government agencies (as customs data) to compile some of the services sub-accounts (Manufacturing

services of the physical inputs owned by others, freight import and exports, Insurance etc.). The

Department of Foreign Affairs (DFA) data on annual budget of Philippine embassies/consular offices

abroad are used as approximations for payments on government goods and services n.i.e.

11.46. For non-resident expenditures in the Philippines (travel receipts), data are derived from the

Visitors Sample Survey (VSS) conducted by the Department of Tourism (DOT), which provides

information on the average expenditure of foreign tourists and their average length of stay in the

Philippines. For tourist-related travel expenditures abroad by residents, data are sourced from the

ITRS and CBTS. Beginning with the 1999 report, travel receipts include non-resident overseas

Filipinos (OF) expenditures in the Philippines during home visits. Travel debits cover expenditures of

resident OFs in the host countries where they are deployed. Information on resident’s expenditures

abroad via credit card payments are obtained via reports of the Credit Cards Association of the

Philippines.

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Part III Data Compilation

Scope. Data compilation is understood as a set of statistical procedures performed on the collected

data to derive new information according to a given set of rules and resulting in intermediate data and

final statistical outputs. Data compilation includes, among other things, integrating data from different

sources, the use of weighting schemes, methods for imputing missing values or source data, statistical

adjustment, balancing/cross-checking techniques and relevant characteristics of the specific methods

applied. Part III includes an introduction and overview of data compilation within the modes of

services supply statistical framework (Chapter 12), followed by discussion of integration of data from

different sources (Chapter 13), compilation of resident/non-resident trade in services statistics

(Chapter 14), compilation of foreign affiliates statistics (Chapter 15), compilation of other indicators

for modes of supply (Chapter 16) and concluding with a description of estimation and modelling of

missing data, and forecasting or back-casting (Chapter 17).

Chapter 12 Introduction and overview of data compilation within the modes of services

supply statistical framework

12.1. Scope. This chapter provides an introduction and an overview of data compilation with the

modes of supply framework. It first covers the information needs of data users, then provides an

overview of using an integrated approach to data compilation, reviews the need for phased

implementation of suggested data compilation procedures, and finally provides an introduction to

using models and estimates in data compilation, which will be further covered in chapter 17.

A. Data compilation within the modes of services supply statistical framework: issues to

consider

A.1. Information needs

12.2. The information needs include the value of trade in services or sales/output of services by

foreign controlled foreign affiliates and other monetary statistics (foreign direct investment flows and

stocks, research and development expenditure in affiliates, income flows relating to foreign affiliates

active in services sectors etc.). There is also interest in non-monetary data, in particular when it comes

to assessing commitments made in trade in services agreements (e.g. number of mode 4 persons,

number of foreign affiliates established abroad in the context of mode 3 etc.).

12.3. To provide a better guidance on how to satisfy the information needs of data users, this Part

of the Guide contains three chapters specially focused on particular areas:

i. Compilation of statistics on resident/non-resident trade in services is covered in

Chapter 14. This chapter complements the guidance provided in the BPM6 Compilation

Guide Chapter 12. It elaborates conceptual issues which are directly related to the data

compilation; describes challenges and good practices in the compilation of particular EBOPS

services categories in total and their detailing by trading partner, as well as their allocation to

modes of supply; and provides guidance on services transactions between related enterprises;

ii. Compilation of FATS is covered in Chapter 15, which contains a general description

of compilation of foreign affiliate statistics, elaborates a set of FATS variables and the related

data compilation issues and describes relevant country experiences. The chapter has a special

focus on the data needs with respect to the international supply of services. It in particular

identifies the variables and breakdowns of interest for assessing mode 3 commercial presence,

such as the need to have more detailed statistics for services activities, that output is a

preferred measure to sales/turnover and that these variables need to separately identify

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sales/output of services products for all activities as well as separately identify those that are

destined to consumers of the country of establishment of affiliates;

iii. Compilation of other monetary and non-monetary) indicators, in particular for mode

2 and mode 4 (i.e., number of mode 2 persons travelling abroad and purchasing services and

number of 4 persons crossing borders and temporarily abroad in the context of services

contracts) is an important part of the information needs. Challenges and good practices

relevant to this topic are described in Chapter 16. In particular, Chapter 16 provides an

overview of data variables on the movements of natural persons under mode 4 of services

supply, describes the uses of various data sources in the compilation of the variables and

provides a comparison of different sources and guidance on the organization of the data

compilation process. The chapter also provides information on the possibilities offered by the

linking of trade and business statistics, and a list of services sectoral statistics that would be

useful for a full analysis of the international supply of services.

B. Focusing on an integrated approach

12.4. Part III gives a special attention to the promotion of an integrated approach to compilation. As

described in Part II there are several groups of data sources which can be used in the compilation.

This raises the issue of how to properly integrate data from various sources. Chapter 13 provides

guidance on this topic by discussing issues and good practices in consolidation and merging of data

and exploring possibilities of compilation using data generated in other statistical domains. It also

proposes a number of different approaches, taking into account the suitability for economies and

considering differences in compilation systems.

12.5. Chapter 14 proposes to integrate data sources for compiling resident/non-resident trade in

services statistics. For example for travel, it is proposed to link with tourism statistics, in particular to

develop coherent sets of data. Such integration focuses in particular on the breakdown by purpose of

travel, by type of product consumed or for compiling the supplementary item tourism related services

in travel and passenger transport. In the case of data for modes of supply, such an approach would

enable compilers to arrive at more detailed estimates of mode 2 supply of services, in particular travel

by type of product consumed and linking to tourism statistics (i.e., tourism-related

consumption/expenditure as suggested in ITRS 2008 or MSITS 2010 chapter 14, section C), and

using customs data or merchant category codes from credit card data. The scope of different statistical

domains has to be taken into account when integrating data from different sources (e.g., chapter 14,

section B, iv).

12.6. Chapter 15, while focusing mainly on compilation issues related to FATS, also gives a special

attention to the possibility to use or re-use existing data by linking with micro-level information; e.g.,

through business registers (with a common identifier) for the compilation of these statistics. It should

also be considered to use data from the Structural Business Statistics (SBS) for further development

on international services data by mode of supply accordingly for mode 1 and mode 4 as well as to

combine the information on FATS to gather more insight details for mode 3.

C. A phased implementation of the recommendations on data compilation

12.7. This Guide advises a phased implementation approach for compilation of data within the

statistical framework for measuring the international supply of services. The proposed approach can,

in particular for modes of supply, serve as a reference for producing approximations of certain

statistics. Part III therefore identifies the main conceptual and statistical challenges in measuring the

international supply of services, in particular for the modes dimension, also beyond balance of

payments services and foreign affiliates statistics. This part evaluates to what extent existing statistics

can match the information needs of trade negotiators as well the needs of economic analysts, in

particular in the context of the GATS; it also identifies what would need to be developed in data

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compilation systems to respond to information needs when it comes to other indicators useful for

assessing the international supply of services.

12.8. Data on trade in services have been compiled for a number of years in the context of the

BPM5, but compiling more detailed statistics by type of service and by partner remains a challenge

for many compilers. Not much information is currently compiled on activities of foreign affiliates, as

FATS is a relatively new statistical domain. Moreover, modes of supply are not always easy to

observe and consequently many data compilers have not yet compiled these data. On the one hand,

the concept of modes of supply is not yet embedded in the existing national compilation systems. On

the other hand, a complete new compilation of statistics on international supply of services by mode

will necessarily cause a higher burden and additional costs for compiling economies, which is why a

phased approach should be adopted based on what is proposed in MSITS 2010. Statisticians, both

national and international, also need to have a more profound knowledge of how different services

sectors operate in various economies. Compilers can choose between different approaches which are

elaborated in Part III, in particular chapter 14. The respective size of an economy, the structure of the

service sector or the importance of specific services could be indicators that could be used for

focusing on one approach or the other, or adopting a combination of several approaches.

12.9. A simplified allocation and direct compilation of statistics on the international supply of

services by modes. For the development of modes of supply information, a simplified allocation of

FATS and balance of payments data to modes of supply is proposed in MSITS 2010.163 The so-called

mechanical allocation of services categories either to one dominant mode or the indication of a

distribution to several modes in the BoP, as well the simple allocation of FATS to mode 3, is

considered as a very first starting point. This approach makes use of existing services data within the

BoP/FATS framework to compile or to estimate statistics by mode of supply and is further explained

in Chapter 14, section C and chapter 15.

12.10. But this simplified allocation is a reasonable very first step due to relative low costs and a

minimum burden for compilers. Chapter 14 then further elaborates on the development of estimates

on a broader basis taking economic, political-economic and socio-economic issues into account.

Chapter 14 then focuses on the actual compilation of data, in particular by suggesting the

identification of modes in trade in services surveys (mainly mode 1 and 4, but also mode 2 under

certain conditions). Focussing on different user interests, specific sector studies would already serve

several purposes e.g. policy makers could also be interested in specific studies such as for services

incidental to agriculture or environment services. This approach could be also combined for further

elaboration and adjustments of the simplified allocation.

12.11. Finally, as outlined above, beyond the monetary value of the international supply of services,

users also need additional monetary and non-monetary data, which are mainly described in chapters

16 and, for mode 3, chapter 15 (e.g., employment, number of enterprises). Although these additional

needs are considered as longer term objectives for compilation, when developing the system,

compilers should keep in mind these additional needs in order to be able to factor them in easily for

future stages of development for a complete information system to serve user needs.

D. Use of models and estimates

12.12. This Guide recognizes that available data sources have their limitations and, therefore,

compilation has to include the use of models and estimates because part of the information cannot be

collected or can be gathered only at an unsustainable cost, the available sources cannot provide the

required coverage, detail, frequency and/or timeliness foreseen by the international standards, and the

163 MSITS 2010, Chapter V and Table V.2, as well as ch apter 1, paragraph 1.5.

153

various sources to be combined in the collection system are partially overlapping. Chapter 17 is

specifically devoted to these issues and covers such topics as imputation for filling data gaps and for

data editing purposes, forecasting and compensating for lack of timeliness of data sources, , back-

casting and revising time series, allocating all services transactions to the relevant individual EBOPS

services categories and appropriate trading partners, and model-based estimates.

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Chapter 13 Integration of data from different sources

13.1. Scope. As described in Part II, several sources can be used in the compilation of data within

the modes of services supply statistical framework. In practice, information from various sources will

often have to be combined to obtain the required level of detail and quality, while at the same time,

reducing excessive burden for respondents. This chapter reviews the potential challenges compilers

face when integrating data sources that cover the same activities or the same entities and provides

guidelines on how to resolve these issues. More specifically, this chapter presents a summary of good

practices and defines the relevant terminology (section A), and describes the integrated business

survey program (section B), integration, consolidation and merging of data from different sources

(section C). A country experience is presented in section D.

A. Summary of good practices

13.2. Integrating data from different sources is advised as the principle way to ensure the

production of more detailed and more comprehensive statistics as well as to reduce the burden on

survey respondents. Compilers are encouraged to determine which data sources are most appropriate

on a case-by-case basis carefully considering the strengths and weaknesses of each data source. More

specifically, compilers should be aware of the statistical units used in each source, the entities

covered, the services categories identified, the variables compiled (e.g., value of services

exports/imports by EBOPS categories for compilation of trade in services between residents and non-

residents, output or turnover/sales and employment for compilation of FATS etc.), the availability of

geographic breakdown, the time period of reference, the presence of thresholds, and the survey

frequency. Ideally, compilers should identify the source(s) in which they have more confidence, to be

used as a benchmark for the other data sources.

13.3. To optimally exploit the advantages of data integration it is advised that the potential of using

linked data is considered from an early stage onwards and that decisions on survey design and

sampling frameworks, for example, are made while keeping in mind that the data will be linked later

on. This forward thinking requires ‘positive coordination’ across surveys, that is compilers should

ensure that the entities covered by different surveys and registers have sufficient overlap in order to

avoid large shares of non-matched records (which make data integration more difficult and may create

statistical biases). It is recognized that such coordination may be seen as a long-term strategy by

countries where the capacity to compile statistics on the international supply of services needs

significant strengthening.

13.4. This Guide encourages national statistical agencies to adopt an integrated business survey

programme, as outlined in the Guidelines on Integrated Economic Statistics.164 Specifically, under

these guidelines, it is recommended that the collection of statistical information move from a

stovepipe approach, in which each statistical program collects information for its own purposes,

towards an integrated approach, which aims to integrate survey design and implementation across all

statistical programme areas. This recommendation is particularly relevant in the context of statistics

on the international supply of services, given that information needs cut across various statistical

domains. Such integration of the data collection procedures will reduce the burden on respondents. It

will also create a common standardized statistical framework for presenting more coherent statistics

for the entire economy (covering business statistics, short term statistics, national accounts and

international statistics) for evidence-based policy making.

164 Guidelines on Integrated Economic Statistics http://unstats.un.org/unsd/nationalaccount/docs/IES-

Guidelines-e.pdf.

155

13.5. It is a good practice that SBR is used to identify the common statistical unit and to provide the

sampling frameworks. In addition it is advised that the ITRS and the trade register (which includes

merchandise trade statistics) are linked to the SBR (with the enterprise as common statistical unit).

This is particularly relevant for those services categories where the link between trade in goods and

trade in services is strong, such as manufacturing services.

13.6. Compilers should take note that for purposes of this chapter the term “data integration” is

used to refer to bringing together information from two or more sources of data, with the object of

better understanding and presenting the nature of a transaction that would otherwise not be possible

based on any one source alone. “Data consolidation” is understood as the summation of data from

multiple sources, in which the sources generally provide information on non-overlapping parts of the

total. “Merging data” refers to the process of combining data (especially data covering the same

activities or the same entities) from different sources via common denominators, such as a unique

identifier in the BR, when incomplete information is available from individual sources. Merging data

is the final step in the process and creates a unified view of an entity or activity. Before merging data,

compilers must first be aware of the definitions and methodologies used across the various data

sources to ensure internal consistency of the merged data and to prevent duplication or overlap of

records.

B. Integrated business survey programme: an overview

13.7. The idea of developing and achieving an integrated system of business and international

statistics has a long history among national and international governing bodies of economic statistics.

The motivating source of this work has been the policy and statistical benefits that can be obtained

from an integrated statistical system for national and international coordinated economic policy

planning in an interconnected global economy.

13.8. The benefits to data users, producers and providers, include, but are not limited to, the

following:

i. A common standardized information management framework that governs the statistical

production process over time and across countries;

ii. Statistical production processes that help reducing response burden and costs while

improving transparency for data users and providers;

iii. Collaboration in the development and application of common methods and IT tools for

data processing, documentation and exchange through the adoption of standardized

information management model;165

iv. Addressing the demand for evidence-based mutually reinforcing stories and descriptions

of the sequence of events that are obtained from coherent statistics, covering business

statistics, short term statistics, national accounts and international statistics.

13.9. The starting point for integrated economic statistics is the use of the internationally accepted

standard for macroeconomic accounts, the SNA (preferably its latest edition, the 2008 SNA) as the

conceptual organizing framework. As a result of years of work in harmonizing macroeconomic

statistical standards, the use of the 2008 SNA as the conceptual framework provides consistency and

coherence with other internationally accepted standards and international recommendations, such as

165 Concept note for the earning centre on explaining the integrated business statistics programme for st atistical

information management, presented at the Forty-fifth session of the Statistical Commission.

http://unstats.un.org/unsd/statcom/statcom_2014/seminars/LC_Integrated_Business/Concept%20Note%2012%2

0Feb%202014.pdf.

156

the BPM6 and other specialized manuals, such as the Manual on Statistics of International Trade in

Services 2010.166

13.10. Standardized surveys across statistical programmes. The most effective means of ensuring

integration and consistency is through a holistic redesign of data collections (surveys and

administrative data) that minimizes inconsistencies through the use of common standards and

methods, integrated survey design and a central business register. It is a good practice that the

collection of statistical information move from a stovepipe approach towards an integrated approach.

In a stovepipe model, where each programme collects information on its own and for its own

purposes, an entity surveyed may be asked the same questions with different definitions. A stovepipe

approach, therefore, not only increases survey burden, but is also likely to produce statistics that are

difficult to align. In contrast, integrated questionnaire design and integrated surveys help to resolve

these data-collection issues.167 The integrated approach is particularly relevant for statistics on the

international supply of services, which are compiled with information from various statistical

domains.

13.11. Under an integrated approach, all economic data collections gradually change their objectives

and statistical designs and enhance the coherence of statistical outputs. When designing a collection

for various sets of economic statistics, compilers will need to think beyond their current work to how

those sets will integrate with other statistical outputs. Likewise, questionnaires have to apply concepts

and definitions that are consistent with those used in other surveys and administrative collections.168

13.12. A national statistics act may provide a national statistical office with the authority to approve

the design of all statistical surveys operated by government agencies.169 One practical approach to

achieving integrated surveys is a reorganization of the statistical agency towards a more functional

structure. A separate division with responsibility for developing and maintaining classifications and

standards can lead a programme to apply consistent definitions and classifications to all statistical

outputs. Creating a division that has responsibility for developing SBR to be used for the production

of all economic statistics is an effective way to ensure that units are selected and classified

consistently across all statistical outputs. Establishing an independent statistical methods division can

help to ensure that all surveys are designed in a coherent way.170

13.13. It is important to note here that the subject matter expert or compiler of statistics on the

international supply of services may not always have full control over the design of such integrated

surveys, if the design is managed by an independent division. It is important for compilers to

recognize that success in achieving integration across many programmes requires extensive

collaboration and communication across the organization, support from senior leaders in the

organization, and adaptability and flexibility.171

C. Integration, consolidation, and merging of data

13.14. The compilation of data within the statistical framework for describing the international

supply of services requires the use of a wide range of data sources, as some sources are

166 Guidelines on Integrated Economic Statistics 2013, p. 17.

http://unstats.un.org/unsd/nationalaccount/docs/IES-Guidelines-e.pdf.

167

Ibid. pp. 49-50.

168 Ibid.

169 Ibid. pp. 28-29.

170 Ibid. p. 39.

171 For a country example of the Integrated Business Statistics program at Statistics Canada, please see:

http://unstats.un.org/unsd/nationalaccount/workshops/2014/St_Lucia/IBSP.ppt. Samples of integrated surveys

from Statistics Canada are available on the UNSD we bsite.

157

complementary and their combined use can result in the production of more detailed and more

comprehensive statistics.

13.15. Integration of different sources and re-using surveys for several purposes also has the

potential to reduce the burden for compilers, in particular in the context of compiling modes of supply

data. Furthermore, linking data on a micro-level could allow for broader types of analysis of the

resulting data. The potential of the approach of using information from other statistical frameworks

therefore deserves further exploration by the compiler. For example, in the context of the compilation

of inward FATS, there is the possibility of integrating information from FDI surveys and domestic

enterprise surveys. Other examples include using information from sources on migration, tourism,

household expenditures, population, or taxes (see chapter 15). This information could be used in the

compilation of resident/non-resident trade in services data (see Chapter 14) or to compile quantitative

indicators on mode 2 or mode 4 (see chapter 16).

13.16. Consolidation and merging of data sources provides multiple advantages for the compilers.

First, it improves coverage and the diversity of information. Second, it usually reduces the resources

required to collect the statistics. Third, it leads to higher quality of resulting statistics. However,

compilers must be aware of the risk that some of the data sets resulting from integration of various

data sources may be internally inconsistent.

13.17. Consolidation is rather a straightforward summation of data sources from multiple sources in

which the sources provide information on non-overlapping parts of the total. Meanwhile, merging

data sources is usually not a simple task, as compilers must find common denominators between data

from multiple sources that cover the same entity or activity. In this process the role of the business

13.18. Compilers should take into account all relevant dimensions of data sources before merging;

for example, the content of each source could be more or less compatible with a certain services

category definition. For such reasons, compilers should have an in-depth knowledge of the

methodologies and definitions used by the other data sources to ensure consistency and comparability

of the resulting merged data. Various dimensions of the different sources must be analysed by the

compilers during merging, most notably: entities covered, services categories or activities identified,

availability of geographic breakdown, and period of reference.

13.19. Entities covered. Sources could collect statistics at different structural levels of the entity.

Some sources may target the legal entity, while others could survey entities responsible for the

production. Companies could merge, be acquired, disappear, or simply modify their organisational

structure so that entities might end up being different from source to source if they have been

surveyed at different points in their structural composition. There could also be differences between

how the business register defines the structural organization of an entity and how that entity defines

its own structural organization. This last point might result in the statistical compiler unwittingly

incorrectly comparing entities from different sources.

13.20. It is a good practice that compilers analyse the coverage, possible overlap, and potentially

differing definitions of variables across different sources available, and make determinations of which

data sources are most appropriate to use on a case-by-case basis.

13.21. Services categories. Compilers should compare the services categories available from each

source to be merged. Details and aggregations provided could be different from source to source. In

the absence of clear definitions and guidance, respondents may interpret survey questions incorrectly

and include invalid transactions or exclude pertinent transactions.

158

13.22. Geographic breakdown. Data sources could have different levels of geographical breakdown,

or even none at all. For example, the country of transaction identified in the International Transaction

Reporting System (ITRS) could be different from the country that actually purchased or sold the

service.

13.23. Period of reference. Values reported on a monthly basis from one source could differ from

the annual value reported by another source (e.g., where there is an annual reconciliation or balancing

process). Moreover, difficulties may arise when integrating data from administrative sources on a

fiscal year basis with information collected on a calendar year basis. Similarly, there may be

challenges in bringing together data reported on a monthly or quarterly basis with data reported on a

through-the-year basis in another source.

13.24. MSITS 2010 recommends the use of the accrual basis for determining the time of recording of

transactions. The accrual basis provides the most comprehensive information because all flows are

recorded (including nonmonetary transactions, imputed transactions and other flows). The change of

economic ownership is central in determining the time of recording on an accrual basis.172

13.25. Other factors, such as threshold for certain sources or the frequency of the survey, may also

affect the comparison between sources. If a source is available only once every two years, compilers

should develop a strategy to preserve the comparability for the year that source is not available. All

these possible differences between sources may complicate the comparability and integration of data

sources, not only at a global level but also at a micro level.

13.26. Possible approaches and solutions. There is no quick fix to resolve problems when merging

data. Compilers must have in-depth knowledge of the data with which they work and need to

recognize the strengths and weaknesses of each source. Data sources are rarely equivalent; one source

may provide reliable information for some transactions but be weak for others. Ideally, if compilers

could identify a source in which they have more confidence, such a source could then serve as a

benchmark against which the other sources will be compared.

13.27. Linking various data sources. It is vital that the compilers avoid approaching businesses

multiple times with different surveys covering the same or similar information. Above all, statistical

surveys should not request information that the business has already supplied in another data

gathering mechanism. The central statistical business register should be linked to the trade register to

enable the analysis of the effects of the international supply of services on production, employment

and enterprise performance.173 The enterprise is the suggested statistical unit to be linked between

trade and business statistics; thus, data collected and registered at the level of the declaring unit of

trade operators can be aggregated to the level of the whole enterprise via characteristics available in

the BR. The linking of trade and SBR allows generating relevant information on the structure of the

international supply of services without collecting additional data from businesses.

D. Country experience

D.1. Canada

13.28. Three different sources are used in Canada to generate most trade in services statistics

(excluding travel and transport). First, the annual survey on trade in services (International

172 BPM6 Compilation Guide, paragraph 1.21.

173 See also chapter 16.

159

Transactions in Commercial Services – BP21S) is sent to Canadian enterprises of varying size and

economic sector.174 The second data source is the set of approximately fifteen annual industry

surveys covering a large sample of establishments in service industries. The third source is

administrative data on non-arm’s length annual transactions between residents and non-residents.

13.29. Statistics Canada integrates these three sources and is thereby able to improve coverage, make

better use of limited resources, and reduce the burden on respondents. The key to integrating these

sources is that each entity covered by the three sources is linked to the Canadian Business Register

(CBR). The CBR covers and contains information on ownership, industrial activity, organizational

structure, and the business identification number175 of businesses engaged in the production of goods

and services in Canada.

13.30. The quality of the CBR directly influences the compiler’s ability to integrate the different

sources. A team at Statistics Canada is constantly working to ensure the CBR reflects the structure of

Canadian economy as best as possible.

13.31. The three sources cited above are not considered to be equal in terms of quality and details

provided. Data on the industry surveys are indirectly measured in a process by which respondents

indicate the percentage of their total revenues related to total trade in services. No breakdown is

available for transactions conducted between related partners and transactions between unrelated

entities. Furthermore, the geographical breakdown is only available for total trade in goods and

services. The administrative records cited only present trade with affiliated parties and aggregated

groupings of services.

13.32. Both the industry surveys and the administrative data have limited details in term of EBOPS

categories. However, the annual survey on trade in services (BP21S) is very detailed, with 32

categories of services collected, broken down by partner country and by affiliation.

13.33. For the majority of the responding entities, data are available from only one of the three

sources cited, which case, reported values are kept by default. When there are data available on an

entity from more than one source, the data from the BP21S survey are used if those values are larger,

equal to or even slightly lower than the other sources. Other situations are reviewed on a case-by-case

basis. Other analysis is also done to insure the validity of the reported transactions, for example,

compilers compare current reported transactions with data from the previous year.

174 To supplement the BP-21S, more than 200 entities f rom the insurance sector are also surveyed with two

surveys of Canadian incorporated insurance companies and Canadian branches of foreign insurance companies.

Both surveys collect financial transactions as well as service transactions.

175 This identification number is assigned at the time of registration with the Canada Revenue Agency. For more

information about the Statistics Canada Business Register, please consult “Statistics Canada Business Register –

A Brief Guide, http://www23.statcan.gc.ca/imdb-bmdi/document/1105_D2_T1_V3-eng.pdf.

160

Chapter 14 Compilation of resident/non-resident trade in services statistics

14.1. Scope. This chapter discusses the compilation of resident and non-resident trade in services

statistics. It is important to stress that this chapter does not aim to be exhaustive, but rather that it aims

to complement the existing guidance provided in BPM6 CG on specific aspects, and focuses on the

needs outlined in MSITS2010. Compilers are also strongly suggested to consult the online version of

this Compilation Guide, where more compilation guidance will be made available, e.g., on certain

services items and complementary groupings, as well as the EBOPS-CPC conversion table that may

facilitate the classification of certain transactions in the EBOPS classification.

14.2. After the summary of good practices (section A), section B describes the compilation of the

EBOPS 2010 service categories by bundling them into several groups that are often similar in the

nature of their compilation and use of underlying source data:

i. Goods-related services (including manufacturing services on physical inputs owned

by others, maintenance and repair services, as well as freight transport and insurance);

ii. Passenger transport and travel;

iii. Construction;

iv. Insurance, pension and financial services;

v. Services related to intellectual property products (IPP), telecommunication,

computer, and information services, other business services, as well as personal,

cultural, and recreational services);

vi. Government goods and services n.i.e.

14.3. Note that in the case of transport, the treatment is split between freight transport and

insurance (goods-related) and passenger transport (travel-related). For each of these subsections, the

compilation of providing partner country detail is separately discussed. Such a breakdown is

recommended in the MSITS 2010, at least at the level of the 12 major components of the BPM6

classification of services, and, where possible, at the more detailed EBOPS 2010 level.176

14.4. Subsequently, section C discusses the compilation of trade in services by modes of supply

insofar as it is related to resident/non-resident transactions. Section D elaborates the statistical

treatment relevant to services transactions between related enterprises.

A. Summary of good practices

14.5. When compiling resident/non-resident trade in services statistics, it is good practice to follow

the BPM6 recommendations on the principles of recording residence, valuation, time of recording,

unit of account and currency conversion. The highest priority should be given to the compilation of

data at the level of BPM6 main EBOPS categories, followed by the introduction of the EBOPS 2010

level of detail, the compilation of related supplementary items and the compilation of complementary

groupings. Also, compilers are also strongly advised to consult the online version of this compilation

guide where more compilation guidance will be made available on e.g. certain services items and

complementary groupings, as well as the EBOPS-CPC conversion table that may facilitate the

classification of certain transactions in the EBOPS classification.

14.6. When compiling goods-related services statistics, this Guide advises to note that enterprise

surveys generally represent the most efficient method to collect the required information. ITRS and

customs declarations, as well as other data sources, may also be used although these are generally not

176 MSITS 2010, paragraphs 3.57-3.58.

161

a sufficient source of data and may need to be supplemented with enterprise survey data. For

manufacturing services on inputs owned by others, compilers should be aware that the difference

between the value of the goods before processing and the value of the goods after processing may

differ from the value of the manufacturing fee. Compilers should also evaluate if and how received

data has to be adjusted, especially in the absence of complete information or misreporting. Compilers

also need to carefully distinguish between manufacturing services and manufacturing on own account,

using the economic ownership of the inputs as the distinguishing criterion. Also a clear difference

needs to be made between transactions related to manufacturing services on inputs owned by others,

and those related to merchanting, based on whether or not the nature of the good changes.

14.7. For freight transport and freight insurance services, it is not always possible to measure the

value of services directly. However, the information may be derived from the CIF/FOB adjustments

that are made to the merchandise trade statistics for Balance of Payment purposes. Compilers should

note however that when calculating the freight transport and insurance costs for BOP purposes, the

statistical value does not necessarily reflect the sum of the actual invoice values, but instead follows

the principle adopted in the accounting framework.

14.8. Regarding passenger transport and travel, compilers are advised that transport should be

recorded on a gross basis. This means that the value of passenger transport includes fares and other

expenditures related to the carriages of passenger. When passengers fares are a component of package

tour payments, the compiler should, separate passenger transport and other travel components.

14.9. The compilation of travel item is closely related to the compilation of tourism statistics. Thus,

it is useful for compilers to understand the conceptual framework of tourism statistics. The BPM6 and

EBOPS 2010 recommendations should be followed and compilers are advised to provide further

breakdowns of travel, in order to better assess the scope of travel activities, gauge their possible

impact in terms of economic activity, and ensure consistency between travel and other related

statistics, such as the tourism statistics, tourism satellite account or supply and use table.

14.10. When compiling statistics on construction, compilers should take care to value transactions

on a gross basis, i.e. inclusive of all goods and services used as inputs to the work (whether

subcontract or not), other costs of production and the operating surplus that accrues to the owners of

the construction enterprise. It is particularly important to precisely identify the residence of the

enterprise realizing the construction work in order to differentiate between exports of services and

direct investment operations, using criteria such as the length of a project. Given the complexity

involved in cross-border construction projects and the level of detail required means that surveys are

the preferred method for collecting data on construction. Such surveys could possibly also be used to

collect information on FDI and other resident-non-resident transactions.

14.11. Regarding insurance, pension and financial services, it should be noted that some services

are provided without explicit fees, which means that their compilation needs a certain degree of

estimation and imputation. It is good practice that insurance and pension services are based on the

earned premiums, which are consistent with the accrual recording. To compile the exports of

insurance services, compilers can generally obtain comprehensive data from surveying resident

insurance enterprises. If comprehensive surveys are not feasible, compilers may be able to obtain

information directly from domestic insurance corporations, which may also be used for estimating

imports of insurance services.

14.12. In order to avoid the volatility and negative figures possibly generated by catastrophic events,

an adjustment in claims due is required to reflect a more long-term view the functioning of the

insurance sector. The compiler is invited to analyse the three possible adjustment methods for

smoothing the amounts of claims by policyholders on insurance corporations, i.e. the expectation

approach, the accounting approach and the sum of cost plus “normal profit” approach and use the

most efficient depending on national circumstances.

162

14.13. For financial services, transactions without explicit fees are included in FISIM. FISIM is

produced only by certain financial corporations and only on the loan and deposit instruments on their

balance sheets. Compilers need to take special care to properly calculate the reference rate. As

recommended by the Advisory Expert Group (AEG) on National Accounts, the calculation of the

reference rate should be determined according to national circumstances, using preferably either a

reference rate based on a single observable exogenous rate for a specific instrument, such as interbank

lending rates; a reference rate based on a weighted average of observable exogenous rates of

maturities with different terms (weighted by the stock of loans and deposits in each maturity) or a

weighted average of the endogenous interest rates on loans and deposits. The most comprehensive

source data for exports and imports of FISIM come from (i) resident financial corporations (surveys

or administrative data collections or financial supervision authorities), which can identify the deposits

and loans with non-residents, as well as (ii) surveys of selected nonfinancial corporations,

households, and NPISH, which could provide data on residents’ accounts with financial corporations

abroad to support compilation of FISIM import

14.14. Services related to intellectual property products may be particularly difficult to measure,

because the distinction between the categories from a reporter’s perspective may not always be clear,

and because intra-firm transactions, which are frequent in these services categories, may be affected

by transfer pricing phenomena or more general tax planning issues. When recording transactions on

the use of intellectual property n.i.e., compilers should note that franchise and trademark licensing

fees related to charges for using non-produced assets and should hence, theoretically according to the

SNA, not be recorded. However, often, the payments are bundled with additional service items that

make it difficult to disentangle the pure payments for the use of the underlying brand and, as such,

both the 2008SNA and BPM6 recommend that such payments are recorded as payments for services.

For payments related to licences for the use of outcomes of R&D, care should be taken to differentiate

between payments for entire originals. Similar differences exist for computer services, where

compilers should distinguish between licences to reproduce (of more than one year) and software

originals. In contrast, compilers should note that R&D services primarily relate to ‘new’ research and

development, such as newly produced customized software, or transactions in ‘originals’, where

ownership and the concomitant rights are transferred to the purchaser. Care is needed in this context

to differentiate this from the licences to reproduce identified above. Compilers are strongly suggested

to consider using the Frascati177 based survey approach provides perhaps the best mechanism to

improve their measurement of trade in R&D services.

14.15. For the compilation of data on resident/non-resident transactions in education or health

services, primarily the collection of data is often problematic. Compilers are suggested to consider

that sources of information from specialized entities may be necessary (e.g., the Ministry of Education

and the Ministry of Health) and also to explore other types of sources, including higher education

institutions, surveys on health insurance companies in combination with travel surveys (e.g. with

reference to the purpose of stay); data available at embassies and consulates; or administrative data

from health and social insurance.

14.16. Government goods and services n.i.e. includes only those services related to government

functions that cannot be classified to another specific service category. The majority of government

services transactions are most commonly compiled using administrative records. Data on government

expenditure abroad should also be available from an ITRS, although it may be more difficult to

capture expenditures by foreign governments and international institutions located in the compiling

177 OECD Frascati Manual: Proposed Standard Practice for Surveys on Research and Experimental

Development, 6th edition. Note that at the time of writing the Frascati Manual is being revised, in part to

provide better alignment with the National Accounts.

163

economy using an ITRS, in which case an enterprise survey of nonresident bank accounts or a survey

of foreign embassies and international institutions could be used.

14.17. When allocating resident/non-resident trade by mode of supply, compilers may start with a

simplified allocation, following table V.2 in MSITS 2010 and applying a three-step procedure of

allocate, evaluate and refine. However, compilers should treat such an allocation only as a first rough

approximation of resident/non-resident services transactions by mode of supply as this technique has

important limitations. This Guide strongly encourages compilers to gather additional information on

modes of supply that may be collected for all services sectors using (added questions to) generic

business surveys. Alternatively, compilers may choose to obtain information only for a selection of

specific service sector(s) of interest to the compiling economy using focused sources of information,

possibly using a sector specific survey that also integrates various other statistical domains (such as

FATS, SBS, innovation or others). It may be useful to consider collaboration with other agencies and

institutions that have a special interest (and/or expertise) in obtaining modes of supply data. In these

circumstances, it is important the agency in charge of the collection and compilation of official trade

in services statistics (generally the NSO or central bank) works in coordination with such specialised

agencies so that the international recommendations for the collection and compilation of trade in

services statistics are followed and to ensure that the information that is collected can be used in a

broader context. It is suggested that the compiler investigates how to collect/compile more details for

those items where mode 4 or mode 2 (both involving natural persons) is deemed to be important for

the compiling economy.

14.18. Finally, compilers are advised to develop appropriate procedures to separately identify service

transactions between related (affiliated) enterprises, as recommended by MSITS2010. It is a good

practice to carefully examine the valuation of services transactions between related enterprises, since

the recorded transactions could be under or overestimated and misrepresent the real flows of the

economy. Compilers should be concerned that intra-firm trade might not reflect the real trade, as

measured by market prices, to benefit from fiscal and taxation regulations, since transfer pricing is

used for the valuation of services transactions.

B. Compilation of individual service categories

B.1. Goods-related services

B.1.a. Introduction

14.19. This sub-section deals with goods-related services, which include manufacturing services on

physical inputs owned by others; maintenance and repair services n.i.e.; and freight transport and

insurance (as sub-component of transport). These service categories are strongly related to flows of

imported and exported goods. However, the value of services cannot necessarily be directly derived

from the gross value of merchandise trade statistics. Additional information, from surveys, for

example, is often needed to measure the exact value of the services provided.

14.20. Manufacturing services on physical inputs owned by others include activities such as

processing,assembly, labelling and packing that are undertaken by enterprises that do not own the

goods (see also paragraphs 3.66-3.77 of MSITS 2010). Such services may also be referred to as

contract manufacturing, toll manufacturing, or toll services and are also described in BPM6178 and the

BPM6 CG.179. In the case of manufacturing services imports (these services can, for example, be

178 BPM6, para. 10.62-10.71 and boxes 10.1. and 10.2 a nd table 10.2.

179 BPM6 Compilation Guide, para. 12.5-12.25 and para. 3.15-3.17.

164

rendered under a special customs procedure - outward processing of goods), the principal180 (goods

owner) has goods it owns processed by another unit (processor) which is resident of another economy.

The principal pays a fee to the processor for the services provided. In the case of manufacturing

services exports (these services can, for example, be rendered under a special customs procedure -

inward processing of goods), a processor transforms goods belonging to the principal who is resident

of another economy. In return for a processing fee, the processor transforms the goods using its own

labor and capital. Over the course of the transformation process, the economic ownership of the goods

remains with the principal. The manufacturing service equals the processing fee; i.e., the value of the

contract between the owner of the goods and the manufacturer. Gross values of goods associated with

manufacturing services should be identified as EBOPS supplementary items in economies where such

an activity is significant.181

14.21. Maintenance and repair services n.i.e. includes maintenance and repair work by residents on

goods that are owned by non-residents (and vice versa) The value recorded for maintenance and

repairs is the value of the repair work done, not the gross value of the goods before and after repairs

(see also paragraph 3.78-3.79 of MSITS 2010).182

14.22. Freight transport and related freight insurance services are part of EBOPS categories

transport and insurance services, respectively (see 3.97-3.103 in MSITS for freight transport and

3.178-3.180 for freight insurance). It refers to freight charges by residents of the compiling economy

with non-residents on goods with change of ownership, as well as on freight where there is no change

of ownership.

B.1.b. Compiling statistics for goods-related services

14.23. It is suggested that compilers consider that enterprise surveys generally represent the most

efficient method to collect information on goods-related services. The surveys could include questions

on the value of the service fee, as well as the value of the goods sent and received for processing or

for repair. This information can be used to adjust the goods account to measure merchandise trade on

a change of ownership basis.

180 In this chapter, the following terminology is applied: The principal is a unit that enters in a contractual

relationship with another unit (here called processor) to carry out some part (or all) of the production process;

the processor is a unit that carries out a specific production process based on a contractual relationship with a

principal. The activities performed by the processo r are denominated 'on a fee or contract basis'. Processing is a

contractual agreement according to which the principal requires the processor to carry out a specific production

process. The term 'sub-contracting' is sometimes used as well. In this context, the production process also

includes supporting activities. Manufacturing services on physical inputs owned by others can be performed on

goods leaving the county of the principle and entering the country of the processor under various arra ngements

depending on the customs laws of the involved countries including (but not limited to) specific customs

procedures called outward and inward processing. Outward processing customs procedures means the Customs

procedure under which goods which are in free circulation in a Customs territory may be temporarily exported

for manufacturing, processing or repair abroad and then reimported with total or partial exemption from import

duties and taxes. Inward processing customs procedures means the Customs procedures under which certain

goods can be brought into a Customs territory conditionally relieved from payment of import duties and taxes,

on the basis that such goods are intended for manufacturing, processing or repair and subsequent exportation.

See IMTS 2010, paragraphs 1.19 – 1.21 and annex B, para. B.12-B.1

181 BPM6, paragraph 12.5.

182 No distinction is made between those repairs that maintain the item in working order and are considered as

intermediate consumption, as opposed to those that extend the efficiency or capacity of the good or ex tend its

life and thus are included in capital formation.

165

14.24. ITRS and customs declarations may also be used for the compilation of goods-related

services, although these sources are generally not sufficient and may need to be supplemented with

enterprise survey data. When using ITRS data for information on fees for manufacturing services or

maintenance and repair services, the compiler should ensure that such amounts do not include

payments for other goods and services. Administrative sources, including tax records, can also

provide useful information (see BPM6CG 12.20-12.25 for manufacturing services and 12.35-12.37

(including tables 12.1 and 12.2 for freight transport).

14.25. Compilers may consider combining data from customs declarations with the results of

enterprise surveys, when both datasets are available. While such merged data would not necessarily

provide compilers with advantages in developing aggregate measures of goods-related services, such

data could be very useful, in combination with appropriate screening questions on enterprise surveys,

for determining partner country attribution, and for determining the detailed product composition of

exports and imports for those firms that indicate they either receive or send goods abroad for

processing or repair.

14.26. Compilers may also consider comparing the trend in the value of goods under inward and

outward customs procedures (and the use of the nature of transactions codes) with the trend in the

magnitude of manufacturing services over time. While the actual monetary amounts will be different,

compilers could expect the growth trend between the series to be similar, which could provide a

useful quality check for compiling statistics on the international trade of manufacturing services.

B.1.b.1 Compilation of manufacturing services

14.27. Compilers should be aware that the difference between the value of the goods before

processing and the value of the goods after processing may differ from the value of the manufacturing

fee for various reasons, including the sale of processed goods in the economy of the processor or in

third countries, holding gains or losses, the inclusion of brand names after processing, and others (see

BPM6 CG 12.14).

14.28. The compilation of data on manufacturing services on inputs owned by others may be

facilitated by following the change of ownership principle in general merchandise trade statistics.

However, the recording of the movements of goods across borders and statistical surveys on trade in

services are usually independent and therefore not mutually consistent.

14.29. As to export and import of manufacturing services, Box 14.1 provides an example of a

possible data adjustment in the compilation of resident/non-resident trade in services statistics when

not all necessary information is available to the compiler and misreporting of goods after processing

can be expected to be the main cause of the difference between the processing services and the value

of goods before and after processing. It also provides an example on other adjustments of data on

import and export of goods related to import of processing services that may be conducted in order to

compile balance of payment statistics. Table 14.2 presents possible combinations of related

movements of goods and services across the borders for processing, after processing and also without

any cross-border movements. It also explains the difference in recording of exports and imports of

goods between the IMTS2010 (cross-border concept) and BPM6 (ownership concept). It is obvious

that in some cases there is no cross-border movements of goods related to the handover of goods

between processor and principal (either before the processing or after the services are provided).

166

Box 14.1 Numerical example of possible adjustments to import and export of goods for the

balance of payments purposes in relation to import of processing services in the absence of full

information

Assume that country A imports processing services from B in value of 7 (5 is related to processed goods

returned to the economy of principal A, 1 - to goods that were sent for processing without returning to country

A and 1 - to goods sourced abroad which were processed in B and imported (brought) to country A after

processing). A’s IMTS records: export of goods for processing (returning to country A after processing ) is 10;

but import of goods after processing is only 5 (therefore it has to be corrected for misreporting).

The margin between goods sent for processing (10) and returning after processing (5) is -5. The value of these

goods cannot be accounted for as general merchandise in the balance of payments and their value is therefore

subtracted to obtain the gross flows of exports and imports according to the BPM6/MSITS2010

recommendations. In addition, the import of services related to the goods returning back to A is 5 so the

adjustment of import after processing has to be +10 (=5+5), i.e. the adjustment of general merchandise

according to the BPM6/MSITS2010 is -10.

Apart from the adjustment for misreporting, there may be also other adjustments in goods due to insufficient

data sources and imported processing services. Assume that country A exports goods for processing that is not

returning back after processing in value of 10. Strictly speaking, the goods should be also subtracted from

general merchandise since no change of ownership occurs when crossing the borders and exports of goods

should be recorded only when sale abroad after processing occurs (e.g. in value of 11, 10 + 1 for the

processing services). However, there is usually no data source for these sales abroad and thus the goods

exported for processing without returning back may not be subtracted from general merchandise (10). In

addition, the import of services for 1 (corresponding to the value of imported services processed on goods

sold abroad) is supposed to be imputed to the export of goods. Analogously, assume import of goods which

were purchased abroad and processed in B (in value of 11, purchase for 10, services for 1). The value of

import according to BPM6/MSITS2010 should include only the value of goods brought from abroad

(excluding the 1 corresponding to the value of imported services processed on goods purchased abroad and

imported to country A).

167

Table 14.2(a)

Export of processing services; resident = processor (contractor)

Recording in BOP, NA, and IMTS

Residence

of the

principal

(owner of

the goods

to be

processed)

Residence

processor

Origin of

the good

before

processing

Residence of

entity

acquiring

transformed

goods from

principal

Export of processing services

resident = processor (contractor)

Goods that should be captured

in the IMTS of processor’s

territory

(physical movement of goods)

Goods and services that should be

recorded in BOP and NA of

processor’s economy

(change of ownership principle)

Import Export Debit Credit

Non-

resident

Resident

Abroad

Non-resident

Goods received by resident processor for

processing. Transformed goods leave

processor’s economy once processed.

Import of goods

for processing

Export of

processed

goods

- Service:

Processing fee.

Resident 2

Goods received by resident processor.

Transformed goods are purchased by

residents of processor’s economy once

processed.

Import of goods

for processing -

Goods: Purchase

of processed

goods

Service:

Processing fee.

Compiling

economy

Resident 3

Goods purchased by non-resident principal

in the resident processor’s economy.

Transformed goods are purchased by

residents of processor’s economy once

processed.

- -

Goods: Purchase

of processed

goods

Service:

Processing fee

Goods: Sales of

goods (input) to

non-resident

principal.

Non-resident

Goods purchased by non-resident principal

in the resident processor’s economy.

Transformed goods leave processor’s

economy once processed.

Export of

processed

goods

Service:

Processing fee

Goods: Sales of

goods (input) to

non-resident

principal.

168

Table 14.2(b)

Import of processing services; resident = owner (principal)

Recording in BOP, NA and IMTS

Residency

of the

principal

(owner of

the goods

to be

processed)

Residence

of the

processor

Origin of

physical

inputs

before

processing

Residence

of entity

acquiring

transforme

d goods

from

principal

Import of processing services

Resident = client/owner (principal)

Goods that should be captured

in the IMTS of principal’s

territory (physical movement of

goods)

Goods and services that should be

recorded in BOP and NA of

principal’s economy

(change of ownership principle)

Export Import Credit Debit

Resident

Non-

resident

Non-

resident

Compiling

economy

Resident 5

Resident principal sends goods (inputs) to

non-resident processor.

Transformed goods are returned to the

economy of principal.

Export of goods

for processing

Import of

processed

goods

- Service:

Processing fee

Non-

resident 6

Resident principal sends goods to non-

resident processor.

Transformed goods are sold abroad by

resident principal to non-residents.

Export of goods

for processing -

Goods: Sales of

goods (includes

processing fee)

Service:

Processing fee

Abroad

Non-

resident 7

Resident principal purchases goods from

non-resident.

Transformed goods are sold by resident

principal to non-residents.

- -

Goods: Sales of

processed goods

(includes

processing fee)

Service:

Processing fee

Goods: Purchases

of goods (input)

Resident 8

Resident principal purchases goods (input)

from non-resident.

Transformed goods are sent to economy of

principal.

Import of

processed

goods

Service;

Processing fee

Goods: Purchases

of goods (input)

169

B.1.b.2 Manufacturing services: borderline cases

14.30. It is important to separate manufacturing services on inputs owned by others from transactions

that may have similar aspects, but that should be recorded differently according to BPM6.

14.31. First, compilers should carefully distinguish between manufacturing services and manufacturing

on own account, using the economic ownership of the inputs as the distinguishing criterion. Even if the

processor not only transforms the goods owned by others (i.e., the principals), but also provides some

physical inputs in the process, their exported output will be recorded under manufacturing services (i.e.,

including the value of physical inputs provided by the processor). This distinction is particularly relevant

for countries with locations or zones with special taxation arrangements, such as export processing zones

or free zones. Compilers should be aware that enterprises that operate in these zones are not necessarily

by definition engaged in manufacturing services. If such enterprises are the economic owners of the goods

that they process (whether purchased domestically or from the rest of the world), their exported output

would not qualify as manufacturing services but as general merchandise. Similarly, many enterprises may

be engaged in manufacturing services, without necessarily being in special locations (see also (see also

12.15-12.16 of the BPM6CG).

14.32. Some enterprises may be affiliates from direct investors abroad and may use technology

transferred to them by this direct investor.

183 Compilers should note that the mere existence of a direct

investment relationship does not imply the provision of manufacturing services, even when the processed

products are sold to the direct investor. Since the classification is solely determined by the economic

ownership of the inputs, this would still be recorded by the affiliate as manufacturing on own account

(and hence not a manufacturing service).

14.33. A second area where compilers need to make a careful distinction is the difference between

transactions related to manufacturing services on inputs owned by others, and those related to

merchanting (see also 12.19 in BPM6CG). When in the case of merchanting, the nature of the goods does

not change; the gross values of the associated goods must be recorded as trade in goods (negative and

positive exports).

14.34. In the case that goods under a merchant’s ownership may be subjected to certain manufacturing

services that change the condition of these goods, relevant purchases and sales of the goods should be

recorded under general merchandise instead of merchanting, whereas the minor processing or packaging

fee would still be recorded under manufacturing services.

14.35. Compilers are suggested to also consult the Guide on Measuring Global Production for more

suggestions on how to deal with the different cases that compilers may be confronted with, as well as

possible solutions to compile the related items in the goods and services account.184

183 Technology transfer includes patenting, licenses, know-how, technical assistance and the provision of research

and development services. See OECD, Measuring Globalization: OECD Handbook on Economic Globalization

Indicators, 2005.

184 UNECE (2014) Guide to Measuring Global Production.

http://www.unece.org/fileadmin/DAM/stats/documents/ece/ces/bur/2014/Guide_to_Measuring_Global_Production_

-_CES.pdf.

170

Country experience: Czech Republic

14.36. In the movements of goods within the EU the processing services cannot be estimated by the

difference between goods crossing borders before and after the processing (e.g. a long-term negative

margin on outward processing with other EU countries has been recorded). There are at least three main

reasons for this:

i. The non-resident principal has the goods after processing shipped directly from the

economy of the processor to a third economy. The resident processor had reported receiving the

goods for processing into Intrastat (system for collecting information and producing statistics on

the trade in goods between EU countries) but the non-resident does not report them as goods sent

after processing but as a simple merchandise export.

ii. Goods after processing are sold by the non-resident principal to a resident of the

processor’s economy (i.e. without the goods leaving the processor’s economy). Non-resident

principal must be registered in the processor’s economy for VAT purposes. The processor had

only reported acquiring goods for processing into the Intrastat but there is no cross-border

movement of goods after processing between the principals’ and processors’ economies.

iii. Goods sent for processing and especially received after processing may be significantly

affected by misreporting or asymmetric reporting. Goods sent for processing within the EU are

not under custom control in the Czech Republic. For this reason it is difficult to keep reporting

consistently on both sides in manufacturing chains. For example processor A reports physical

entry of goods into the country (for processing) in certain value, eventually processes it and

transfers it to processor B, which after its own processing reports the exit from the country with a

completely different value.185

14.37. The reasons mentioned under (i) and (ii) lead to differences between processing services and

margins resulting from gross cross-border flows in goods for processing. Since the compilation of export

and import of goods is based on change-of ownership principle186 (not on cross-border principle), there is

no need for any additional adjustments. In case of (i), the goods received for processing by resident

processor is excluded from general merchandise as well as all cross-border exports by non-residents, even

though they are reported as general merchandise. In case of (ii), the goods received for processing by

resident processor is also excluded from general merchandise and only sales by non-residents within the

Czech market is recorded as import of goods. The sales of non-residents are known from VAT statements

submitted by non-residents.

14.38. However, the difference caused by point (iii) must be eliminated by additional adjustment of

goods excluded from general merchandise in order to keep the balance on trade of goods and services

unaffected. In fact, the first adjustment is done mostly at the level of Intrastat data-collection by

185 Holding gain/losses or overheads are not likely to be among them as the entity obliged to report the movements

of goods across the borders in Intrastat is the processor (not the owner of goods).

186 National concept of foreign trade in goods, which represents change- of ownership approach, takes into account

sales and purchases by non-residents within the Czech market, and eliminates all cross-border movements of goods

reported by non-residents since these cross-border flows cannot be considered as transactions related to the Czech

economy.

171

comparing the processing services (declared by exporters or importers of services) and declared cross-

border movements of goods (reported into Intrastat by the same reporting units, as these units are usually

the same – exempt for chain-linked processing). The adjustment requires sufficient data comparison of

both data sources on the individual level of reporting units. Nonetheless, other adjustment may be needed

at the aggregate level, mostly because of the misreporting caused by chain-linked processing.

14.39. For the purpose of these adjustments ad-hoc annual survey on a voluntary basis along the regular

survey on international trade in services is conducted among the processors (exporters of services) and the

principals of goods to be processed abroad (importers of services). Detailed information is collected on

the relationship between services exports and imports and the related movements of goods across the

border and the handover of transformed goods to the principal within the processor’s economy. The

additional adjustment of goods due to misreporting may be carried out in order to keep the margin

between goods after processing and goods before processing in accordance with the particular processing

services related to the movements of the goods (especially when goods is returning back after processing

– see Box 14.1).

Hong Kong imports of manufacturing services and related goods transactions

Case I: Outward processing to Mainland China with processed goods returned to Hong Kong

14.40. In the processing activities between Hong Kong (principal in the reporting economy) and

Mainland China (non-resident processor), the import value of the manufacturing services is derived from

the total of the processing fee charged by the non-resident processor and the amount reimbursable by the

principal for the materials procured by the processor.

14.41. The cost of materials supplied by the principal from or via Hong Kong for processing without

change of ownership is not included in “Exports of goods” in the balance of payments statistics. By the

same token, the value of the processed goods returned to Hong Kong should not be treated as “Imports of

goods”. The cost of input materials supplied by the principal to the processor from a third economy

directly is included in “Imports of goods” of the economy of the principal.

Case II: Offshore trade activities involving outward processing with processed goods sold offshore

14.42. Similar to Case I, the value of manufacturing services is reported under “Imports of services”.

The import value of the manufacturing services is derived from the total of the processing fee charged by

the non-resident processor and the amount reimbursable by the principal for the materials procured by the

processor. Margin earned from the offshore sale of the processed goods are not included in “Exports of

services”.

14.43. As for trade in goods, the cost of goods for processing supplied by the principal from or via Hong

Kong to the processor without the change of ownership is not included in “Exports of general

merchandise”. The value of the processed goods sold offshore directly without returning to Hong Kong is

treated as “Exports of general merchandise”. The cost of materials supplied by the principal to the

processor from a third economy directly is included in “Imports of general merchandise” in the economy

of the principal.

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Hong Kong exports of manufacturing services and related goods transactions

14.44. For illustration purposes, it is assumed a Hong Kong company provides manufacturing services

on the materials owned and supplied by an Australian company (non-resident principal) and the processed

goods are returned to Australia. The value of manufacturing services is reported under “Exports of

services”. The respondent can provide the export value of manufacturing services based on the total of

the processing fee charged and the amount reimbursable by the non-resident principal for the materials

the processor procured. For trade in goods, the value of the processed goods is not treated as “Exports of

general merchandise” because the ownership belongs to the Australian company. Besides, the value of

input materials supplied to the processor by the principal from Australia or a non-resident are not included

in “Imports of general merchandise”. However, the value of materials procured by the Hong Kong

company from a non-resident to be used in the processing activity are already recorded under “Imports of

general merchandise” and would be part of the manufacturing fee.

B.1.b.3 Freight transport and freight insurance services: CIF and FOB valuations

14.45. It is not always possible to measure the value of the freight transport and freight insurance

services directly. However, freight cost estimates (including both transport and insurance premiums) can

be derived from the CIF/FOB adjustments that are made to the merchandise trade statistics for Balance of

Payment purposes. The difference between CIF and FOB values are considered as freight costs (transport

and insurance premiums). These costs are generally deemed payable by the importer of the goods. Where

they are provided by residents to non-residents, or by non-residents to residents, there will be recordings

in the balance of payments. Table 14.1 displays these differences in recording.

Table 14.1 Valuation principles of merchandise statistics and Balance of Payments

Merchandise trade

(IMTS statistics)

Imports Statistical values CIF (cost insurance freight) and statistical

values FOB (free on board)

Exports Statistical values FOB (free on board)

Goods

(BOP statistics)

Import and

exports Statistical values FOB (free on board)

14.46. As table 14.1 shows, the recommendation for merchandise exports is that they are valued on a

FOB basis, which follows the BPM6 principle of recording general merchandise credits FOB. Imports in

international merchandise trade statistics are recommended to be compiled on a FOB basis (also,

countries are encouraged to compile FOB-type value of imported goods as supplementary

information187)whereas in the BOP, the imports of goods should be valued on an FOB basis; i.e., the value

of transportation cost and insurance premiums from the frontier of the exporter to the border of the

importer is recorded as imports of these services (if the services are provided by non-residents) and the

remaining value is recorded as imports of goods.

14.47. Compilers should note that when calculating the freight transport and insurance costs for BOP

purposes, the statistical value does not necessarily reflect the sum of the actual invoice values,188 but

instead follows the principle adopted in the accounting framework (see the numerical example in box III.4

187 See: IMTS 2010, paragraph 4.8

188 The report from Statistics Denmark provides an overview on differences between the statistical CIF and FOB

value. EuroGrant 2009 Balance of Payments, Grant agreement number 20821.2009.001-2009.715, final report May

2010; the Glaab report recommends collecting invoice values instead of statistical value; the import and export of

freight services should be collected.

173

in MSITS2010). However, many users are also strongly interested in obtaining the data on the actual

costs, as this reflects the total value of freight related services that are provided, which is why MSITS

2010 suggests making these data available to users on a supplementary basis (i.e. beyond the

BPM6/EBOPS2010 recommendations). The valuation of freight transport services on a transaction basis

indicates market price transactions excluding any kind of adjustments or estimations. Such additional

information189 can be used as supplementary information to the FOB/FOB valuation principles in balance

of payments statistics or the FOB/CIF principle in international merchandise trade statistics.

14.48. A variety of methods for estimating freight and insurance on imports are described in BPM6 CG

table 12.2. A common approach of CIF/FOB adjustments is to calculate conversion factors, or ratios of

CIF imports over FOB imports, that should take into consideration the mode of transport, the

geographical distance and the type of commodity transported. International merchandise trade data from

customs can be used to estimate CIF/FOB ratios, provided that these data include information on invoice

and delivery terms. Dedicated surveys are also used in some countries.

14.49. To compile the ratios between the statistical value (CIF-type) and the invoiced value (of the

transactions with FOB-type delivery terms190), compilers are suggested to use those transactions for

which FOB type delivery terms is available, and to calculate the ratio between their FOB-type invoiced

value and the corresponding CIF-type statistical value. The ratio thus compiled can subsequently be

applied to the total statistical value (CIF-type) to obtain a FOB type value. Such ratio should be calculated

for freight transport and insurance, respectively. When there is no sufficient information available from

customs merchandise trade statistics, a combination of the above techniques and direct data collection or

surveys can be used to allow a full coverage of all the cases of imports and exports, types of contracts,

and residence of the carrier.

14.50. Freight insurance services are usually estimated by compilers on the basis of the insurance

premiums, the former being often calculated as a ratio to the non-life insurance premiums. Depending on

the terms of the freight, additional adjustments may be needed based on the value of the goods being

traded (i.e. if the terms are not on an FOB basis) and the terms of contract (i.e., whether the shipment

between the exporter and the importer’s borders is undertaken by a resident or a non-resident).

14.51. It is advised to compile the value of total freight insurance, whereas the freight transport

component has to be broken down by mode, as follows: sea, air, other, of which, space, rail, road, inland

waterway, pipeline transport and electricity transmission.

Country experience: Germany

14.52. In Gernamy, the following formula is applied for the calculation of the transportation costs:

Transportation Costs = weight x freight rate (subject to mode of transport, product group (in the case of

sea transport), and distance). In order to apply this formula the information matrix of table 14.5 is used.

189 MSITS 2010, paragraphs 3.107-3.110.

190 The delivery-terms-FOB method has been developed by Statistics Netherlands.

174

Table 14.5 Information matrix to calculate transportation costs

Weight Product

characteristic Distance Unit costs Nationality

Sea Cargo X x (x) x x

Air Cargo X (x) x x

Inland Waterways Cargo X x x

Road Cargo X X x x

Rail Cargo X X x x

Pipelines X X x x

14.53. In order not to increase the burden for the reporters the information needed for the estimation are

taken from the following public data sources.

14.54. The weights for imported and exported goods are taken from foreign trade statistics and are hence

available on a monthly basis.

14.55. Freight rates. As a second best solution, we use information extracted from publications

specialized in transport an internet research, which focus on more than 30 major carriers and data from

transport services associations. Based on this information the transport costs for a standard container191

were calculated for the various modes of transport. With regard to sea transport, owing to the availability

of additional information, a further breakdown of the transport costs by containers, bulk goods and crude

oil is made.

14.56. The transport prices for each mode of transport, which fluctuate considerably over the course of a

year, are updated on the basis of the transport price indices calculated by the Federal Statistical Office.

14.57. Mode of transport. As an expedient, a “main mode of transport” is used as a basis for the

estimation. The longest part of the total transport route (and hence as a rule also the stretch with the

highest value) is covered using this mode of transport. Information on the mode of transport is derived

from the foreign trade statistics, in which an obligatory enquiry is made about the active mode of

transport used to cross the EU’s external border. This is mainly sea or air and a good approximation of the

actual main mode of transport. If another mode of transport is stated in the trade statistics, it is assumed

that in the case of non-European countries, the goods were transported by sea to the large ports in the

Netherlands and Belgium192 and then transported onwards to Germany on the stated mode of transport.

Table 14.6 shows an example of calculating transportation costs.

191 20ft equivalent unit (TEU) with an average loading weight of 14 tons.

192 For mineral oil imports, Italy (Trieste) is assumed to be the unloading port for the Middle East countries.

175

Table 14.6 Example of calculation of transportation cost for imports from China

Imports from

China: 1,109,537t

Mode of

transport Distance Product group Unit costs Costs in

1,000 EURO

Sea cargo 85.6%

139 €/t 151,141

+ chain sea->inland

waterways 3.9%

+ chain sea->road 8.3%

+ chain sea->rail 0.2%

Air cargo 2.0% 8,479 €/t 188,022

Inland waterways

cargo 3.9% 4.90€/t 212

Road cargo 8.3% 300 km 0.08776€/t km 2,424

Rail cargo 0.2% 300 km 0.04636€/t km 30

Note: (1,109,537 x (0.856+0.039+0.083+0.002) x 139 = 151,141)

14.58. Nationality of the carrier. A number of different sets of statistics are used as a basis to determine

the relevant partner country. The nationality composition of the road toll statistics is used for the

regionalization of lorry transport (adjusted to compensate for the disproportionately large share of

German trucks due to domestic transport). The ownership (not flag) share of the countries among the

world fleet is used for sea transport. Since only some sea transport is carried out using scheduled services,

the breakdown of the world fleet by country can be regarded as an informative approximation. The same

applies to air transport, i.e. the world market shares of the airlines are used. With respect to inland

shipping, information on the flags of the ships is the sole data available, hence only this information is

currently used. As cross-border rail transport has only been liberalized since 2007, no statistics are

available for this yet. A robust estimation for the rail system is carried out on the basis of the technical

systems of the national railway networks (e.g. track widths, line voltages, operating licences).

14.59. Transport insurance. The amount of transport insurance is also estimated using this procedure,

although no further details will be supplied regarding the methodological particularities of insurance

companies (service fee included in the insurance premium, etc.). Unlike transport costs, the insurance

costs are calculated as a share of the import value. This share is in line with the premium rates set by

transport insurance brokers for transportation from/to various regions. These rates were calculated parallel

to determining the transport costs by surveying several international transport insurance companies. The

reported country structure for transport insurance is used for the regional breakdown of these costs.

B.2. Passenger transport and travel

B.2.a. Introduction

14.60. Passenger transport and Travel are service categories that are strongly related and where

compilation often involves the same or similar data sources. Passenger transport include fares and other

expenditure related to the carriage of passengers, including any taxes levied on passenger services, such

as sales or value added taxes (see MSITS2010 paragraph 3.95). Travel covers goods and services for own

use or to be given away, acquired from an economy, by non-residents during visits to that economy.

Hence, travel is transactor-based, which makes the compilation of data on travel challenging compared

with most other service categories that follow a product-based classification (see MSITS2010 paragraph

3.115).

176

B.2.b. Compiling statistics for passenger transport and travel

14.61. To compile statistics for passenger transport and travel, compilers can draw from a variety of data

sources. These can include ITRS (which can provide information on monetary flows between travellers

and tourism services providers and payments made through bank notes, traveller cheques or credit cards),

payments cards data and other administrative sources (such as immigration records), but surveys remain

an especially important data source. For passenger transport, these surveys may include dedicated

transport surveys (aimed at large transport-providing enterprises, such as airlines or railway operators).

14.62. For EBOPS travel item (exports), surveys can include survey of travellers; border surveys;

household surveys; and surveys of enterprises, including accommodation establishments and tourist

intermediaries (e.g., travel agencies and tour operators). Travel agencies are the traditional intermediaries

between those traveling and travel-related services providers, such as hotels, car rentals, cruise lines and

package tours. Direct reporting allows for a better measure of travel expenditures booked through these

intermediaries than what can result from the ITRS. As far as individual tours are concerned, the travel

agencies have detailed information that allows them to distinguish travel components only when

individuals pay for tours to visit foreign countries. For package tours, it is often the case that tour

operators are in a better position to provide the product classification of different services assembled in a

package. This information can be obtained through the implementation of a specific direct report for tour

operators.

14.63. Visitors’ surveys may provide more detailed insights, such as the purpose of travel without which

the trip would have not taken place, the type of person traveling, the structure of the expenses made

during the trip and how they pay for those expenses. Supplemental sources include tourism activity

statistics (accommodation providers’ statistics) along with accommodation prices in the consumer price

index, and, on the debits side, mirror statistics from partner countries.

B.2.b.1 Passenger transport

14.64. Transport services should be recorded on a gross basis. This means that the value of passenger

transport services includes fares and other expenditures related to the carriages of passenger. For example,

commissions of ticket sales should be included in services value.

14.65. Given prevalent practices of interlining and code sharing by airlines, compilers should obtain data

on revenue earned by an airline from residents of other countries rather than data on sales by an airline to

residents. It may be possible to collect such data as airlines keep records on revenue generated by country

of sale. However, as not all airlines earning revenue from residents of a particular country will have

offices in that country, it may be difficult for compilers to obtain a complete coverage of passenger fare

revenue earned by non-resident operators from residents of the home country. In such cases, a data model

based upon the number of non-resident passengers carried by resident operators, passengers’ countries of

origin and destination, and average fare rates could be used to produce an estimated value.

14.66. An alternative means of measuring passenger fare revenue earned by non-resident operators is to

collect information on the total value of tickets sold in the compiling country and deduct from this total

value the earnings of resident carriers. An estimate of ticket sales may be derived from a household

budget survey or other surveys of individuals, for example.

14.67. In some cases, passengers fares may be a component of package tour payments, and the compiler

may, in consultation with travel industry representatives, have to separate passenger transport and other

travel components.

177

Country experience: Ireland

14.68. In Ireland export sales data for passenger transport are obtained from resident airline and ferry

operators in terms of their receipts from non-residents for travel to and from Ireland.

14.69. Direct data on receipts for other types of resident transport companies are not available – such

expenditure by non-resident visitors to Ireland being captured indistinguishably in the travel and tourism

receipts (exports). Respondents may provide their best estimates’ in respect of the geographical

breakdown required because of the difficulty of knowing in all cases the precise country of residence of

their customers. Payments by Irish residents to non-resident transport enterprises in general cannot be

directly distinguished at present. Such payments (imports) are included in the travel and tourism

expenditure data. Receipts by resident airline and shipping companies for freight services provided

(exports) to non-residents are obtained from these enterprises, the geographical breakdown being

provided on a best estimates’ basis where necessary.

Country experience: Australia

14.70. In Australia passenger transportation services are obtained from the ABS's quarterly Survey of

International Trade in Services with estimates for freight debits derived from the ABS's International

Merchandise Trade Statistics. Survey responses for passenger transport are adjusted to ensure only

international services are captured as described below.

14.71. The SITS requests non-resident providers of passenger transport services to report revenue earned

from the sale of international tickets within Australia. Survey responses could therefore include tickets

sold to both resident and non-resident travellers, and regardless of whether it involves transport between

Australia and the rest of the world or within Australia as part of an international journey. Data from the

International Visitors Survey conducted by Tourism Research Australia and ABS Overseas Arrivals and

Departures data are used to estimate the value of international tickets sold within Australia to non-

residents on non-resident airlines and this value is deducted from the survey total for passenger transport

debits. Similarly estimates are made for the value of international tickets sold within Australia to non-

residents on resident airlines and this value is added to the survey total for passenger transport credits. It

should be noted that the survey requests the same information from resident providers of passenger

transport services for the sale of international tickets abroad, however no adjustment is currently made to

account for the purchases by Australian residents abroad.

14.72. The value of services provided to non-residents by Australian carriers in Australia, when sold

abroad as part of an international ticket (on-carriage), is collected from the carriers and allocated to travel.

Services provided on purely domestic travel in Australia by non-residents, whether pre-purchased abroad

or while in Australia, are also included in travel. No classification adjustments are made for non-resident

earnings from residents for internal flights abroad, and all earnings from sales in Australia for on-carriage

in a foreign country, or for pre-purchased domestic travel in a foreign country, are included

indistinguishably in transportation debits. Cruise fares are excluded from passenger services and included

in travel, although sea passenger services sold in Australia and provided to residents travelling from one

country to another and any resident sea passenger earnings are included in transportation.

B.2.b.2 Travel

14.73. The concept of travel, as it used in MSITS 2010, is closely related with the concept of tourism.

Thus, it is advised that trade in services compilers understand the conceptual framework of tourism

statistics, including Tourism Satellite Account (TSA). Detailed descriptions are available in two UN

178

publications (IRTS 2008 and TSA: RMF 2008) and in the Compilation Guide for Tourism Statistics

available at the World Tourism Organization website.193

14.74. In addition to the aggregate measure of travel exports (credits) and imports (debits), BPM6 and

EBOPS 2010 recommend the compilation of further breakdowns of travel. These breakdowns can be used

not only to better assess the scope of travel activities and to gauge their possible impact in terms of

economic activity, but also to ensure consistency between data on travel compiled in accordance with

MSITS 2010 and other related statistics, such as the tourism statistics, tourism satellite account or supply

and use table.

14.75. Some of these requirements are not new compared with the previous edition of MSITS and BPM.

That is the case of the mandatory split between business and personal travel and the breakdown of

personal travel into health-related, education-related and other motives. Other breakdowns, such as the

alternative presentation of travel according to the types of goods and services, are new challenges for the

balance of payments compilation. C To meet these requirements compilers should draw on the advantages

of the increased proximity with agents directly involved in the external operations and on the availability

of more detailed information. Table 14.7 shows complementary data sources that can be used to compile

different breakdowns.

Table 14.7 Travel breakdown: data sources (example)

Breakdown Data Sources

Travel Purpose:

Business / Personal

Payment Cards Database

Direct Reporting - Travel Agencies and Tour Operato rs,

visitor surveys and household surveys

Personal Purposes: Health-related, Education-

related, Other Survey, Administrative Data

Group of Traveler: Border, seasonal and other

short-term workers

Mirror Statistics

Survey

Types of Goods and Services

Payment Cards Database

Direct Reporting - Travel Agencies and Tour Operato rs

Survey

14.76. When defining the specific level of detail for each breakdown, other specifications should be

considered in order to have an integrated and consistent framework, which would provide all details

required by other statistical domains, such as the tourism satellite account, national accounts and the

harmonized index of consumer prices. A needs assessment is essential to understand how the available

data sources can deliver the level of detail required. For this purpose, the cooperation between different

statistical authorities seems to be crucial in order to reduce compilation costs, as well as to integrate

diverse statistical systems and conceptual frameworks.

14.77. In particular, compilers who are responsible for estimating the receipts and expenses for travel

could work closely with the Ministry of Tourism or similar governmental agencies. When international

passenger surveys and other surveys are conducted or outsourced, thorough discussions should be made

between the compilers of trade in services statistics and the Ministry of Tourism. Such discussions would

193 See: http://statistics.unwto.org/en/content/methodology-0 and http://statistics.unwto.org/content/international-

recommendations-tourism-statistics-2008-irts-2008-compilation-guide.

179

contribute to the consistency of primary data used for the compilation of these statistics and tourism

statistics, including tourism satellite account.

14.78. The interconnection of the different sources can be seen as rooms in different floors of a house

(see Figure 14.1, which is based on the experiences of Austria), where the SNA serves as the roof top

giving inputs to the TSA and receiving input from Travel item of balance of payments (T-BOP). The

basic tourism statistics, accommodation statistics and the sample survey are major inputs for compiling

the compound statistics TSA and T-BOP. The basic statistics should be mutually harmonized in major

conceptual fields and the outcomes should be reconciled where they describe the same pieces of reality.

Figure 14.1 Integrated Aspects of Tourism and Travel Statistics

Country experience: Austria

14.79. In Austria, OeNB and Statistics Austria are running a joint survey for tourism expenditures and

the travel item. For collecting or compiling tourism in its forms of domestic, outbound and inbound the

accommodation statistics (covering inbound and domestic) and the sample survey are used. These two

basic surveys cover all forms of tourism with respect to the physical flows. For bringing in expenditure

variables for inbound expenditure, T-Mona, which is basic tourism statistics, is used. These three basic

statistics are followed by the compound statistics TSA and the T-BOP. T-BOP statistics provide key

figures with the TSA.

14.80. As the travel components such as seasonal and border workers, students, medical patients and

those who are crossing the border but still are within their usual environment can be isolated, T-BOP data

can be used as key figures of the TSA. The TSA uses several other data sources, including the

accommodation statistics, the sample survey and T-Mona. The T-BOP that goes beyond the concept of

tourism statistics also uses several tourism statistics as inputs. The T-BOP is input for compiling the rest

of the world account, delivering bridge tables for the private consumption and identifying business travel,

which is seen as production input in the NA.

180

14.81. Reconciliation of basic tourism statistics. The selection of the T-Mona sample is based on data of

the accommodation statistics as these data are available on a detailed geographical level. The data are

further used for weighting and grossing up procedures. Also the questionnaires are harmonized in major

fields as, for example, the same categories of accommodation statistics are used in both statistics. As the

accommodation statistics do not consider stays at friends and relatives but as this information is also

included in the T-Mona survey, inputs are used from the accommodation statistics to establish proper

sample basis.

14.82. The questionnaires of the sample survey and T-Mona are harmonized according to

accommodation establishments and other definitions according to the tourism concept. The data sources

of both sample survey and accommodation statistics cover domestic tourism. Therefore the outcomes at

least for the physical flows of the number of overnights and arrivals of Austrian residents in Austria are

mutually checked.

14.83. Reconciliation between the BOP travel item and tourism statistics is performed on both credit and

debit sides of T-BOP.

i. Credit side of the T-BOP. The first major data source for the compilation of the credit side of

the T-BOP is T Mona, as it delivers the average expenditure of non-resident tourists in

Austria in paid and non-paid accommodation establishments. The expenditure questions in

the T-Mona questionnaire meet TBOP needs and are harmonized with concept used in BPM6

and MSITS2010. The second major data source for the compilation of the credit side of the

T-BOP is the accommodation statistics which delivers the population of non-resident tourists

in paid accommodation establishments by country of origin. However due to survey

restrictions the number of countries, which are directly surveyed, is limited to 60. In contrast

to this limited geographical breakdown the T-BOP considers data from credit and debit card

companies which are delivered by the Austrian National Bank and therefore delivers detailed

information about the geographical breakdown. So data can be used to further splitting up the

geographical breakdown of the accommodation statistics based on expenditure data.

ii. Debit side of the T-BOP. Major data source for the compilation of the debit side of the T-

BOP is a sample survey. As this sample survey is based on the tourism concept harmonized

questions are implemented to meet the needs for the travel concept of the T-BOP. Besides the

differentiation between business and personal travel also same day visitors are included as T-

BOP does not distinguish between lengths of stay as only the expenditure variable is

important. Credit and debit card data which are implemented in the T-BOP are used for doing

plausibility checks with the outcome of the sample survey. The data are also used to create a

detailed geographical breakdown of the sample survey as for this survey the geographical

breakdown is limited to approximately 10 because of the sampling error. This reconciliation

exercise helps to overcome the limits of the sample survey.

Country experience: Portugal

14.84. The framework designed in Portugal to compile travel statistics is to a large extent based on the

instruments used to pay for travel expenditures, that is to say (a) payment cards, (b) traveler’s checks and

difficulty for the compilers, particularly in the euro area countries. It is necessary to estimate these

expenditures and this estimation can be quite challenging, since the use of cash must certainly differ

according to the type of good or service acquired by travelers.

181

14.85. The selection of the data sources above-mentioned to use in such a framework depends upon the

moment of payment of the expenditures: (a) pre-payment or (b) local payment, and upon the channel used

to book and/ or pay for travel arrangements: (a) direct reservation or (b) reservation made through a travel

agency or tour operator (resident or non-resident). The approach and sources selected to compile travel

credits and debits may be somewhat different, taking into account that the scope of data sources available

and the degree of coverage that is possible to obtain from each data source individually can differ for the

credit and the debit side.

14.86. Tables 14.8 and 14.9 present an overview of the main sources selected for each combination of

channel, moment of payment and payments instrument used. The combinations showed in the tables are

the ones that are more likely to occur. For example, the pre-payment of a trip booked through a direct

reservation channel most probably will not be performed in cash. Therefore, this alternative was excluded

from both tables.

Table 14.8 Main source for travel credit (supply side)

Channel used to carry

out travel arrangements

Moment of

payment

Payments

instruments Data Sources

Direct reservation

Pre-Payment Payment Cards Payment Cards Database

Local payment

Payment Cards Payment Cards Database

Cash

Direct Reporting - Banks and

MTO

Payment Cards Database

Survey

Traveler’s check Direct Reporting – Banks

Reservation made

through a travel agency or

tour operator (resident or

non-resident)

Pre-Payment Payment Cards Tourist Activity Statistics;

Accommodation Prices;

Direct Reporting - Travel Agencies

and Tour Operators; Survey

Cash

Local payment

Payment Cards Payment Cards Database

Cash

Direct Reporting - Banks and MTO

Payment Cards Database

Survey

Traveler’s check Direct Reporting – Banks

182

Table 14.9 Main source for travel debit (demand side)

Channel used to carry

out travel

arrangements

Moment of

payment

Payments

instruments Data Sources

Direct reservation

Pre-Payment Payment Cards Payment Cards Database

Local payment

Payment Cards Payment Cards Database

Cash

Direct Reporting - Banks and MTO

Payment Cards Database

Survey

Traveler’s check Direct Reporting – Banks

Reservation made

through a resident travel

agency or tour operator

Pre-Payment Payment Cards Direct Reporting - Travel Agencies

and Tour Operators

Cash

Local payment

Payment Cards Payment Cards Database

Cash

Direct Reporting - Banks and MTO

Payment Cards Database

Survey

Traveler’s check Direct Reporting - Banks and MTO

Reservation made

through a non-resident

travel agency or tour

operator

Pre-Payment Payment Cards Payment Cards Database; Survey

Local payment

Payment Cards Payment Cards Database

Cash

Direct Reporting - Banks and MTO

Payment Cards Database

Survey

Traveler’s check Direct Reporting – Banks

Country experience: Hungary – health-related travel

14.87. The Hungarian Central Statistical Office (HCSO) compiles services transactions between

residents and non-residents. Data for business and transportation services are based on annual and

quarterly conducted surveys by HCSO. The statistical units are the resident enterprises, government and

non-profit organizations, which supply services to non-residents and use services of non-residents. The

surveys contain a list of 62 service types, of which health services. According to the methodology,

respondents should report all services of NACE 86 category between residents and non-residents,

provided by physicians, nurses, other qualified personnel working in health care. Even the services

provided from distance (ex. Laboratory, through internet) should be included.

14.88. The main data provider for health services is the National Health Insurance Fund (OEP). Among

the other companies who reported export data for health services were university hospitals, air emergency

rescue companies and pharmaceutical trade companies. According to an agreement between OEP and

HCSO (and based on the international methodology) the insurance fund export data cover emergency and

other demanded health services provided by Hungarian health institutes for foreigners in Hungary. The

invoices paid by foreign health insurance companies, or paid by foreigners at the site.

183

14.89. On the other hand, imports cover emergency and other demanded health services provided by

foreign institutes for Hungarians, the invoices paid by OEP directly, and the services paid by Hungarians

at the site, reimbursed by OEP later. The health services for Hungarians who travel abroad for the certain

purpose of medical treatment are considered as part of the tourism service and are not reported here. The

differences between the methodology of external trade statistics and SHA have as result different values

for the national health accounts of Hungary and international trade of health services. In the trade

statistics the difference is part of the tourism service import.

14.90. Data on tourism expenditure is based on two surveys: Questionnaire on foreigners visiting

Hungary, and Questionnaire on travel abroad. The sample, excluding lorry drivers, covers those outgoing

foreign and incoming Hungarian citizens, who cross the border, including participants in package tours.

The sample is a stratified non-probability sample. On a yearly basis, average sample sizes are ~120,000

questionnaires for foreigners and ~50,000 questionnaires for Hungarians. The selection of the days is

systematic and casual. Data collection is conducted through personal interviews. The surveyed places are

24 road border stations and Budapest-Liszt Ferenc International Airport. The survey is voluntary.

14.91. From the whole set of questions two contain information that can be related to health care,

namely the questions on purpose of visit and on expenditures. The purpose of visit, among others, can be

“medical treatment” and “spa, wellness”. In the latter should be accounted both the spending at spas

based on physician’s prescriptions, and spending for purpose of wellbeing or recreation.

14.92. However, a mechanical use of data from tourism statistics may lead to double-counting on

aggregate level, since the household survey data (the Hungarian out-of-pocket expenditure data being

based mainly on this survey) contain all the household spending no matter if it took place in the country

or abroad, even if in the household survey guidance there is not any reference to payments abroad. The

exports of health services to non-residents are more important than the imports, given the lower prices of

the Hungarian health care providers.

Country experience: United States – education-related travel

14.93. Exports of education services measure foreign students’ education expenditures in the United

States. Foreign students are defined as individuals enrolled in institutions of higher education in the

United States who are not U.S. citizens, immigrants, or refugees. Data on the number of students are

obtained from an annual survey of about 2,700 accredited U.S. institutions, conducted by the Institute for

International Education (IIE). Characteristics of the population used in the estimates include the

geographic area of origin (residence), type of institution (public or private), enrolment status (part‐time or

full‐time), and academic level of institution (2 year, 4 year, or university).

14.94. Estimates of average expenditures for tuition and for room and board are developed from annual

surveys of most U.S. accredited institutions conducted by the National Center for Education Statistics,

U.S. Department of Education, and matched by BEA to the characteristics of the student population. Data

on living expenses are based on Bureau of Labor Statistics, U.S. Department of Labor, estimates of low‐

income level family budgets in metropolitan and nonmetropolitan areas, reduced to a single person, and

adjusted for inflation each year. Estimates of foreign students’ expenditures are made by multiplying the

number of students by average expenditures.

14.95. Imports of education services measure U.S. students’ expenditures abroad. Students consist of (1)

U.S. residents who receive academic credit for study abroad from an accredited institution of higher

education in the United States and (2) students who enrol directly with foreign institutions, including

184

medical students, and receive no academic credit from U.S. institutions. The total of U.S. students’

expenditures abroad is the sum of the estimates for the two groups of students.

14.96. For students who receive academic credit from U.S. institutions, data on the number of students

are obtained from an annual survey of about 1,300 U.S. institutions conducted by the Institute of

International Education. Characteristics of the population used in the estimates include country of study,

type of institution (public or private), and academic level of institution in the United States (2 year, 4

year, or university). Data do not include students who study abroad without receiving academic credit

from a U.S. institution, or students enrolled for a degree overseas.

14.97. Student payments to U.S. colleges and universities for tuition and room and board are assumed to

be forwarded to foreign institutions. Estimates of average expenditures for tuition and room and board are

developed from an annual survey of most accredited U.S. institutions; the survey is conducted by the

National Center for Education Statistics, U.S. Department of Education. Average living expenses are

estimated by applying a ratio of U.S.‐to‐foreign living costs to the low‐income‐level family budget series

developed for foreign students who study in the United States. Estimates of U.S. students’ expenditures

abroad are made by multiplying the number of students by average expenditures for tuition and room and

board and for average living expenses.

14.98. For students who enroll directly in foreign institutions and receive no academic credit from U.S.

institutions, supplemental estimates of education payments for the United Kingdom, Australia, Canada,

and Ireland, based on national data from those countries, are used to capture U.S. students’ expenditures.

B.3. Construction

B.3.1 Introduction

14.99. Construction covers the creation, management, renovation, repair or extension of fixed assets in

the form of buildings, land improvements of an engineering nature and other constructions such as roads,

bridges and dams. It includes related installation and assembly work, site preparation and general

construction, as well as specialized services such as painting, plumbing and demolition (see 3.132-3.135

of MSITS 2010).

14.100. Construction is valued on a gross basis, i.e. inclusive of all goods and services used as inputs to

the work (whether subcontract or not), other costs of production and the operating surplus that accrues to

the owners of the construction enterprise194. Construction is also valued on a gross basis in the sense that

it can be disaggregated into construction abroad and construction in the compiling economy. The

construction exports (credits) would result from summing up the credit entries (i) from construction

abroad and (ii) from construction in the compiling economy. Similarly, the construction imports (debits)

would consist of debit entries (i) from construction abroad and (ii) from construction in the compiling

economy.195 If the external operations of a construction company are substantial enough, a separate

branch, resident in the host economy, may be constituted which will usually give rise to a direct

investment relationship between the parent company and the branch.

194 BPM6 CG, paragraph 12.95.

195 BMP6 CG, Chapter 12.99, 12.101.

185

B.3.2 Compiling statistics for construction

14.101. With respect to the value of the goods and services used as inputs to the work, compilation

difficulties may arise when it is not possible to identify separately the goods purchased in the home

economy and the host economy. For practical reasons, the compiler may need to estimate a breakdown, or

otherwise attribute all goods purchased to either the host or the home economy of the construction

enterprise (see also Box 14.2). Also, it may not always be possible to identify the purchase of goods and

services separately from labor costs. In this case, the compiler will need to estimate a breakdown or,

alternatively, allocate all costs either as goods and services or as compensation of employees (for

employees that are residents of the host economy).

14.102. In order to correctly compile the item it is particularly important to precisely identify the

residence of the enterprise realizing the construction work. Indeed, a construction enterprise established in

one economy may undertake construction projects in another economy directly (no local entity created) or

through a branch, i.e. via a direct investment relationship. In the former case the construction activities are

regarded as export of services, whereas in the other case they are considered direct investment operations.

14.103. In the case of long-term projects where no local entity needs to be created, MSITS 2010 and

BPM6 suggest a number of factors to identify if a unit of one economy which is active in another has

operations substantial enough to consider that this unit has a branch resident in this other economy (see

MSITS 2010 paragraph 3.142). The operations therefore need to be analysed to identify if they are

substantial. In particular, compilers should avoid creating too many notional units.

14.104. First of all, the compiler should identify the duration of the construction project. If the project

extends over a period of at least one year, then it is a strong indication that the compiler should investigate

further on the project. If certain other factors are met, the construction work undertaken is to be treated as

if a separate institutional unit – a branch (subsidiary) – is created, which is resident in the economy where

the activity is being carried out. This branch would be considered as a direct investment enterprise. If

some or all of these factors are not met, the activity is to be treated as an export by the construction

enterprise. The other suggested criteria are:

i. The maintenance of a complete and separate set of accounts for the activity (i.e., income

statement, balance sheet, transactions with the parent company, etc.);

ii. The activity being subject to tax in the host country;

iii. The existence of a substantial physical presence;

iv. The receipt of funds for its work for its own account, etc.

14.105. The decision is based on the weight of the evidence for a set of criteria and not on any single

criterion; for example it would be very difficult to identify a branch if for the construction activity a

separate set of accounts cannot be prepared or maintained. Construction activities involving major

projects (bridges, dams, power stations, etc.) that are carried out through unincorporated site offices, in

many cases meet the criteria of a direct investment enterprise and thus are treated as part of the production

of the host economy, not as an export of services to that economy.196

196 Ibid., paragraphs 12.92-12.94.

186

14.106. In the case of construction projects conducted in the context of aid programmes, the treatment

should be to record a transaction under services if relevant (i.e. if project is small scale etc. using the

criteria defined in the previous paragraphs) between the economy where the aid agency financing the

project is located (credits) and the economy where the construction is taking place (debits). The

counterpart entry should be in the capital account. If the contractor is not a resident of the economy of the

donor, then there would also be some (construction) transactions to record between the economy of the

donor and the economy where the contractor is conducting its operations from (using a gross

recording).197

14.107. To compile statistics on construction, both ITRS and surveys can be used as sources of

information regarding construction. However, surveys may provide more detailed and relevant data than

the ITRS, in particular when it comes to gathering information on construction abroad debit and

construction in the compiling economy credit. The complexity of cross-border construction activities is

also another reason to prefer a survey, in particular if the compiling economy has many international

construction projects (either exports or imports). If countries should decide to use ITRS data, particular

care should be taken to measure transactions involving bank accounts of construction companies in the

host economy, because some of these companies may meet the criteria for treatment as residents.198

197 Such a treatment is not limited to construction.

198 A survey collecting data on construction could also jointly collect information on foreign direct investment and

other resident/non-resident transactions BPM6 CG, table 12.4, p.205.

187

Box 14.2

Numerical example of measurement of construction

A construction enterprise resident in economy A starts a construction project in economy B on the 1st of February.

The end date of the project is the 10th of April of the same year. The gross construction value is 100,000. The

project is considered as a construction service, as it lasts less than one year (69 days). The enterprise is requested to

report the construction project in the questionnaires related to both the first and the second quarter, specifying the

project start and end dates, the counterpart country and the gross value of the construction.

In order to undertake the construction project the enterprise purchases inputs (materials, services and labour) during

the first quarter. The purchases are reported as follows:

 Goods purchased in Italy: 20,000;

 Goods, services and labour purchased/acquired abroad: 50,000.

The gross construction value pertaining to Q1, to be allocated in A’s BOP as constructions abroad - export with

counterpart country B, is computed as follows:

(100,000 / 69 total days * 59 days in the quarter) = 85,507

The reported goods, services and labour purchased/acquired abroad are allocated as constructions abroad - import

with counterpart country B. The reported goods purchased in Italy are deducted from the goods exports, again with

partner country B, of the BOP. The complete recording for Q1 is shown in the table that follows:

Q1 BOP

Export Import

Constructions abroad 85,507 50,000

Goods (adjustment) -20,000

In Q2 the enterprise does not purchase any input, neither in Italy nor abroad, thus, it has only to report the

construction start and end dates, the counterpart country and the gross construction value. The construction value

pertaining to Q2, to be allocated the BOP as construction abroad - export with counterpart country B, is computed as

follows:

(100,000 / 69 total days * 10 days in the quarter) = 14,493.

Hence, the BOP recording forQ2 is the following:

Q2 BOP

Export Import

Constructions abroad 14,493

188

Country experience: Italy

14.108. In Italy’s system, the construction activity is either regarded as an FDI-related operation, if the

construction work extends over a period of at least one year, or regarded as a service transaction if the

construction work takes less time. In Italy the gross construction value of projects lasting one year or

more largely exceeds that of short-term works, both for constructions abroad (98% vis-à-vis 2% as an

average in the period 2008-2012) and for constructions in Italy (80% vis-à-vis 20%).

14.109. Constructions lasting less than one year. The quarterly non-financial transactions questionnaire

(TTN questionnaire) collects specific information needed to compile the construction item. In particular,

only for constructions abroad, firms are required to report the following transactions, in relation to the

reference quarter (see Chapter 6 Section C.8., paragraphs 6.78-6.87 for data collection of construction):

i. Goods, services and labour purchased/acquired abroad, used to compile the construction abroad

debits. According to MSITS 2010, the goods and services acquired by the construction enterprise

from third economies should be recorded under the appropriate general merchandise or services

item. However, in order to reduce the reporting burden, firms are not required to split the inputs

purchased in the host economy from those acquired in third countries; as a consequence the

inputs purchased abroad are all allocated to construction abroad debits and to the host economy as

the partner country. Moreover, another approximation is that also labour costs are included in

construction abroad debits, as it proved not feasible for firms to separately identify this cost

component.199

ii. Goods purchased in Italy, used to adjust the BOP goods item, by deducting the corresponding

amounts from merchandise exports. This is necessary in order to avoid duplications, as the goods

purchased in Italy by the resident construction enterprise are also recorded in merchandise

exports, based on foreign trade statistics.200 In principle, also the services acquired by the resident

construction enterprise from residents of the home economy should be excluded; however, in

order to simplify the reporting, it is assumed that all services are acquired from the host economy.

14.110. Table 14.10 shows the different sources used for each component of construction services. The

construction abroad as exports, and the construction in Italy, as imports are computed assuming that the

gross construction value is uniformly distributed throughout the duration of the work.

14.111. For constructions in Italy, detailed information is usually not available to the reporting enterprises

receiving the service. In order to fill this information gap, an assumption is made that the cost structures

of constructions abroad and in Italy are similar. Therefore, the missing information (i.e. the goods,

services and labour purchased/acquired in Italy and the goods purchased in the country of residence of the

construction firm) is estimated on the basis of the ratio of the symmetric items reported for constructions

abroad to the gross construction value.

199 Ibid., paragraph 3.141.

200 Ibid., paragraph 3.140, footnote 14, and BPM6, paragraph 10.22 (d).

189

Table 14.10 Methodology for the compilation of the construction services item in Italy

Export Import

Constructions abroad

Total contract value

pertaining to the reference

quarter

Goods, services and labour

purchased/acquired abroad

Constructions in Italy

Goods, services and labour

purchased/acquired in Italy

(estimated)

Total contract value

pertaining to the reference

quarter

14.112. Constructions lasting one year or more. Also in the case of constructions lasting one year or more

the gross construction value is uniformly distributed throughout the entire duration of the work. The quota

pertaining to the reference quarter is considered an increase of FDI equity stock (FDI abroad - or assets -

in the case of construction abroad and FDI in the reporting economy - or liabilities - in the case of

construction in the compiling country).

14.113. For constructions abroad, in the quarter in which the construction project ends, the reporting

agent has to report the additional information on the net margin, i.e. the difference between the gross

construction value and all costs incurred by the construction enterprise in relation to the project. For

constructions in Italy, the net margin, which is not directly available to the reporting agent, is estimated

by the compiler applying to the gross construction value the average rate of return observed for

constructions abroad.

14.114. Consequently, in BoP for the quarter in which the construction ends: (i) the gross construction

value is recorded as FDI disinvestment (on the assets side in the case of constructions abroad, on the

liabilities side in the case of constructions in Italy), since the construction is delivered to the client; (ii) the

net margin is recorded as FDI income (on the credit side in the case of constructions abroad, on the debit

side in the case of constructions in Italy).

B.4. Insurance, pension and financial services

B.4.a. Introduction

14.115. This sub-section describes the compilation of insurance and pension services as well as financial

services, maintaining the consistency with the recommendations of the BPM6 CG 201. Some of those

services are provided without explicit fees, which are included in property income and other flows. Thus,

calculation of services needs certain degree of estimations or imputations, based on balance sheet and/or

profit/loss, which are often provided through supervisory reports. Other services, in particular auxiliary

services, are provided with explicit fees.

14.116. According to the MSITS 2010, insurance and pension services are disaggregated into four

separate sub-components: direct insurance; reinsurance; auxiliary insurance 202 ; and pension and

201 The BPM6 CG provides recommendations on the treatment of insurance, pension and financial services, in

particular, in its Appendix 2 “Insurance Transactions and Positions, Pension and Standardized Guarantees Schemes”

and Appendix 3 “Financial Intermediation Services Indirectly measured”.

202 According to MSITS 2010, auxiliary insurance services are included in insurance and pension services. This fact

should not be confused with the sectoral classification of SNA 2008, whereby insurance brokers and alike are

classified under “financial auxiliaries.”

190

standardized guarantee services203. Direct insurance is further broken down into life insurance, freight

insurance and other direct insurance. Pension and standardized guarantee services is further broken down

into pension services and standardized guarantee services.

B.4.b Insurance and pension services

B.4.b.1. introduction

14.117. The insurance and pension services reflect the output of specific industries whose calculation is

best described in the context of balance of payments recordings. BPM6 Appendix 6c provides some

background to the operation of the insurance and pension schemes and the BPM6 CG, Appendix 2

provides more details on the overall recording of transactions in the balance of payments, including the

relevant services. This section summarizes the main aspects related to the calculation and data sources for

the insurance and pension services.

B.4.b.2 Compiling insurance and pension services

14.118. The estimation methods and necessary data for various insurance and pension services, if they are

provided without explicit fees, are basically the variation204 of those for direct insurance as shown below

and in the example in box 14.3. Their insurance services are calculated based on premiums earned and

losses incurred pertaining to the accounting period:

Gross premiums earned (from direct business)

Plus Net income from investments attributable to policyholders (premium supplements)

Minus Estimated claims incurred (adjusted for claim volatility, if necessary)

Equals Insurance service charges

Box 14.3

Numerical example of direct insurance services

For resident insurers with separate data on policyholders abroad:

Premiums earned from abroad . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100

Claims payable abroad . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95

Income attributable to policyholders . . . . . . . . . . . . . . . . . . . . 20 (premium supplements)

Insurance service charge is . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 [=100+20-95]

14.119. For life insurance and pension services, the net increase in life insurance actuarial reserves or

pension reserves (pension entitlement) should be further deducted as such increase is regarded as asset

accumulation to their policyholders.

203 The MSITS 2010 does not recognise fees paid to administrators of pension funds as a separate category, while

the 2008 SNA recommends that pension fund managers, (administrators of pension funds, which only manage the

activities of pension funds without taking ownership of the assets or liabilities), be classified as financial auxiliaries.

204 The value of the output of standardized guarantees providers can be calculated in the same manner as that of non-

life direct insurance. For reinsurance, commission payable should be further deducted from the premiums earned

and the claims adjusted for profit sharing in excess of loss reinsurance.

191

Gross premiums earned

Plus Premium supplements

Minus Benefits due

Minus Net Increase in life insurance actuarial reserves

Equals life insurance service charges

14.120. To compile the exports of insurance services, compilers can generally obtain comprehensive data

from surveying resident insurance enterprises, particularly in countries where surveys are the major

source data for TIS data collection (see Chapter 6 F (iv)).

14.121. Alternatively, if comprehensive surveys are not feasible, compilers may be able to obtain

information directly from domestic insurance corporations that would allow them calculate an

approximate insurance service in a given reporting period. Specifically, if they can collect data on the

breakdowns of premiums received from resident clients and those from non-resident clients, insurance

services provided to non-resident clients can be calculated assuming that the service-to-premium ratio is

the same between resident and non-resident clients. Such a ratio could also be used for estimating imports

of insurance services if payments of insurance premiums are captured through general enterprise surveys,

as shown in Box 14.4. Nevertheless, compilers should pay attention to possible differences between the

service-to-premium ratio of domestic insurance corporations and that of foreign insurance corporations.

Box 14.4

Numerical example of exports of insurance services

For resident insurers with separate data on policy-holders abroad for premiums only:

Total insurance services (to residents and non-resident clients combined) . . . . . . . . . . . . . .50

Total premiums . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 200

Of which: Premiums from residents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .120

Premiums from non-residents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .80

Estimated insurance services provided to non-residents are. . . . . . . . . 20 [= (80/200)*50]

14.122. Compilers, depending on the ITRS as a main source data, may not be able to compile a

comprehensive set of accounts in order to approximate the insurance services exports. However, from the

ITRS, compilers may obtain settlement data for insurance premiums received from abroad and insurance

claims paid to abroad. Also, compilers may also obtain settlement data for insurance premiums paid

abroad and insurance claims received from abroad to estimate insurance services imports. Insurance

services can be estimated by multiplying these data by a service-to-premium ratio (Box 14.5). Premiums

are a better indicator than claims for determining the service charge. The reason is that claims are

contingent on events incurred to trigger payments, and there may be periods without claims or with

regularly large claims. The service-to-premium ratio needs to be fixed and revised periodically by means

of checking financial reports of domestic insurance enterprises or direct inquiries to them.

Box 14.5

Numerical example of imports of insurance services

Premiums from residents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . .. . . . . . 40

Ratio of service charge to premiums (average from data on insurers abroad). . . . 25 %

Estimated insurance services from non-residents . . . . . . . . . . . . . . . . . . 10 [40*0.25]

192

14.123. The concept of accrual recording is an important aspect in calculating the insurance service as

insurance contracts may spread over different periods of time than the ones used in the compilation of

statistics. In estimating the insurance services on an accrual basis, compilers would need to differentiate

between the earned premiums and the written premiums. The estimation of the insurance service should

be based on the earned premiums, which are consistent with the accrual recording. At the time a policy is

first written, the total of the premium may be unearned, as premiums are often fully paid at the inception

of the policy. Direct written premiums are the amount charged to and actually paid over the life of a

contract by the policyholders for insurance coverage. Each day thereafter, the premium amount accrues to

the insurance unit until the end of the policy. At the end of the reporting period, the insurance corporation

assesses the premiums reserves representing the unexpired terms of the policy. The earned premiums plus

the unearned premium for a policy equals the written premium.

Figure 14.2 The relationship between earned premiums and written premiums

14.124. For insurance service, major catastrophes that may require large payments of claims are expected

to occur once in several years. When they do occur, the payments of claims in the year of the catastrophe

could exceed the value of premiums. If only the claims incurred in the accounting period are used in the

formula, the value of insurance services could be highly irregular and, in some cases, could even be

negative. Therefore, an adjustment in claims due is required to reflect a more long-term view the

functioning of the insurance sector, in line with the decision-making process in the insurance industry.

The adjustment for claims volatility shows the difference between the actual claims in the period and the

normally expected value of claims, where the expected value of claims removes the effects of claims

volatility. In periods when large values of claims are incurred, the adjustment, if it is to be made, would

be negative, while in other periods the adjustment would be positive.

14.125. Regarding the adjustment for smoothing the amounts of claims by policyholders on insurance

corporations, BPM6 (Appendix 6 c paragraph 22) proposes three methods: the expectation approach, the

accounting approach and the sum of cost plus “normal profit” approach are proposed in the.

14.126. In the expectation approach, output is calculated as: premiums plus expected premium

supplements minus expected claims. This approach replicates the ex- ante model used by insurer

corporations to set their premiums on the basis of their expectations. In accepting risk and setting

premiums, insurers consider both their expectation of loss (claims) and of income (premiums and

premium supplements). Ideally, the micro data of the insurance corporations accounts could be used in

the expectation approach for estimating the output of the insurance corporation, however this information

is seldom available to the compiling agencies. In the absence of such data, a statistical technique to

simulate this approach can be applied by using macro statistics, to smooth past data to forecast the

expected claims.

14.127. In the accounting approach, output is calculated as: actual premiums earned plus premium

supplements less adjusted claims incurred; where adjusted claims are determined by using claims due plus

193

the changes in equalization provisions and, if necessary, changes to own funds. In the sum of cost plus

“normal profit” approach, the output is calculated as the sum of costs (including intermediate costs, labor

and capital costs) plus an allowance for “normal profit”.

Country experience: United States – insurance services

14.128. The U.S. method for measuring trade in insurance services most closely conforms to that outlined

in example 4 in MSITS 2010.205 In addition to premiums minus a proxy measure of expected claims

(actual claims payable with an adjustment for claims volatility), called normal losses, and premium

supplements as outlined in table 14.11, the U.S. measure of insurance services also includes a measure of

auxiliary insurance services. The U.S. measure includes separate estimates of trade in direct insurance and

reinsurance. Although both this manual and BPM6 recommend estimating life and non-life insurance

separately, the United States treats all direct insurance as non-life insurance because U.S. cross-border

transactions in life insurance are thought to be insignificant.

14.129. The U.S. measure of trade in insurance services is compiled using data from a variety of sources.

The main source is a survey of U.S. insurance enterprises. This survey, conducted by the Bureau of

Economic Analysis (BEA), collects quarterly data on reinsurance premiums sold to and purchased from

abroad and annual data on reinsurance claims paid and received, primary insurance premiums sold and

claims paid, and auxiliary insurance services. Every 5 years, BEA conducts a benchmark survey of

insurance enterprises to collect information on c enterprises that fall below the reporting threshold on the

quarterly survey. A separate survey of U.S. businesses, also conducted by BEA, collects data on primary

insurance premiums purchased and claims received by non-insurance enterprises and additional data on

auxiliary insurance. Data on the income generated by insurance enterprises’ reserves, used to calculate

premium supplements, are from Best’s Aggregates and Averages: Property-Casualty by A.M. Best

Company.

14.130. Insurance services include three components: premiums less normal losses, called ‘risk-pooling

services’; premium supplements; and auxiliary insurance. The calculation of risk-pooling services

requires information on current premiums and a measure of what insurers expect their claims to be.

Premiums are collected on BEA surveys as outlined above. The proxy measure for insurers’ expected

claims, called normal losses, is estimated by applying a ratio based on historical premiums and claims to

current period premiums. This method assumes that insurance enterprises base current premiums on their

expectation of current period losses and that their expectation of losses is based on their loss history.

14.131. The U.S. method assumes that insurance enterprises plan for two basic types of losses, regularly-

occurring losses that occur every period and catastrophic losses that occur at infrequent intervals.

Separate estimates are made for these two types of losses. To calculate separate estimates, catastrophic

losses must be separated from regularly-occurring losses in the loss data reported by insurance enterprises.

When a catastrophe such as a major hurricane occurs, the magnitude of the related loss is estimated using

data from the survey of insurance enterprises and publically available reports from insurance enterprises

impacted by the event. Losses other than catastrophic losses are considered regularly-occurring.

14.132. Expected regularly-occurring losses are estimated by applying to current period premiums a 6-

year arithmetic moving average of each prior period’s ratio of regularly-occurring losses to premiums.

205 MSITS 2010, box III.7, page 61.

194

Loss data for the current period are not included in the average in order to achieve an ex ante concept of

regularly occurring losses.

14.133. Because catastrophic losses occur much less frequently than regularly-occurring losses, they are

assumed to affect loss expectations over a much longer period. To account for this, catastrophic losses are

removed from current period losses, and spread over the 20 years following their occurrence in equal

increments. Similar to regularly-occurring losses, expected catastrophic losses are estimated by applying

to current period premiums a 6-year arithmetic moving average of the ratio of each prior period’s share of

catastrophic losses to premiums. Thus, only a small fraction of catastrophic losses is factored into each

year’s calculation of expected claims.

14.134. Normal losses are the sum of expected regularly-occurring and catastrophic losses. Separate

estimates of normal losses are calculated for primary insurance and for reinsurance and for credits and

debits. For the United States, the ratio of losses to premiums is lower for primary insurance than for

reinsurance because administrative and financial intermediation services differ for these two types of

insurance. Primary insurance is more retail in nature—selling and writing a large number of individual

policies to customers—and, thus, may have higher administrative and other costs than reinsurance, which

involves fewer, larger transactions between insurance enterprises.

14.135. BEA does not directly collect information on the technical reserves of insurance enterprises on its

surveys because it is deemed too burdensome for enterprises to report these data. Due to the lack of data

on technical reserves, it is not possible for BEA to use a relationship between investment returns and

technical reserves to estimate premium supplements. As a result, BEA developed a ratio of expected

investment gains to premiums and multiplies that by current premiums to estimate premium supplements.

The ratio of investment income to premiums is from Best’s Aggregates and Averages: Property-Casualty

by A.M. Best Company. A.M. Best provides data on investment gains that are attributable to insurance

transactions, as opposed to investment gains attributable to the insurers’ own funds. The ratio is a

weighted moving average of the previous ratios of actual investment gains to premiums. In the cross-

border trade data, the expected investment gains-to-premiums ratio is estimated separately for primary

insurance and reinsurance, in recognition of the fact that reinsurers may have different ratios of net gains

to premiums than primary insurers. The different ratios may arise because reinsurers hold larger reserves

than primary insurers or because reinsurers hold reserves for a longer period of time.

14.136. Once these ratios have been calculated, they are applied to the estimates of premium receipts for

direct insurance and reinsurance obtained from BEA surveys to derive premium supplement receipts.

Because similar data on investment income of foreign insurance enterprises are not available for

payments, the ratio used for receipts is applied to the estimates of premium payments in order to estimate

premium supplement payments.

14.137. Auxiliary insurance services cover items such as agents’ commissions, actuarial services,

insurance brokering and agency services, and salvage administration services. Data are collected on BEA

surveys. Auxiliary insurance is a component of primary insurance; there are no auxiliary services

associated with reinsurance.

195

Table 14.11 Numerical Example of Measuring Insurance Services in United States

Country example: Japan – recording insurance services on an accrual basis

14.138. Since Japan employs an ITRS as a major data source, recording insurance services on an accrual

basis has been challenging. To deal with this problem, Bank of Japan (BOJ) adjusts ITRS data in

implementing a method that most closely conforms to that outlined in example 3 in the box III. 7 of

MSITS 2010; the method measures insurance services by multiplying actual premiums earned by the

insurance service ratio.

14.139. The ITRS captures premiums actually paid rather than actual premiums earned that accrue to the

accounting period. Thus, data are adjusted under the following assumption. The BOJ assumes that

insurance premiums payable cover 12 months risks, and as insurance premiums are generally paid at an

inception of a policy, actual premiums earned are calculated by equally allocating premiums in

subsequent 12 months (figure 14.3). This adjustment is made for other direct insurance and reinsurance.206

14.140. The insurance service ratio for other direct insurance and reinsurance, which is the ratio of service

charges to gross premiums earned, are estimated from resident nonlife insurance enterprises’ financial

statement and applied to both imports and exports. Operating and administrative expenses are regarded as

costs for providing insurance services, and service ratio is estimated by dividing aggregated operating and

administrative expenses by corresponding premiums. This ratio is fixed for a year, and is updated when

new financial statements become available. The insurance service ratio for freight insurance is captured

separately and obtained from resident insurance enterprises.

206 Since freight insurance policies cover a single contract, which is usually a short-term, the same adjustment is not

applied to freight insurance premiums. Life insurance and pension services are excluded from estimating services, as

cross border life insurance and annuity contracts are negligible in Japan.

2010 2011 2012

Primary insurance receipts (line 2

plus

line 3

plus

line 4)

1,090

1,575

1,350

Risk-pooling services (line 5

minus

line 6)

825

1,200

1,015

Premium supplements (line 5

times

line 9)

165

260

210

4 Services auxiliary to insurance (from survey) 100 11 5 125

Primary insurance supplementary information

5 Premiums received (from survey) 1,500 2,000 1,750

Normal losses (line 5

times

line 8)

675

800

735

7 Actual losses paid (from survey) 500 3,000 800

Normal loss ratio

0.45

0.40

0.42

Premium supplement ratio

0.11

0.13

0.12

10 Catastrophic losses paid (from survey and public reports) 0 1,750 0

Non-services entries in balance of payments account s

Current transfers (line 6 minus line 7 plus line 10 )

175

-450

-65

Capital transfers (line 10 with sign reversed)

-1,750

13 Income payments (line 3 with sign reversed) 3-165 -260 -210

Based on a 6-year moving average of premiums and l osses, see paragraphs 14.57-14.61.

Based on a moving average of investment gains to p remiums, see paragraph 14.63

Negative sign denotes outflow from U.S. insurance company to foreign policy holder.

196

Figure 14.3 Estimation of actual premiums earned

14.141. Multiplying the service ratio and monthly actual premiums earned,207 insurance services are

calculated. Premium supplements are regarded as zero, as retained incomes for nonlife insurance reserves

are negligible. Claims are recorded when paid, under secondary income for normal claims and under

capital transfer for high claims when catastrophic events occurred.

14.142. This method is likely to stabilize outputs. Compared with a simple cash-based method, which is

premiums minus claims, volatility of the outputs is substantially reduced. More importantly, negative

figures, which are mainly due to lumped claims, are avoided.

207 Freight insurance premiums receivable on both exported and imported goods are obtained through direct report

from resident nonlife insurance companies. The corresponding values for imported goods are also used to derive a

premium ratio. Freight insurance premiums paid from resident to non-resident on imported goods are estimated by

excluding those earned by resident insurance companies from the total value. The total value is derived by

multiplying premium ratio on imported goods to total value of imports.

Jan.

Feb. Mar. Apr. May June July Aug.

Sept.

Oct. Nov. Dec.

Y+1

Jan.

Feb. Mar. Apr. May June July Aug.

Sept.

Oct. Nov. Dec.

10 10 10 10 10 10 10 10 10 10 10 10

20 20 20 20 20 20 20 20 20 20 20 20

10 10 10 10 10 10 10 10 10 10 10 10

30 30 30 30 30 30 30 30 30 30 30 30

10 10 10 10 10 10 10 10 10 10 10 10

40 40 40 40 40 40 40 40 40 40 40 40

Y Jan. 120

Feb. 120

Mar. 240

Apr. 120

May 120

June 360

July 120

Aug. 120

Sept. 120

Equally allocated to subsequent 12 months <40 premi ums per months from Dec., Y to Nov., Y+1>

Oct. 120

Nov. 120

Dec. 480

Premium

actually payable

Actual Premiums Earned

forDecember, Y: 180

Premiums Actually Payable

in December, Y: 480

Box 14.6

Numerical example of actual premiums received and c laims paid to non-residents

Actual premiums received for December, Y 180

Insurance service ratio for year Y 40%

Claim paid to non-resident in December, Y 85

Insurance service (export) 72 (=180*40%)

197

Country Example: Germany – smoothing of insurance premiums paid/received

14.143. Calculation of Insurance imports. In Germany, there is a lack of any kind of administrative data

for compiling imports of insurance services. Therefore the data available from the external sector

statistics are those to be used and are immediately available on a monthly basis. They are, however, not

detailed enough and need to be supplemented by several types of estimates:

i. Adjustments for premiums paid to premiums payable

ii. Estimates for premium supplements

iii. Estimates for changes of insurance technical reserves

iv. Estimates on the stock of insurance technical reserves.

14.144. The first step is to smooth the premiums paid, which are relatively volatile, to premiums payable

by using a 12 months moving average. The decision is related to the fact that premiums usually are paid

in advance for one year. The second step is to apply the ratio of premiums earned to service derived from

the export side to the smoothed premiums of the import side, which is in line with the BPM6 suggestions.

Figure 14.4 Premiums paid from Germany to insurance companies abroad

14.145. Premiums received but not yet earned. The technical reserves represent the amounts identified by

insurance companies to account for prepayments of premiums and claims occurred, but not yet paid.

Germany intends to use the same approach as for smoothing premiums paid to premiums payable for the

two components which contribute to the development of technical reserves, the premiums paid to

insurance companies abroad and the claims received. If the premiums paid are bigger than the premiums

payable the technical reserves increase, if it is the other way round, they decrease.

Figure 14.5 Claims received in Germany from insurance companies abroad

198

14.146. If the claims received are bigger than the claims receivable the technical reserves decrease, if it is

the other way round, they increase. The sum of the changes of technical reserves will have to be recorded

in the financial account.

Figure 14.6 Development of technical reserves in Germany

14.147. There is still a need to estimate premium supplements as the interest on technical reserves. There

are two ways to make this calculation, namely (1) calculation interest on the estimated stock of technical

reserves or (2) applying a ration on the premiums payable derived from the export side. Germany’s

intention is to make use of the second possibility since it is immediately available.

B.4.c. Financial services

B.4.c.1 Introduction

14.148. Financial services may be charged for explicitly or implicitly, and some transactions in financial

assets may involve both explicit and implicit charges. The most common implicit charges relate to (1)

margins on buying and selling transactions; (2) asset management costs that are deducted from property

income receivable, in the case of asset-holding entities; or (3) margins between the interest rate and the

reference rate on loans and deposits (FISIM). EBOPS 2010 identifies FISIM separately from all other

financial services.

14.149. Among financial services provided without explicit fees, margins on buying and selling are

regarded as service changed by securities dealers. In theory, margins are identifiable for each transaction

within securities dealers. Thus one way is to process such micro data if they can be collected. Another

way, which appears more realistic, is to estimate margins on an aggregate basis, for example by

multiplying their transaction volumes by spread ratio. Transaction volumes can be obtained from financial

accounts of balance of payments statistics and spread ratio can be obtained from financial market data

providers. BPM6 CG Chapter 12 paragraphs 114 – 116 provide additional detail on the data collection for

such services.

B.4.c.2 Compiling FISIM

14.150. The 2008 SNA and BPM6 recognize FISIM produced only by certain financial corporations and

only on the loan and deposit instruments on their balance sheets. Thus, FISIM exports are calculated on

the loan assets and deposit liabilities of resident financial corporations for which the counterparty is a

nonresident unit. is calculated as follows:

199

 For loans, it is the difference between interest receivable by a financial corporation and the

interest cost of funds calculated at a reference rate on the loan balance;

 For deposits, it is the difference between the interest payable at the reference rate on the

deposit balance and actual interest payable to depositor.

14.151. FISIM imports are calculated on the resident institutional sectors (mostly nonfinancial) loan

liabilities and deposit assets with nonresident financial corporations.

14.152. The 2008 SNA refers to the cost of funds at the reference rate as “SNA interest”. Determining the

reference rate is a key element in compiling FISIM. The reference rate should contain no service element

and should reflect the risk and maturity structure of deposits and loans. The rate prevailing for interbank

borrowing and lending may be a suitable choice as a reference rate. However, different reference rates

may be needed for loans and deposits in other currencies, in particular in the case of transactions with

non-resident financial institutions. The reference rate will change over time with market conditions.

14.153. For FISIM exports, the reference rate is, in principle, the cost of funds from the liability side of

resident financial corporations’ balance sheets. However, exports of FISIM on loans to nonresidents can

be estimated using the reference rate for domestically produced FISIM as interest receivable less the

product of the loan position and the (domestic) reference rate, if it can be assumed that transactions are

mostly in national currency. Exports of FISIM for deposits of nonresidents (excluding financial

corporations) can be estimated as the product of the deposit position and the domestic reference rate, less

interest payable (BPM6 CG Appendix 3, paragraph A3.11).

14.154. For FISIM imports, the reference rate is, in principle, the cost of funds from the liability sides of

nonresident financial corporations’ balance sheets by economy of residency.

Imports of FISIM for loans received from nonresidents can thus be estimated as interest payable to

nonresident financial corporations less the product of the loan position and the reference rate for the

applicable funds lent. Imports of FISIM for deposits with nonresident financial corporations can be

estimated as the product of the deposit position multiplied by the reference rate for the funds deposited,

less the deposit interest receivable from the nonresident FISIM provider (BPM6 CG Appendix 3,

paragraph A3.13).

14.155. The most comprehensive source data for exports and imports of FISIM come from (a) resident

financial corporations (surveys or administrative data collections or financial supervision authorities),

which can identify the deposits and loans with non-residents, as well as (b) surveys of selected

nonfinancial corporations, households, and NPISH, which could provide data on residents’ accounts with

financial corporations abroad to support compilation of FISIM import (see Chapter 6). FISIM imports by

general government is often derived from administrative data (see Chapter 9) or government financial

accounts. Information on the interest flows and deposit and loan positions can alternatively be sourced

from the compilation of balance of payments and the international investment position. Statistics on

interest rates and/or data on interest flows are used to calculate the reference rate as well as

deposit/lending rates.

14.156. The data sources available for economies’ own financial corporations sectors and for those of

their FISIM trading partners will tend to control the specific approach to determining the relevant

reference rates for international trade in FISIM.

200

14.157. Additional source of data difficulties may be encountered in compiling FISIM imports. Thus,

partner country data, including data sourced from international organizations (most relevant here, BIS),

may provide useful information. In this context, the domestic reference rates of the economies supplying

financial intermediation services may be used. To ensure data consistency, it would be helpful if

economies disseminate their domestic reference rates for possible use by non-resident compilers.

14.158. For economies where cross-border FISIM is small, it can be measured with relatively simplified

methods based on aggregated data. For example, FISIM for deposits with financial corporations is

calculated by deducting deposits interest flows from the value obtained by multiplying deposit stocks by

the reference rates. FISIM for loans from financial corporations is calculated by deducting the value

obtained by multiplying loan stocks by the reference rates from loan interest flows. More elaboration on

the calculation of the imports and exports of FISIM is provided in BPM6 CG Appendix 3.

14.159. In general, FISIM of financial corporations (calculated on the loan assets and deposit liabilities) is

expected to be positive. However, the calculation of FISIM of financial corporations can be negative if

the reference rate becomes higher than lending rate and/or lower then deposit rate temporarily. In this

case, for practical reasons, the compiler may wish to assume the value of FISIM is zero. A negative

FISIM may reflect erroneous calculations and inappropriate reference rates. If the negative values

continue for a long time, compilers should review the calculation of the reference rates.

Reference rate in FISIM

14.160. Given the complexities involved in estimating imports and exports of FISIM the Advisory Expert

Group (AEG) on National Accounts (at its May 2013 meeting) provided a series of recommendations

which are applicable to the international transactions. These recommendation are summarized below and

trade in services compilers are encouraged to follow them.

14.161. For estimating imports and exports of FISIM, FISIM should be calculated by at least two groups

of currencies (national and foreign currencies). The reference rate for a specific currency need not be the

same for FISIM providers, which are residents in different economies, however they are normally

expected to be relatively close. Use of partner country information or other relevant information is thus

encouraged, where national estimates are not available.

14.162. The calculation (definition) of the reference rate should be determined according to national

circumstances, using preferably any of the following approaches:

i a reference rate based on a single observable exogenous rate for a specific instrument, such as

interbank lending rates;

ii a reference rate based on a weighted average of observable exogenous rates of maturities with

different terms (weighted by the stock of loans and deposits in each maturity); or

iii a weighted average of the endogenous interest rates on loans and deposits.

14.163. Estimation of FISIM over periods of volatile movements in reference rates should be carefully

monitored, in particular if the results turn out to be negative, particularly for depositors, but also for

borrowers. In such cases, countries are encouraged to review the applicability of the underlying reference

rate for that period to calculate FISIM.

201

14.164. Research continues in the area of credit default risk related to FISIM and the merits of its

exclusion from FISIM, including for practical reasons.

Country experience: Estonia – calculating FISIM

14.165. For Estonia, external FISIM has a relatively small importance in relation to internal FISIM. This

is due to the fact that most of the banking sector belongs to foreign banks and loan resources for local

economy are made available through interbank transactions. The latter form the overwhelming majority in

external transactions of loans and deposits. Having considered the size of the external FISIM, cost-

effective approach and simplifications have been taken into compilation practice instead of additional

data collection with increase of burden for data providers.

14.166. The compilation process is based on the stock and interest income figures that are available

through the balance of payments surveys and banking statistics. In order to compile FISIM, the average

interbank rate is needed to calculate and apply for stock figures. FISIM is the difference between the

interest actually charged and the adjusted interest or vice versa, depending on the lender or borrower point

of view.

14.167. For stocks data, the balance of loans and deposits is needed. In case of the assets related to loans

and liabilities related to deposits, stock data are needed only for institutional sectors S.122 and S.125.

14.168. The main difficulty arises due to the fact that assets and liabilities between financial

intermediaries should be excluded from the stock data. Therefore, the counterpart data have to be taken

into account while determining the stock from which FISIM is derived. This does not concern banking

sector statistics that already have data by counterpart sectors. For other financial intermediaries (S.125),

no loan data are available by counterpart sectors or the data are too aggregate level (leasing companies).

Compilation of stocks for S.125 includes the assumption that they have loan liabilities against financial

intermediaries. On the asset side of loans at the moment, all stocks of S.125 have been taken into account,

reflecting also those with other financial intermediaries.

14.169. Another issue concerns stock data of households where the main data source is the ITRS. The use

of ITRS does not give a good indication about the positions. One of the solutions to tackle the issue is to

use mirror data, i.e. other countries banking sector statistics by counterpart sector. However, households

sector still remains on the estimation level.

14.170. The reference rate is derived by using credit institutions report on the balance of loans and

resources from which the stocks against non-residents financial intermediaries are taken by currencies and

by maturities. Each stock is multiplied by the corresponding contractual interest rates from the same

reports. The amounts to be paid or received are then divided by the stocks. The result from this

compilation represents an average weighted interbank rate which is used as a reference rate.

14.171. Before multiplying stocks with the reference rate, both the stocks and unadjusted interest income

are distinguished by counterpart sectors. The process is taken on in order to exclude the stocks and

interest income between financial intermediaries. Data by counterpart sectors for both items could be

derived by using credit institutions report on the balance of loans and resources. However, the stocks and

income could not be divided for other financial intermediaries due to the lack of proper data sources.

14.172. Experiences up to the present indicate that preconditions still exist to eliminate stocks and income

between financial intermediaries properly. Therefore, data sources have to include data by currencies and

by counterpart sectors also for other financial intermediaries. For households sector further estimations

202

for stocks is needed to be developed. Estimations were needed to be added in case of negative FISIM.

Usually it happens due to huge transactions in deposits by general government sector where the stocks in

both the beginning and the end of the period were zero while at the same time interests were earned. In

order to keep a cost-effective approach to data providers, detailed sectorized data requirement in different

currencies have not been applied. Instead the weighted average reference rate itself reflects the weights of

the currencies and maturity while implementing it for stocks by maturities.

Country experience: Japan – margins on buying and selling transactions

14.173. Dealers implicitly charge services by incorporating a spread between their buying and selling

prices. Japan will estimate margins on debt security transactions by multiplying their "transaction

volumes" by corresponding "spread ratios", "Transaction volumes" and "spread ratios" are estimated as

follows.

14.174. In most cases, a resident dealer exports services through inward investment transactions.

Correspondingly, a resident investor imports services through outward investment transactions.

14.175. Therefore, Japan assumes that export of services occurs only in inward investment, and that

import of services occurs only in outward investment. Some inward (outward) investment transactions are

conducted with non-resident (resident) dealers and such transactions are excluded. Volumes (sum of

buying and selling transactions) of inward investment and outward investment by type of securities are

obtained from direct reports from financial institutions and ITRS.

14.176. A spread ratio is the difference (as a ratio) of an ask-price and a mid-price, where a mid-price is

the average of an ask-price and a bid-price. The spread ratio varies by every transaction, but there is no

perfect data source. Therefore, Japan chooses the most common products and uses their spread ratios for

approximation. For inward investment (export of service), spread ratios of Japanese Government Bonds

(JGB) are used. For outward investment (import of service), spread ratios of six major countries'

government securities that account for majority of outward portfolio investment are used and are applied

to investment in corresponding countries. As they are significantly different, spread ratios of short-term

securities and spread ratios of long-term securities are separately measured. Data are obtained from

Bloomberg.

Table 14.12 Numerical example of exports involving margins on buying and selling

Bid price for 10Y JGB 101.675

Ask price for 10Y JGB 101.695

Mid-price [(bid + ask) / 2]: 101.685

Spread [(ask – mid) / mid]: 0.01%

203

Table 14.12 continued

(Billion yen, %)

Transaction Volume (Inward Investment)

Sprea

d on JGB

(d)

Margin

Country

investor

Credit

(a)

Debit

(b)

Total

A 65,000 17,000 82,000 0.01% 8.2

B 1,800 25,000 26,800 0.01% 2.68

C 9,000 5,000 14,000 0.01% 1.4

D 16,000 2,000 18,000 0.01% 1.8

Total ─ ─ ─ ─ 14.08

Table 14.13 Numerical example of imports involving margins on buying and selling

(Billion yen, %)

Transaction Volume (Outward Investment) Spreads on

government

bonds

(d)

Margin

Country

issuer

Credit

(a)

Debit

(b)

Total

E 1,000 1,500 2,500 0.04% 1.0

F 1,500 2,700 4,200 0.05% 2.1

G 7,000 1,800 8,800 0.03% 2.64

H 9,000 2,000 11,000 0.01% 1.1

Total ─ ─ ─ ─ 6.84

Country experience: Luxembourg ̶ E-commerce (merchandising) services

14.177. Luxembourg hosts an increasing number of subsidiaries of international groups208 that provide

worldwide e-commerce services and are active in well diversified domains (distribution of music, audio

books, and audio-visual products, online trading platform services, operating of websites for the purpose

of selling, auctioning, renting or otherwise distributing products and services, etc.). Thus, “Service

Merchandising” has become one of the important components of telecommunications, computer and

information services, audiovisual and related services, royalties or other business services.

14.178. Given the importance of international transactions of these subsidiaries, Luxembourg’s aim was

to include all of them in its monthly BOP reporting for services. While there are a few international

groups that operate through different local operational entities, in most cases, the international groups act

208 By combining the advantages of both European directives (2002 / 38 / CE and 77 / 388 / EEC) from July 1st,

2003, the subsidiaries from international groups providing e-commerce services were allowed to apply t he

Luxembourg rate of 15 % VAT on services provided, and not the higher VAT rates applicable in the country of

residence of European clients.

204

through a single operational legal entity with a low physical presence through which services are provided

to a multitude of clients, especially inside the European Union, whereas expenses (i.e., imports) are often

intercompany retrocessions in different form of services (including royalties), both within and outside the

European Union. Therefore, while the gross flows may be sizeable, in many cases, on a net basis, the

international trade in services transactions nearly cancel out because the overall accounting result of the

resident legal entities is often around zero, due to the intercompany retrocessions. Thus, because the value

of “Merchandising services” exported from and imported to Luxembourg is recorded on a gross basis, the

resulting values may seem inflated, given the fact that there is a low physical presence of the international

groups in Luxembourg. This treatment is applicable because most of the firms hosted in Luxembourg

trade services that are classified to the appropriate specific service classification (such as

telecommunications, computer and information services, audio-visual and related services, charges for the

use of intellectual property n.i.e. or other business services), and if the firms act as an agent on a

commission basis, then only the commission is recorded as the service provided.

14.179. Luxembourg covers the external transactions through its survey and completes monthly figures

with an estimate for FDI income.

B5. Services related to intellectual property products

B.5.a. Introduction

14.180. This sub-section discusses the compilation of services related to intellectual property products

(IPP), and covers EBOPS category Use of intellectual property n.i.e.; as well as parts of other main

EBOPS categories including telecommunication, computer, and information services; other business

services, and personal, cultural, and recreational services. This Guide combines these components in this

sub-section because of the partial overlap and interrelationships between the categories.

14.181. Services derived from IPP cover following items in the 2010 Extended Balance of Payments

Services Classification (EBOPS 2010):

 Charges for the use of intellectual property n.i.e. (main EBOPS category)

 Computer and information services (included in telecommunication, computer, and

information services)

 Research and development services (included in other business services)

 Architectural, engineering, scientific and other technical services (included in other

business services)

 Audio-visual and related services (included in personal, cultural, and recreational

services)

14.182. Recent decades have seen an explosion in transactions related to these categories. Many of the

transactions relate to the use of an underlying produced asset (typically research and development,

software, databases and audiovisual originals). However these categories present significant measurement

challenges. Firstly, because the distinction between the categories from a reporter’s perspective may not

always be clear (for example software versus research and development, or software versus audiovisual).

And, secondly, because intra-firm transactions may be affected by transfer pricing phenomena or indeed

more general tax planning issues, meaning that the distinction between flows recorded as trade in services

and flows recorded in the primary income account of the Balance of Payments as property income may

not always be clear cut.

205

14.183. This section provides a detailed description of each of the service categories derived from IPP. It

focuses on the particular challenges concerning flows relating to IPP recorded as assets in the system of

national accounts. Special mention is also made for the treatment of transactions related to franchise and

trademark licence fees. These fees usually also reflect payments for the use of marketing assets, which are

considered as non-produced assets. As a consequence, in theory transactions should be recorded in the

primary income account in the balance of payments. However given that the payments also includes a

service element and if it is not possible to make the distinction with the income element, then by

convention the full value is recorded under franchise and trademark licence fees.

14.184. Despite the guidance offered below, it is important to note that it is unlikely that compilers will

ever be able to fully account for transactions in intellectual property in a way that is consistent with the

underlying principles of economic ownership. However, it is at least possible to make progress on

achieving more coherence: both internationally, by encouraging compilers to engage in asymmetry

reconciliation exercises, and nationally, by improving the coherence of capital stock and productivity

estimates. Ultimately, pragmatic approaches to measurement are necessarily advocated here.

Improvements in a few key areas could significantly improve quality.

B.5.b Use of intellectual property n.i.e.

14.185. Charges for the use of intellectual property n.i.e. are defined in paragraph 3.214 of MSITS 2010,

and include franchises and trademarks licensing fees, licences for the use of outcomes of research and

development, licences to reproduce and/or distribute computer software, licences to reproduce and/or

distribute audio-visual products and licences to reproduce and/or distribute other products.

14.186. Franchises and trademark licensing fees are in theory related to charges for the use of non-

produced assets (Marketing Assets). As such and, if one were to follow the underlying principles of the

National Accounts, payments would not be recorded in production accounts of the National Accounts nor

in the goods and services account of the Balance of Payments. Rather the payments correspond to

property income. However, often, the payments are bundled with additional service items that make it

difficult to disentangle the pure payments for the use of the underlying brand and, as such, both the

2008SNA and BPM6 recommend that such payments are recorded as payments for services. Nevertheless

outright purchases of the entire brand (the Marketing Asset) or indeed rights to use the brand in certain

regions, such that the licence has the characteristics of a licence to reproduce, should not be recorded in

the goods and services account and should instead be recorded in the Capital Account.

14.187. Licences for the use of outcomes of R&D include payments for licences to use and licences to

reproduce. The latter reflects a transaction in a pre-existing produced asset in the SNA corresponding to

negative Gross Fixed Capital Formation (GFCF) for the unit selling the licence and positive GFCF for the

acquiring unit.

14.188. Care should be taken to differentiate between payments included in this category from those

included in EBOPS category 10.1, which includes payments for customized (made to order) R&D as well

as acquisitions of entire R&D originals. Differentiating between sales/purchases of licenses to reproduce

and sales/purchases of entire originals may not always be trivial but the latter will usually, at least for

transactions between unaffiliated parties, be accompanied by sales/purchases of legal instruments, such as

a patent or copyright.

14.189. Since the 1993 SNA, when software was recognized as a produced asset for the first time,

significant improvements have been made in measuring software and software related transactions, and

the proposed changes for more details in the latest EBOPS classification system should consolidate those

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advancements. The inclusion of a separate category Licences to reproduce and/or distribute computer

software, which specifically relates to licences to reproduce and not licences to use (which are included in

EBOPS category 9.2) was requested by the National Accounts community to assist in efforts to estimate

GFCF in software. Licences to reproduce (with a contract period of more than one year) are recorded as

GFCF by the purchaser and negative GFCF by the seller.

14.190. Similar improvements have been made with respect to other intellectual property products such as

databases, audio-visual, literary and other artistic originals. Licences to reproduce and/or distribute

audio-visual products and Licences to reproduce and/or distribute other products refer only to licences to

reproduce and not licences to use.

B.5.c. Computer services

14.191. MSITS 2010, in paragraph 3.224, defines Computer services as covering “hardware- and

software-related services and data processing services”. Compilers shout take particular care with respect

to the coverage of computer software, in particular its distinction with licences to reproduce and/or

distribute computer software. (see also paragraph 3.225 of MSITS 2010).

14.192. The key difference vis-à-vis licences to reproduce concerns the recording of flows in the national

accounts. Whereas licences to reproduce (of more than one year) are not considered as reflecting new

output, transactions in computer software, with the potential exception of software originals (which may

have been produced in prior periods) are. This item does not include the value of software embodied in

other products, (such as a computer) and sold as a bundle where the software component and value is not

separately invoiced. Moreover, with the exception of sales to households and expenditures on licences

with one year or less, all domestic expenditures in this category are typically recorded as GFCF in the

national accounts.

14.193. Also of note is the inclusion of software provided on a physical storage device with a periodic

licence fee as transactions in services, whereas software acquired on physical media with a one-off

payment are recorded as transactions in goods.

14.194. It is clear that the blurring of the lines between a good and a service, magnified by the difficulties

that may exist in differentiating between the two categories in practice, will complicate measurement. A

complementary grouping (C.3) in EBOPS is included for Computer software transactions, which includes

all related transactions whether embodied on physical media or not (see below). An additional grouping

C.3.1 is included to separately identify those transactions that concern licences (explicit or otherwise)

whose duration is for more than one year, which are recorded as GFCF when acquired by producers.

14.195. Other computer services (EBOPS 9.2.2) include all other related transactions that are generally

not recognised as investment in the national accounts. The detailed coverage of other computer services is

given in paragraph 3.230 of MSITS 2010.

B.5.d Information services

14.196. MSITS 2010 divides information services into news agency services and other information

services. These are defined in paragraph 3.232 of MSITS 2010. One particular issue worthy of mention

here concerns database related transactions. The use and outright purchase or sale of originals and copies

of databases are included in this category. However some care is needed to ensure that software

development costs in developing databases are not included in this category but in Computer software.

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B.5.e Research and development services

14.197. Research and development services are defined in paragraph 3.234 of MSITS 2010. EBOPS 2010

recommends a breakdown of research and development services into two subgroupings: work undertaken

on a systematic basis to increase the stock of knowledge (reflecting the coverage of research and

development within a 2008 SNA context) and other research and development services.

14.198. It is important to note that the categories above within provision of customised and non-

customised R&D services 10.1.1.1 primarily relate to ‘new’ research and development, such as newly

produced customized software, or transactions in ‘originals’, where ownership and the concomitant rights

are transferred to the purchaser. Care is needed in this context to differentiate between licences to

reproduce and originals. Most, if not all, of these expenditures will be recorded as investment in the

accounts of the importing country. Note too that not all acquisitions necessarily need reflect patented,

copyrighted or other protected forms of R&D. In many cases, companies may deliberately opt not to

patent the outcomes of (some of their) R&D . This may be motivated by a desire to preserve secrecy, the

costs of patenting may in some instances be perceived as outweighing the benefits, or the R&D may not

be a patentable subject matter.

14.199. Other research and development services primarily reflect other R&D related expenditures that

are not expected to add to the stock of knowledge as defined in the OECD Frascati Manual and

recognised in the SNA, and so, will not be treated as investment in the national accounts.

14.200. There are other borderline issues to consider however. These chiefly concern design originals and

the potential overlap with architectural, engineering, scientific and other technical services, covered

below.

B.5.f. Audio-visual and related services

14.201. Audio-visual and related services relates to the production of motion pictures (on film, videotape,

or disk or transmitted electronically), radio and television programmes (live or on tape) and musical

recordings (see 3.256 of MSITS 2010). As noted above care should be taken to ensure that licences to

reproduce and/or distribute audio-visual products are not included in this category. There may

however be borderline issues concerning the rights acquired by transmitters such as TV companies and

radio stations, when the contractual arrangements allow for multiple transmissions. Where the fees are

paid on a ‘pay as you go’ basis, for example a royalty payment is made every time a song is played on a

radio station, these should be recorded under 11.1.1 (audiovisual). If however a one-off fee is paid that

provides for unlimited air-time it should be recorded as being equivalent to a licence to reproduce

(intellectual property).

14.202. Performing arts and other live entertainment event presentation and promotion services (namely,

live performances such as concerts and plays) are excluded from audiovisual services and are instead

included in artistic related services. The transaction corresponding to the performance of resident actors,

musicians or other artists for the shooting of a movie (or other types of visual programs) or musical

recording by a non-resident entity (and vice-versa) is also included under artistic services, under the

condition that artists are not in an employer-employee relationship with the recording entity. However,

the subsequent transactions for the result of the recording will be included in audiovisual services. If for

the recording the services of an independent recording studio or similar services are outsourced, then

transactions will be included under audiovisual services if between residents and non-residents (and there

is no employer-employee relationship if these correspond to the services of an independent service

provider). Also included in audiovisual services are amounts receivable or payable for rentals of

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audiovisual and related products and charges for access to encrypted television channels (such as those

offering cable and satellite services).

14.203. Like software, a complementary grouping is provided for audiovisual transactions in recognition

of the grey borderline between transactions in goods and services. In the same way a complementary

grouping is included to account for those transactions that reflect investment expenditure in the national

accounts (i.e., licences for more than one year), when undertaken by producers.

14.204. For artistic related services, care should be taken to ensure that transactions are only included if

the service providers are not employees of the entity making payments (otherwise, they should be

recorded as compensation of employees).

14.205. Sales of ownership rights of literary or other artistic originals (excluding those covered under

audio-visual), should be recorded under 11.1.2 (artistic-related services). There may be borderline issues

for rights that restrict reproductions to certain markets or languages, where transactions should be

recorded under EBOPS 8.4.2 (intellectual property).

14.206. Other borderline issues may concern transactions relating to the selling of exclusive rights before

any originals have been created (for example, the exclusivity of a publisher to publish future literary

works of an author). These types of rights should be recorded as contracts for future production, and so

payments should be included in the capital account. However at the point in time when the ‘original’ is

produced, an imputation should be recorded for either (a) the transfer of the entire ownership from the

‘author/producer’ to the ‘funder’ or (b) a licence to reproduce.

B.5.g. Compiling IPP related services

14.207. Despite some of its current shortcomings in identifying international transactions in trade in R&D

services, with the addition of supplementary questions, the Frascati209-based survey approach provides

perhaps the best mechanism to improve the measurement of trade in R&D services. The OECD

Handbook on Deriving Capital Measures of Intellectual Property Products describes a prototype

questionnaire with a comprehensive list of questions that could inform the design of new or modified

surveys (see also below).

14.208. The key challenge for measuring R&D flows, however, concerns transactions between affiliated

parties. R&D-related transactions between affiliated enterprises are not always observable, and, often,

payments that are implicitly related to R&D are instead recorded in the primary income account of

BPM6. At the same time, flows may also be channelled through convoluted chains of affiliates, including

Special Purpose Entities, that have been set up to maximize post-tax profits for the controlling Multi-

National Enterprise (MNE).

14.209. The Task Force on Global Production210 and its predecessor, the Task Force on Globalisation in

the National Accounts, have the goal of developing guidance on the issue of ensuring that flows for the

funding, performance and use of R&D align with the concepts of ‘economic ownership’ in the National

Accounts. Since the conclusions reported in the Guide to Measuring Global Production are still under

209 OECD Frascati Manual: Proposed Standard Practice for Surveys on Research and Experimental Development,

6th edition. Note that at the time of writing the Frascati Manual is being revised, in part to provide better alignment

with the National Accounts.

210 See Chapter 4 of Global Production, UNECE, forthcoming.

209

discussion in other inter-governmental bodies at the time of writing this Compilers Guide, more concrete

guidance on these issues will be provided on the on-line version of this Guide. In the Interim Guide to

Measuring Global Production,211 the Task Force proposes that the most expedient approach to ensuring an

underlying consistency between payments for the use of an asset and economic ownership would likely

be through adjustments to balance sheets and, where possible, through the recording of transfers of assets

from one affiliated party to another.

14.210. Central to this proposition is a desire to remain close to recorded and observed flows. This partly

reflects practicalities, in particular the difficulties in making corrective imputations in the absence of

complementary data, but it also reflects a desire to retain a close consistency between recorded profits and

taxes paid, even if these payments suggest departures from the principles of economic ownership.

Nevertheless, in two specific cases, the Task Force on Global Production suggests imputations to correct

for flows recorded ‘incorrectly’ as property income, where evidence is available.

14.211. The first case relates to affiliates using an underlying asset, owned by the parent (or other

affiliate), but where no explicit payment for use is recorded, and, instead, related flows are recorded as

property income. In these circumstances, the Interim Guide to Measuring Global Production212 proposes

that, in principle, an imputed payment for the use of the underlying asset should be recorded as charges

for the use of intellectual property n.i.e.213 The imputation could be based on observable flows in property

income that can be related to the underlying asset, or failing that, the imputation should be based on the

affiliate enterprise’s share of total relevant MNE output multiplied by the total income generated by the

underlying asset. However, the data requirements of such an approach are arduous as it requires not only

information on the entire MNE, but also on the income generated by the asset, or proxies, such as the

value of capital services provided by the asset. As such, more often than not, it is unlikely that such

imputations will be made in practice. Nevertheless, if compilers do make such imputations, they should

ensure that counterpart transactions (in particular international transactions) should be coherent, requiring

coordination with other statistics agencies.

14.212. The second case concerns dedicated affiliates engaged in the production of intellectual property

products for use by other affiliated parties in production but where the affiliate producing the intellectual

property does not itself use the asset in production nor does it receive any revenue through sales of licence

to use or reproduce the asset or related income. Often these units have no recorded output beyond the

production of the asset itself, which is recorded as own-account production of GFCF. In these

circumstances the Interim Guide to Measuring Global Production214 proposes that an imputation is made

such that the produced asset is transferred (exported in cases of international transactions) to the parent

company. Sources of such information are scarce but some potential sources or approaches exist.

14.213. The first source relates to firm-level data and, in particular, data collections on Activities of

MNEs and Foreign Affiliates. Units classified to the Research and Development activity (ISIC Rev 4: 72)

211http://www.unece.org/fileadmin/DAM/stats/documents/ece/ces/bur/2014/Guide_to_Measuring_Global_Productio

n_-_CES.pdf.

212http://www.unece.org/fileadmin/DAM/stats/documents/ece/ces/bur/2014/Guide_to_Measuring_Global_Productio

n_-_CES.pdf.

213 Since the conclusions reported in the Guide to Measuring Global Production are still under discussion in other

inter-governmental bodies at the time of writing this Compilers Guide, more concrete guidance on these issues will

be provided on the on-line version of this Guide. [Insert web address of on-line version of CG MSITS 2010].

214http://www.unece.org/fileadmin/DAM/stats/documents/ece/ces/bur/2014/Guide_to_Measuring_Global_Productio

n_-_CES.pdf.

210

but with no identifiable output, except for own-account production of R&D originals, or with no

expectations of revenue through sales of licences (which can be indicated if historically this is also the

case) can be considered as satisfying the criteria established in the Interim Guide on Measuring Global

Production215 for imputing unrecorded or misreported exchanges of R&D assets to their parents (see

footnote 42). In these cases, the value attributed to the asset should be equivalent to the valuation used in

estimating the own-account production (typically based on the sum of costs with an estimated mark-up

for gross operating surplus).

14.214. A second potential source is the surveys used for the collection of R&D data in the Frascati

framework. Data on external funding of business R&D are collected in a large number of countries as part

of this framework. The information includes funding from abroad by affiliated and non-affiliated

enterprises. Although business enterprises mainly perform market transactions, these flows of funding

might include donations and subsidies and not necessarily represent acquisitions of R&D, so some care is

needed in interpreting this information. Nevertheless, the source can provide a useful proxy or diagnostic

to investigate flows recorded as acquisitions of R&D originals or payments for customized R&D services

within the EBOPS category for R&D services.

Country experience: Germany ̶ Charges for the use of intellectual property

14.215. Germany collects all BOP relevant service transactions via a cut-off survey directly from

enterprises, public authorities and natural persons on a monthly basis. Thereby, a generic questionnaire

has to be used by the respondents to submit all their service transactions to the Deutsche Bundesbank, as

long as the value of a single transaction is above the reporting threshold of 12,500 Euros. Thus, the

collection of data on “Charges for the use of intellectual property” builds only one block in the frame of

the general approach. Instead of asking explicitly what kind of intellectual property has been used and

charged for in the reporting period, respondents have to report only a transaction code indicating for

which licences payments have been made/received (use or reproduction).

14.216. The list of transactions codes for filling out the forms is part of the basic law about the collection

of BOP data. However, as the list might not always be self-explaining enough for respondents, the

Deutsche Bundesbank has published in addition an explanatory note on the coding list. Like for other

BOP items, the note describes, in the case of intellectual property with over three pages and in an

understandable way, which kind of transactions should be reported under a specific code and explains

differences between the codes.

14.217. From the following excerpt of the note, it can be seen that, at the beginning of the section on

intellectual property, a small table summarizes all relevant codes falling under this category216. Thereby,

the structure of the table follows mainly the structure given by Table III.1, Treatment of Intellectual

Property, in Chapter III, subparagraph 8 of the MSITS. Subsequently, for each category (licences,

distribution rights and purchase/sale) at first a general “definition” of the category is given, followed by

detailed remarks and examples about transactions to be reported under the respective code. All of them

are in line with the recommendations of the MSITS and the BPM6.

215 Ibid.

216 It becomes obvious from the table that, under this section, not only codes belonging to the item “charges for the

use of intellectual property” are listed, but also codes for transactions with intellectual property which have to be

assigned to other EBOPS items. This is done for practical reasons because respondents usually get confused if

transactions in intellectual property are spread over various service items.

211

Figure 14.7 Treatment of Intellectual Property

14.218. Currently the reports of the reporting agents are the only source used to compile the item

“Charges for the use of intellectual property”. Besides the transaction code, the respondent has to provide

for each transaction (credit and/or debit) the partner country and the amount which has been paid.

14.219. The incoming reports are checked by staff members for plausibility and completeness, mainly by

cross-checking them with the reports of former periods. In case of doubts about the correctness,

declarants are contacted to clarify the doubted transaction. In the event that an open request could not be

answered in due time by the respondent, imputations are made at least for important reporters.

217 The

monthly values for the total and each partner country are then calculated by aggregating the transactions

codes belonging to the item “Charges for the use of intellectual property” of all individual reports. Codes

for transactions with intellectual property belonging to other EBOPS items, for example the use of

software (code 613 in the table above), are separated automatically and assigned to the appropriate item

like software services.

217 Usually they are replaced by the confirmed or corrected transaction in the following month.

212

B.6. Education and health services

14.220. For the compilation of data on resident/non-resident transactions in education or health services,

additional sources of information from administrative sources (e.g., the Ministry of Education and the

Ministry of Health), specialized entities, or other third party sources may be necessary or other types of

sources. In particular, on the receipts side, relevant ministries usually gather such information (i.e., for

mode 2, but also other modes) or would have an interest in doing so. Another option is to collect data

from all higher education institutions and universities operating in the country with the aim of collecting

data on foreign students studying in the compiling economy. Other questions relevant to mode 2 could be

also added to the survey questionnaires. Data from health insurance companies could be used and

combined with administrative sources and information from travel surveys for further analysis on health

services.

14.221. Embassies and consulates may also hold information for both exports and imports of such

services. For health services, it is advised that compilers use administrative data from health and social

insurance programs. Other breakdowns could also be encouraged for sectors of particular interest to an

economy; e.g., cultural services or leisure.218

14.222. Given the importance, for example, of increasing demand for information on health-related or

cultural services, and the complexity of some existing questionnaires, other methods could be envisaged

to compile more details on such services, such as combining household surveys with administrative data,

or health insurance and credit card data expenditures to health care providers, as this information could be

extracted by the appropriate merchant code categories.219

14.223. Some information on health services could be derived from the travel purpose variables used for

education-related travel, by including a breakdown for “Study and courses” and “Medical treatment”.

Additional information could be derived from linking the aforementioned sources with administrative

data. such as VAT data (from the National Tax and Customs Administration).

B.7. Government goods and services n.i.e.

B.7.a. Introduction

14.224. While services supplied by and to governments should be classified to the relevant service

category (business services, health, etc.), if possible, services related to government functions that cannot

be classified to another specific service category are classified as government services. Transactions

covered by government goods and services n.i.e. include trade of goods and services between the

government unit and the territory in which it is physically located; i.e., as government and international

organization enclaves are not residents of the territory in which they are physically located, their

transactions with residents of the territory of location are international transactions. Other official entities

218 For example, given Australia's interest in the exports of education services, the Australian Bureau of Statistics

compiles a breakdown of education travel data by type of expenditure (i.e., education fees and other expenditures)

and type of institution.

219 For example, Austria is deriving information on health-related services which residents consume in Hungary as a

neighboring country from a household survey, together with administrative information from the project “health

region – Regional Network for the Improvement of Healthcare Services,” which is run by the European Union.

Both relevant information sources are combined to establish sound estimations.

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are also considered government transactors, such as aid missions, government tourism information and

trade promotion offices, and international organizations. Other examples of such transactions include

charges for visas; payments for police-type services; technical assistance under certain circumstances (see

paragraph 14.115); and government supply of a licence or permit that is classified as provision of a

service (see paragraph 14.116).

14.225. MSITS 2010 recommends that government goods and services n.i.e. be further classified

according to the following breakdown based on the transactor: embassies and consulates; military units

and agencies and other government goods and services n.i.e.. Administrative costs incurred in the donor

economy as a result of providing technical assistance or aid should be included under the specific services

provided. Technical assistance provided by a government or an international organization is classified

under government goods and services only when not specified to a specific service and if the technical

assistance personnel are employed by the donor government or an international organization.

14.226. If the issue of government licenses involves little or no work on the part of the government, with

the licenses being granted automatically on payment, it is likely that they are simply a device through

which to raise taxes and should therefore not be considered a service. For example, by convention,

amounts payable by households for licences to own or use vehicles, boats or aircraft, along with licences

for recreational hunting, shooting or fishing, are treated as taxes. On the other hand, cases in which the

licensing is used to check the competence or qualifications of the person concerned, to check the efficient

and safe functioning of equipment, or to carry out some other form of control, the payments made should

be treated as purchases of services from the government, unless the payments are clearly out of all

proportion to the costs of providing the services.220

14.227. All expenditure on goods and services by diplomats, consular staff, and military personnel, and

dependent members of the same household, in the economies in which they are located is also included in

government goods and services n.i.e. However, the expenditure of locally engaged staff of embassies,

military bases and so forth, and international organization staff is not included in government goods and

services n.i.e. Moreover, all staff of international institutions staying in the host economies for 12 months

or more should be regarded as residents of those host economies and their expenditures are therefore not

included.221

B.7.b Compiling government goods and services n.i.e.

14.228. As discussed in Chapter 11, the majority of government services transactions are most commonly

compiled using administrative records. Data on government expenditure abroad should also be available

from an ITRS.222 Moreover, estimates of expenditures of diplomats and other government personnel

posted abroad could be based on the wages paid to these persons—details of which should be available

from administrative records—and an assumption about the percentage of wages spent on such

expenditures.223 It may be more difficult to capture expenditures by foreign governments and international

institutions located in the compiling economy using an ITRS, in which case an enterprise survey of

220 MSITS 2010, paragraphs 3.277 – 3.279.

221 On the other hand, staff of international institutions staying in host economies for less than 12 months should be

regarded as residents of the economies in which they maintain permanent households—typically their economies of

origin. BPM6 CG, chapter 12, fn. 37.

222 BPM6 CG, paragraph 12.150.

223 BPM6 CG, chapter 12, paragraph 12.150.

214

nonresident bank accounts or a survey of foreign embassies and international institutions could be used.

When comprehensive data collection is difficult, existing replies to past surveys could be used as

representative values.

14.229. For provision and receipt of aid, compilers of the donor country could obtain information on the

costs and type of provided services from official sources. In the recipient country, compilers could obtain

information from the embassy of the donor country or the relevant domestic ministry or agency. An ITRS

can also provide information on several related transactions (e.g., current transfers to government

received through the banking system) or from customs (data on imports of materials and equipment). An

alternative source is OECD’s Official Development Assistance (ODA) records.224

14.230. If data on government expenditure abroad are not timely, or source data only provide broad

aggregates or partial data, it may be necessary to extrapolate certain series or create data models based on

past survey data or historical trends. In such cases, government expenditure policies, budget planning and

decisions, and observed statistical relationships among historical indicators should be considered.

Country experiences: Denmark

14.231. In Denmark, information for the expenditure side of government goods and services n.i.e. is

provided by the Ministry of Foreign Affairs and the Ministry of Defence. Data on officials’ (ambassadors,

military personnel, etc.) personal expenditure in the host country in which they are located is based on

their wages. Importantly, Statistics Denmark assumes that these government officials spend 50% of their

salary on personal expenditures in the host country in which they are located. The data for military units,

however, is based purely on expenditure data rather than data on wages.

14.232. The revenue side of government goods and services n.i.e. is compiled by combining information

from different sources. The Ministry of Foreign Affairs provides lists of embassies and international

organizations located in Denmark, which Statistics Denmark contacts to obtain their number of

employees of Danish and foreign origin. Non-responses are supplemented by information from the

Ministry of Foreign Affairs. It is assumed that government officials of foreign origin located in Denmark

spend a similar amount on personal expenditures in Denmark as Danish government officials spend when

abroad. Thus, the number of staff of foreign origin per embassy or international organization located in

Denmark is multiplied by the average expenditure on goods and services of Danish government officials

located abroad, which Statistics Denmark has previously estimated as described above.

Country experiences: Japan

14.233. Japan relies on the ITRS as the data source for most of its balance of payments (BOP) statistics,

including government goods and services n.i.e when possible. However, there are certain transactions of

government goods and services that are carried out with no monetary settlement, which therefore cannot

be captured by the ITRS and must be estimated.

14.234. Following BPM6 convention,225 the value of transactions that occur without monetary settlement

in the absence of appropriate market prices is regarded as the sum of the relevant costs of providing the

good or service (in this case, government expenditures for providing the goods and services in question).

Actual government expenditure data in Japan have certain limitations that preclude their effective use in

224 BPM6 CG, chapter 12, paragraph 12.159.

225 BPM6, paragraph 12.49.

215

the statistical compilation process; namely, such data are not timely226 and are not reported according to

official BOP definitions. Therefore, the Bank of Japan (BOJ) uses government budget data, which are

more timely than government expenditure data227 and follow BOP classifications, in place of actual

government spending data in order to compile government goods and services n.i.e. when the ITRS does

not suffice. The discrepancy between the budget data and the actual expenditure is usually insignificant,

according to BOJ research. The budget data are then allocated to the correct time period in accordance

with the duration covered by the budget. If a supplementary budget is passed, it is also incorporated into

the budget data used to compile government goods and services transactions.

C. Allocation of resident/non-resident trade in services to modes of supply

C.1. Introduction

14.235. MSITS 2010 recommends that trade in services statistics are also broken down by modes of

supply, based on the resident/non-resident trade in services and FATS statistical frameworks. FATS

output data for services should be used to measure mode 3, whereas the resident/non-resident trade in

services data needs to be broken down by modes. Different options exist to compile such information,

either via a simplified allocation of EBOPS2010 categories, or on the basis of collected data. This section

describes these options in more detail (it should be noted that deriving modes of supply using a data

model is also a possibility, this is described in chapter 17).

14.236. This section starts with explaining how the MSITS 2010 recommendation, that in the absence of a

special data collection, compilers use a simplified (mechanical) allocation of FATS and balance of

payments data to modes of supply228, can be applied in practice (C.2). Subsequently, given that the goal is

to ultimately implement a data collection and compilation of a breakdown of trade in services by mode of

supply based on collected data, section C.3 describes the steps compilers can take to set up such a data

collection in the most efficient and policy relevant manner. Section C.4 concludes with suggestions on

how more detailed information regarding especially mode 2 and 4 can be compiled.

C.2 Resident/non-resident trade in services data by mode of supply: a simplified allocation

14.237. Given that the compilation of resident/non-resident trade in services data broken down by mode

of supply is a relatively new area of data compilation, and given that amending existing data collection

mechanisms or creating new ones may be difficult, it is suggested to adopt a step-by-step approach for

compiling such a break down. In the absence of relevant data, or if only some sporadic information is

available, it is first proposed that compilers conduct a simplified allocation of existing statistics as given

in table V.2 in MSITS2010.229 This method consists of attributing EBOPS service categories to either one

dominant mode or to several modes using a distribution, based on an assumption on how specific EBOPS

2010 service items are most probably supplied by exporters (or to importers) of the economy.

14.238. This method provides a first set of estimates on modes of supply comparable at the international

level (which also could be disseminated in a common manner; see chapter 20 for more information). Such

an allocation has the advantage of being a relatively low-cost solution, as the compiler can start working

226 Data on government spending are not released in Japan until the end of the fiscal year, which is too late for

inclusion in the compilation of the relevant statistics.

227 Government budget data in Japan are released before the beginning of the fiscal year.

228 See also MSITS 2010 Chapter V and Table V.2 and chapter 1, paragraph 1.5.

229 Ibid.

216

with the available balance of payments services data and gradually build his/her knowledge of how

services are supplied internationally. However, compilers should treat such an allocation only as a first

rough approximation of resident/non-resident services transactions by mode of supply as this technique

has important limitations. This Guide strongly encourages compilers undertake efforts to develop more

precise estimation procedures at a later stage.

14.239. Using table V.2, compilers are suggested to make the allocation in three steps: 1) allocate 2)

evaluate and 3) refine, as described below:

14.240. Firstly, compilers can allocate each service item to one of the columns identified in table based on

an assumption of how a specific service item is most probably supplied by exporters (or to importers) of

the economy. In order to provide a first approximation in a comparable way, all compilers are strongly

encouraged to conduct this generic allocation.

14.241. Secondly, compilers should evaluate if the "generic" allocation as conducted at the first step is

relevant for their economy, and review results accordingly. For example, it may be worthwhile for the

compiler to discuss with the institution in charge of trade in services negotiations if the results reflect their

knowledge of how services are supplied abroad and to their national economy, as far as it relates to

transactions recorded in the balance of payments.

14.242. Thirdly, and based on the results obtained in the second stage, compilers can refine their

allocation by gathering additional information to improve the knowledge of some specific service sectors.

Such additional information can be gathered in cooperation with the institution in charge of trade in

services negotiations and might validate the assumptions made earlier by statisticians or negotiators.

14.243. Various ways of gathering more information may be envisaged, such as contacting major services

providers or trade or consumer associations; conducting qualitative interviews with one or two relevant

services providers in a specific sector (e.g., legal services, computer services, consultancy, construction

etc.), or conducting interviews with employment agencies which have international services transactions

with clients abroad. Compilers can also approach relevant ministries, in particular sectors where

internationalization is known to be important (e.g., the ministry of industry, education, and health), or

approach compilers in other statistical domains to obtain further information on particular sectors and to

adjust the allocation if needed (e.g., through micro-data linking).

14.244. When making refinements to the initial allocation, compilers should also consider other factors,

such as the business structure of the compiling economy (e.g., the dominance of large enterprises or

SMEs/micro-enterprises), the type of service traded (some specific/technical services require the physical

presence of the service provider), the geographical location of the compiling country and/or the distance

to the trading partner (i.e., the less distant the partner, the more likely trade in mode 2 or mode 4 can

occur), language barriers, the evolution of business strategies and tradability over time (e.g., technological

advances).

C.2.a. Limitations to the simplified allocation

14.245. The compiler should always keep in mind that table V.2 and the methods described above, are

simply a theoretical guide for classifying resident/non-resident services transactions according to the most

likely predominant modes of supply. In each specific economy, other modes than those indicated may be

involved for some specific services categories, considering their nature. For example, in table V.2

personal, cultural and recreational services are shown as deemed to be provided (or consumed) through

modes 1 (cross-border) or 4 (temporary presence of service provider, either himself/herself, if self-

217

employed, or his/her employee). However, for example, in the case of countries that are important

destinations for the shooting of films, mode 2 (presence of consumer abroad to consume services) may

also need to be considered. In other words, these assumptions may need to be reviewed to identify how

well they respond to national needs. It would also be useful to conduct some analysis of contracts for

specific groups of persons to better understand how they operate in the context of trade in services.

14.246. There are also other shortcomings to be considered when following the procedures outlined

above. Compilers should ask themselves questions such as the following: how is the most significant

mode allocated? Regarding enterprises which report their main economic activity, how should secondary

economic activities be treated? Regarding manufacturing enterprises also providing production services

or services packages around high-value goods, how should these services be treated? Even if this

framework provides an approach for a first rough measurement of trade in services by modes of supply

with a minimum use of resources, relevant qualitative background information and research is needed.

Compilers need to consider these aspects when performing the conceptual allocation.

14.247. Compilers are encouraged to make use of their own information about modes of supply and

possibly different country-specific distributions among services than the general allocations. Allocations

to the modes may be based on the knowledge compilers have about the provision of services from their

close contact with respondents or based on their knowledge of the business structure gained in the

enterprise survey design process. More generally such an exercise is encouraged for improving the

knowledge of compilers with respect to international trade in services.

C.3. Resident/non-resident services transactions by mode of supply: towards full data collection and

compilation

14.248. As indicated above, the ultimate goal is to implement data collection and compilation of a

breakdown of resident/non-resident services transactions by mode of supply. This compilation can be

done in much detail for (a) specific service sector(s) of interest to the compiling economy (i.e., using the

simplified allocation for the other sectors of less interest), or through the compilation for all services

sectors. The compilation of such data may entail a number of challenges, mainly because of the fact that it

may be difficult to collect the raw data itself. However, it should be noted, that when the relevant details

are collected, there are no additional compilation issues, besides the general considerations (i.e., grossing-

up, dealing with non-response, quality of information obtained, data confidentiality etc.).

14.249. A variety of options have been developed (or can be envisaged) by countries to set up a new data

collection (or add questions to existing data collections) regarding trade in services by mode of supply.230

Both a broader data collection exercise, as well as collaboration with other agencies and institutions, can

be envisaged as described below. Alternatively, data on modes could be derived through the combination

of information; e.g., through the use of a data model, as described in chapter 17.

C.3.a. Broad data collection and generic surveys

14.250. For collecting data on the value of supply of services by mode of supply, the most relevant source

would be through surveys, mainly enterprise surveys (see chapter 6). By, for example, amending existing

surveys or integrating appropriate questions in survey forms, data from existing enterprise surveys can be

230

Another possibility would be for the data compiler to establish a data model for certain services categories or

modes (see chapter 17).

218

used as a way forward to estimate the value of the international supply of services by mode. Hence,

potentially, such estimates can be generated without establishing a new and additional data collection,

while still being of acceptable quality. Even efforts targeted towards a limited number of relevant services

categories in the compiling economy can ensure the production of policy relevant results. Especially

because the expected respondents’ burden could be high, it would be a good practice to conduct at the

initial stages sample surveys of enterprises, which should address questions needed to estimate or allocate

services by modes. At a later stage, modes of supply could be integrated in the existing questionnaires as

a mandatory data element.

14.251. Such an approach (i.e., amending existing surveys in a step–by-step manner) would necessitate

some knowledge building from the compilers side. As a starting point this could be done by following the

considerations outlined in the section on the conceptual allocation. It could also be achieved by

conducting a "screening" survey to identify the sectors and enterprises that should be targeted, or by

exploring academic research (literature review) to identify the way in which services are generally

rendered. Relevant enterprises could be extracted from the existing business registers (see also chapter 5,

section E and chapter 6) focusing as a first step only on some key (business) services e.g. legal services,

engineering services, computer services.231

14.252. Structural business statistics provide compilers with additional information regarding the

structure of the businesses, size-class, employment, etc. which could be useful for national industry

policies.232 Important service sectors could be identified as a starting point from the shares of the services

to the GDP or share in total services. Some countries compile jointly international trade in services and

structural business statistics, therefore the whole business population is available and the relevant sub-

population of interest for a specific mode could be derived from this source. In some cases the

information is also available in internally maintained registers, so-called BOP-registers.

C.3.b. Specialized surveys

14.253. A focused or specific data collection could be developed on the basis of economic, political-

economic and socio-economic issues; for example, mode 4 could be integrated in a broader concept of

cross-border movements and related international transactions in globalization theories. In addition to

enterprise surveys, surveys of persons and households (see chapter 7) could also be (partially) useful to

for certain mode 4 niches; e.g., for services provided by self-employed persons or for households as

consumers of services provided by contractual service providers, although the latter may not be

significant for the majority of compiling countries (small proportion of population, small transactions as

compared to mode 4 transactions of enterprises). Surveys of persons and households could also be used to

identify mode 2 (i.e., travel).

14.254. Finally, a pluralistic-integrated approach, i.e., a sector-specific survey that integrates various

statistical domains including trade in services (but also e.g. FATS, SBS, innovation or others), can

provide relevant statistical information for different statistical domains. Focusing on different user

231 See also Eurostat manual on the Production of Business Services, Annex VIII of the European Parliament and

Council Regulation No 295/2008. For more information see:

http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2008:097:0013:0059:EN:PDF.

232 Information on small and medium-sized enterprises and specific characteristics of enterprises related to

particular breakdown of activities might be important for national policy to promote cross-border services trade for

enterprises which are not exporting services or to support enterprises which are already active in the export of

services.

219

interests, specific sector studies would serve several purposes; e.g., policy makers could also be interested

in specific studies, such as those incidental to agriculture or environment services. A more detailed

approach (i.e., modes for more detailed services categories) in such surveys may be implemented, but

often the policy needs have to be identified by the national authorities for this to be developed.

C.3.c. Specialized surveys in collaboration with other agencies

14.255. As described in chapter 6, the collection and compilation of resident/non-resident trade in

services statistics by mode of supply may also be established in collaboration with agencies that have

specific interests in obtaining such data. For example, ministries of economy or trade may be interested in

a special collection for this type of information. In these circumstances, it is important that the agency in

charge of the collection and compilation of official trade in services statistics (generally the NSO or

central bank) coordinates with the specialised agency so that the international recommendations for the

collection and compilation of trade in services statistics are followed, and to ensure that the information

that is collected can be used in a broader context.

14.256. An example of such a data collection is presented in chapter 10 (paragraphs 10.63-10.67). This

example shows that the Australian International Legal Services Advisory Council (ILSAC) has for a

number of years been conducting its own compilation of statistics on the international supply of legal

services to non-residents. This approach benefited from the assistance of the Australian Bureau of

Statistics. Such collaboration has highlighted the desirability, from ILSAC's point of view, of increasing

the focus on compiling data that is more closely aligned to the specific modes of service delivery

recognized by economies in trade negotiations, and although it does not mention it, to ensure that the data

collected will be following as closely as possible international standards. This experience can also be seen

as an example of positive collaboration of the body in charge of compiling trade in services statistics and

an institution which has a strong interest in collecting sector-specific data. Although from the statistical

compilers perspective it would seem difficult to replicate this for all services sectors, such experience can

prove useful for improving the quality of statistics as well as providing some first estimates according to

the four modes.

14.257. Similarly, large employment or recruitment agencies233 that (could possibly) have important

cross-border activities could also be targeted. This would be for example agencies e.g. working with

persons from new EU-members for instance or working with persons in so-called regional (border)

clusters). For example, it may be possible to use the data from these agencies on the types of contracts to

identify those services relevant for measuring mode 4.

C.4. Compiling more detailed mode of supply statistics for resident/non-resident trade in services

C.4.a. Specific considerations regarding mode 4

14.258. It is suggested that the compiler investigates how to collect/compile more details for those items

where mode 4 (presence of natural persons) is deemed to be important for the compiling economy. For

233 For example, since 1994, recruitment agencies in Germany can recruit in all occupational fields before there were

some exceptions in management and artistic related activities.

220

example, professional and management consulting services (mainly business services) is generally

considered to be predominantly provided (or consumed) through modes 1 (cross-border supply) or 4 as

these services often entail a proximity to the consumer for the service to be rendered. Alternatively,

providing processing services or maintenance and repair services may most likely involve mode 2

(consumption abroad) or mode 4. So including a question asking for the share of mode 4 for specific

services categories may be sufficient to greatly improve the statistics on trade in services by mode.

C.4.b. Specific considerations regarding mode 2

14.259. As presented in MSITS 2010, some EBOPS components are strongly linked to the supply of

services through mode 2. These include for example manufacturing services, maintenance and repair

services, travel and waste treatment. Travel has the most obvious link with mode 2 supply of services. In

this context BPM6234 and MSITS 2010235 propose an alternative breakdown of travel into: goods, local

transport services, accommodation services, food-serving services and other services. This level of detail

would already serve many information needs, including those related to mode 2. It is in particular

important to identify goods separately as these products are of minor interest from a GATS/trade in

services perspective.

14.260. Various possibilities exist for compiling these breakdowns for the Travel item, such as the use of

credit card data, border surveys or household surveys (which are often used in the context of data

models). Tax-free purchases could be used as complementary sources to separately estimate the goods

purchased by persons going abroad for travel reasons, because those traveling can request a refund for the

VAT paid on the goods when exporting the goods.

14.261. When using credit card data, the use of information included in merchant codes is suggested. This

could enable a more detailed analysis of travel/tourism data and would also allow to identify e.g. transport

services and to extract data split by goods and services. For example payments of or to a company which

provides maintenance and repair services would be reported since this company is providing services and

the payments have to be reported. Also merchant codes categories like Hotels/Motels/Inns/Resorts, car

rentals or tourist attractions and exhibits are subject of reporting. Using merchant code information from

credit card data has several advantages, including the relatively low costs for compilers, and the fact that

in addition to the EBOPS travel item, also other services categories (other business services,

communication services, government services) could be compiled or verified.

14.262. In addition, customs data could help in the identification of thresholds in order to adjust travel

and goods (EBOPS concept) accordingly (i.e., durable goods and valuables).236 For that, totals on travel-

related inflow from travel survey data or credit card data has to be calculated. The value of the total

amount of valuables and durable goods in excess of custom thresholds from customs data also has to be

calculated and efforts need to be made to avoid double counting.

234 BPM6, paragraphs 10.85-10.100.

235 MSITS 2010, paragraphs 3.115-3.131.

236 BPM6/MSITS 2010 and ITRS 2008 have a different treatment concerning some goods purchased by those

traveling: the BPM6/MSITS 2010 travel item excludes purchases of valuables and consumer durables above a

customs threshold, whereas tourism statistics includes all such purchases irrespective of the threshold. See MSITS

2010 Box III.5 for the relationship between data on travel and tourism statistics.

221

Country experience: New Zealand on collecting data on modes of supply

14.263. The user is invited to read the experience of New Zealand collecting data on modes of supply as

presented in the country example of chapter 6. In New Zealand respondents were asked in the 2011

Census of International Trade in Services and Royalties to estimate the percentage of the export value that

was delivered through mode 1, mode 2, and mode 4. Testing showed that most respondents understood

the modes of supply concepts, although feedback suggested the guide which was provided together with

the trade in services questionnaire was helpful as well.

C.7. Country experience: Turkey

14.264. Turkey’s compilation system entails some advantages for modes of supply analysis. To be more

precise, the first advantage stems from already having the following breakdown of travel by type of

product for Mode 2 purposes both for travel credit and debit as well as for personal and business travel

(except for the expenditure on package tours: the share pertaining to Turkey for credit and the share

pertaining to non-residents for debit) almost on an EBOPS 2010 classification: breakdown a) Goods, b)

Local transport services, c) Accommodation Services, d) Food-serving Services, e) Health services, f)

Sports, education and culture.237 In addition, some of the Mode 4 type of transactions may be identified

through the ITRS forms.

14.265. At this point, it may be useful to give more information on the TURKSTAT travel surveys

conducted in cooperation with the CBRT and the Ministry of Culture and Tourism. In connection with

Mode 4 purposes. These are face to face surveys conducted at the border gates, on the nationality basis,

four times a year, so as to cover quarterly periods. For instance, the “Departing Non-resident Visitors”

survey for travel credit is carried out at 25 border Gates, which covers 90 percent of all departing visitors

according to the departure way (Air, Road, Rail and Sea), and as regards years and terms, new gates have

been added or excluded. The purpose of this survey is to determine the profile (age, sex, education level,

occupational status), travel characteristics (purpose of visit, the place stayed, accommodation type, night

spent, types of expenditures) and to estimate Turkey’s travel income of foreigners and citizens residing

abroad. The number of foreign visitors is based on the administrative border statistics of the Directorate

General for Security for the related periods which cover all arrivals and departures in all border gates in

the details of citizens, foreigners, nationality, month and border gates (overnight visitors and

excursionists).

14.266. The survey is carried out for overnight visitors and excursionists by 0.5% sample rate to estimate

on the basis of departure way and nationality and estimations are given quarterly in the detail of 26

selected nations and 10 country groups.238 The sample survey results estimate the average expenditures

with the breakdown of overnight stays and the excursions, which are expanded with the related

Directorate General for Security border statistics. In order to estimate average expenditure figures for

Turkish travelers abroad, sample surveys are also conducted on a quarterly basis for resident visitors

arriving in Turkey.

14.267. In the light of the above considerations, the “Departing Non-resident Visitors” survey has

questions on general occupational status and purpose of the visit with one of the options being “Business

(conferences, meetings, assignments etc.)” albeit with no further breakdown. This option may further be

broken down into i) conferences, meetings, trade fairs and exhibitions etc. and ii) as a contractual service

237 In the EBOPS 2010, the distinction regarding other services is between education services and health services.

238 Turkish Statistical Institute (2011), Tourism Statistics.

222

supplier and iii) other. The next step would be to modify the questions on general occupational status to

identify the type of the employer-employee relationship for those whose purpose of visit is business and

professional activities as such if (i) their employer is in Turkey, (ii) outside Turkey. The resulting matrix

of the mentioned questions may then prove to be useful, provided that a statistically meaningful

expansion can be achieved, which should be assessed with statistical scrutiny.

14.268. The compilation of the additional item on tourism services related expenditure in travel and

passenger transport should also be encouraged to establish a clearer link between the BOP and tourism

statistics. Finally it is necessary that BOP and tourism statisticians cooperate, and in particular investigate

if more detailed services categories are of interest. Also some data for the tourism satellite accounts could

probably be integrated.

C.8. Country experience: Portugal

14.269. A separate alternative breakdown of travel into types of goods and services is recommended

according to BPM6/MSITS2010. Box 14.8 shows the level of product detail required as supplementary

breakdowns for travel in according to BPM6 and EBOPS 2010 integrated with additional requirements

included to provide the necessary level of detail for other statistical domains. This also responds to mode

2 information needs.

Box 14.8 Level of product detail required for supplementary

breakdown of travel

14.270. The forthcoming payment cards database can provide important information to meet these new

requirements, using the activity sector code of the goods and service provider. For payments made in

Portugal by cards issued abroad in Portugal the NACE of the POS owner is available, while for payments

made abroad by cards issued by resident institutions the MCC of the POS owner is provided. These

variables are used as proxies. A correspondence table between NACE or MCC and the different travel

expenditures on goods and different types of services has to be developed. Furthermore, to identify local

transport services other than rental services separately from international transport services the border

survey is going to be used.

223

14.271. In addition, when travel expenditures are prepaid to resident travel agencies, both in terms of

travel credits and travel debits, the direct reporting by these companies will provide the breakdown by

good and type of service for travel credits as well as for travel debits. This information complements

payment cards data. For the same breakdown of payments made to non-resident travel agencies, on the

debits side, the border survey is being considered as a possible data source. In terms of travel expenditure

on goods, BPM6 recommends the acquisition of valuables, consumer durable goods, and other consumer

purchases for own use or to give away acquired by travelers in excess of customs thresholds to be

registered under general merchandise and not under travel. To identify the acquisition of such goods,

different variables from the payments card database have to be combined, namely, the activity

classification of the goods provider is restricted to jewelry, art, cars and electronic goods, and considering

some minimum threshold for the value of the operation.

D. Service transactions between related (affiliated) enterprises

14.272. MSITS 2010 acknowledges that information on the value of all transactions between affiliated

enterprises is helpful in understanding the degree to which globalization of services is taking place. Such

intra-firm trade in services can take up a substantial share of total services trade; for example, transactions

between related (affiliated) enterprises accounted for 28 per cent of both U.S. exports and U.S. imports of

private services in 2013.239. In addition, statistics on intra-frim services trade can highlight the role of

services, in particular those related to IPPs, provided by one unit but used throughout the MNE. For

example, again the information for the United States shows that intra-firm trade accounted for 59 per cent

of receipts of royalties and license fees and 71 per cent of payments of charges for the use of intellectual

property in 2013.

14.273. MSITS 2010, therefore, recommends that data on resident/non-resident transactions in services

separately identify transactions with related and unrelated enterprises. Although such a breakdown would

be most informative at the level of the detailed EBOPS 2010 classification, it is recognized that this could

place an additional burden on both suppliers and compilers of data and could raise issues of

confidentiality. In this connection, MSITS 2010 recommends that such a breakdown be carried out at the

aggregate level for total services transactions (under the complementary grouping of EBOPS entitled total

services transactions between related enterprises), although countries willing to provide additional detail

are encouraged to do so for some (relevant) aggregated EBOPS 2010 categories.240

14.274. The MSITS 2010 associates related enterprises (intra-firm trade) to direct investment

relationships241. Should the criteria for related enterprises depart from this recommendation, it is good

practice to clearly describe the criteria chosen in a country’s trade in services metadata.

14.275. It is good practice to carefully examine the valuation of services transactions between related

enterprises , as the recorded transactions could be under- or overestimating and misrepresenting the real

flows of trade (as measured by market prices) if such transactions between related enterprises are based

on transfer prices (see also chapter 1 for transfer/market prices).

239 U.S. cross-border trade in private services excludes transactions by the U.S. government (including the military).

Trade in private services is the most appropriate basis of comparison because intra-firm trade covers only trade by

businesses.

240 Ibid., paragraph 3.56. Note that for some transactions/services items compiling such a breakdown would not be

relevant, e.g. transactions where individuals are consuming services, education services.

241 See MSITS 2010, paragraphs 4.58 – 4.60 for further details.

224

Country experience: the United States

14.276. For conceptual reasons or due to the source data limitations, the U.S. Bureau of Economic

Analysis (BEA) only presents statistics on intra-firm trade for some selected types of services.

Transactions between individuals and businesses are considered to be between unaffiliated parties. Thus,

personal and business travel services, which are transactions by individuals who travel to foreign

countries; education, which consists of expenditures for tuition and living expenses by students studying

in foreign countries; medical services, which cover expenditures by patients in foreign countries; and

expenditures by non-resident workers, are all considered to be unaffiliated transactions. Passenger

transportation, which covers transactions between individuals and foreign airline or vessel operators, are

also considered to be unaffiliated transactions. Transactions in insurance services are deemed to be

unaffiliated even when they are between affiliated companies because the services are deemed to be

provided to the policyholders who pay for the insurance premiums and who are unaffiliated with the

multinational company. Transport services other than passenger transport are treated as unaffiliated

because the source data do not allow transactions between affiliated parties to be separately identified

from transactions between unaffiliated parties.

14.277. The remaining categories—including charges for the use of intellectual property;

telecommunications, computer, and information services; financial services; and other business

services—can have affiliated transactions. The source data for these statistics are BEA surveys.242 On the

surveys, U.S. companies are asked to report their transactions in a specific service type by country and,

for each country, by whether the transaction was with their foreign affiliates, with their foreign parent or

with foreign affiliates of their foreign parent, or with unaffiliated parties.

14.278. The definitions of affiliated parties are the same as those used to identify a direct investment

relationship. A foreign affiliate is a foreign business enterprise in which a U.S. person directly or

indirectly owns or controls 10 per cent or more of the voting stock in an incorporated business enterprise

or an equivalent interest in an unincorporated business, including a branch. A foreign parent is the first

person outside of the United States that owns or controls 10 per cent or more of the voting stock in an

incorporated U.S. business enterprise or an equivalent interest in an unincorporated U.S. business,

including a branch. Foreign affiliates of the foreign parent are defined according to a more restrictive

criteria than above as they are any foreign persons proceeding up the foreign parent’s ownership chain

that owns more than 50 per cent of the person below it up to and including that person that is not owned

more than 50 per cent by another foreign person and any foreign persons, proceeding down the ownership

chains of each of these members, that is owned more than 50 per cent by the person above it.

14.279. By collecting data on transactions with foreign affiliates separately from those with foreign

parents and foreign affiliates of the foreign parent, transactions within U.S. multinational enterprises, i.e.,

between U.S. parent enterprises and their foreign affiliates, can be distinguished from those within foreign

multinational enterprises, i.e., between U.S. affiliates and the foreign multinational enterprises that invest

in them.

242 Financial services are collected on the BE-185 Quarterly Survey of Financial Service Transactions between U.S.

Financial Service Providers and Foreign Persons and the BE-180 Benchmark Survey of Financial Service

Transactions between U.S. Financial Service Providers and Foreign Persons. Telecommunications and most

business, professional, and technical services are collected on the BE-125 Quarterly Survey of Transactions in

Selected Services and Intangible Assets with Foreign Persons and the BE-120 Benchmark Survey of Transactions in

Selected Services and Intellectual Property with Foreign Persons. These surveys can be found on BEA’s website,

www.bea.gov, by looking under “International” and clicking on “Survey Forms and Related Materials.”

225

14.280. Multinational enterprises sometimes allocate expenses across various divisions or parts of the

enterprise rather than billing them separately. These allocations, often called allocated expenses,

headquarters services, or miscellaneous charges, are sometimes for a designated service, such as for

research and development (R&D), but sometimes no specific service is designated. It is important to note

here that management of patents and license fees, which may be of a similar nature to allocated expenses,

should be recorded in other business services, n.i.e. If the type of headquarters service is known, BEA

asks reporters to include those allocated expenses in its data for that type of service. If the type of service

is not known, BEA asks reporters to include them in the category of “management, consulting, and public

relations (including allocated expenses).”

226

Chapter 15 Compilation of Foreign Affiliates Statistics and th e international supply

of services

15.1. Scope. This Chapter deals with the compilation of FATS and consists of the following sections:

Compilation of foreign affiliates statistics: summary of good practices (Section A), general purpose and

description of FATS compilation (Section B), FATS variables and their compilation (Section C), selected

additional data compilation issues (Section D). Specific country experiences have been included in the

main text, and full texts of country contributions will be made available on the website dedicated to the

compilers' guide.

A. Summary of good practices

15.2. FATS describe the activities of foreign-owned or foreign-controlled enterprises in host

economies. This statistics relates to commercial presence in GATS (mode 3), but also it is more broadly

of interest in the context of globalization. 243 As described in MSITS2010 the interest in FATS is on all

variables, with a particular focus on variables related to the supply of services. This Guide advises on the

compilation issues in relation to FATS and provides more details on items where services measurement

deserves more attention. Partial information on the presence of natural persons may also be obtained in

the process of FATS compilation if data on employment by foreign affiliates is collected and if the

foreign employees (such as corporate transferees) can be separately identified. For these purposes, FATS

are of interest in their own right, but it will often only be possible to ascertain their full significance when

they are viewed in conjunction with other information, such as comparable information on total investor-

country or host-country economic activity and on services supplied through modes other than commercial

presence.

15.3. Consequently collection of data based on balance sheet information and activity measures such as

sales, employment, imports, exports or value added figures, etc. provide a more complete picture of the

international supply of services. While the production and use of services provided by foreign affiliates

are part of the national accounts of the host country (including exports of such services to other

countries), these measures will not appear in the national accounts of the investing country.

15.4. Good practices. Given the complexity of the FATS compilation framework, a step-by-step

approach is advised as follows:

xii. While setting up the FATS compilation programme a thorough analysis of data needs for FATS

has to be conducted in the context of various possible options for the organization of data

collection and data compilation process. Given that inward FATS are generally easier to obtain

than outward FATS and that this information is directly connected to international negotiations, it

is a good practice that countries first concentrate on the compilation of inward FATS;244

xiii. A review of all available sources should be conducted (e.g. FDI statistics, enterprise surveys,

registers, administrative sources). Procedures for the identification of the relevant population,

either directly or through linking exercises should be developed and tested. The identification of

the Ultimate Controlling Institutional unit is particularly important for compiling FATS;

See chapter 1.244 It is important to note that a country’s outward FATS conceptually should match its partner's

inward FATS.

244 It is important to note that a country’s outward FATS conceptually should match its partner's inward FATS.

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xiv. A list of the most important variables for compilation has to be established early on based on the

list of core (and eventually additional variables) identified in MSITS2010. The guide suggests as

a starting point to concentrate on sales/turnover or output (the latter being the preferred measure

out of the two), employment, and number of enterprises;

xv. The choice of the statistical unit needs to be made, although in many cases this will be determined

by the existing definitions used in other domains of national economic statistics (e.g. for business

statistics, national accounts);245

xvi. Ideally data should be compiled annually and, if possible, on a calendar year basis;

xvii. Compilation of data broken down by economic activities is advised. Compilers are

encouraged to do so for all activities, with sufficient details to respond to the needs related to

services negotiations (see ICFA Rev. 1 in MSITS 2010). For output or sales/turnover, feasibility

of a disaggregation into total sales/output of goods and total sales/output of services for each

activity should be investigated to respond better to information needs related to the measurement

of the international supply of services;

xviii. Given the complexity of the FATS framework and the often high level of detail in of the

collected information, compilers should pay particular attention to ensuring data confidentiality

when cross-classifying information by activity/product and partner country; proper procedures for

evaluating what data can be publicly disseminated should be developed and systematically

applied.

B. General Description

15.5. FATS data should be compiled for as many variables as possible. Some are more closely related

to the needs of GATS (output or turnover, employment, number of enterprises), but for broader analytical

purposes other variables would be of interest such as assets, R&D expenditure, etc. The main elements of

the FATS conceptual framework and its scope for services are described in Chapter IV of MSITS2010.

For additional guidance, compilers are advised to refer to the OECD Benchmark Definition of Foreign

Direct Investment 4th edition chapter 8 as well as the OECD Handbook on Economic Globalisation

Indicators chapter XX.246All sources identified above also include some practical information on FATS

compilation.

15.6. FATS are the main data source for assessing mode 3, or commercial presence.247 In the majority

of cases this mode of supply corresponds to the activities of entities that are controlled or owned from

abroad in the territory where they are established. The supply of services through mode 3 by non-resident

suppliers to residents of the compiling economy is made by the resident affiliate of this supplier (i.e.,

recorded as transactions between residents of the same economy).

245 Compilers should note that this may differ between inward and outwards FATS, see section D.1

246 Another valuable source of information for compilers is the Eurostat Foreign Affiliates Statistics (FATS)

Recommendations Manual, 2012 edition, produced by Eurostat Available at:

http://epp.eurostat.ec.europa.eu/portal/page/portal/product_details/publication?p_product_code=KS-RA-12-016

247 Mode 3 also refers to cases where there is an establishment of a non-resident entity (e.g. for less than one year)

delivering services to customers of the economy of establishment. In these cases international transactions in

services will be recorded in the balance of payments statistics. However, MSITS2010 recommends considering

these only if it is believed that such cases are important for the compiling economy.

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15.7. The main interest from a mode 3 perspective is in compiling data broken down by

destination/origin of control and by service type. However in the absence of data by service type or if

such a breakdown is difficult to compile, it is possible to estimate the most likely type of service being

provided according to the primary activity of the firm. For example, a company in the telecommunication

services industry is likely to have been set up abroad to provide mainly telecommunication services.

15.8. FATS will include variables such as output or turnover/sales, employment, etc. Although the

interest from a mode 3 perspective is not limited to this output, output is the measure of mode 3 supply of

services, which, in a GATS context, is analogous to exports and imports of services recorded in the

balance of payments (corresponding to modes 1, 2 and 4). In the absence of output data, a solution could

be to use FATS sales/turnover of services data, keeping in mind the mode 3 measurement issues

associated with wholesale and retail trade, financial services, and insurance services (see section C.1

below).

Chart 15.1 Output of foreign affiliates and mode 3 supply of services: a statistical view

15.9. It is also important to consider what has in fact been supplied to consuming entities of the

economy where the affiliate is established. The measure of mode 3 supply of services is a subset of a

foreign affiliate's output figures, i.e., output that is not exported to third economies or back to the

economy of the controlling enterprise. As shown in box 15.1, company B’s production and delivery of

services to consumers of B is supply of services through mode 3 for economy B (originating from A).

Company B’s exports of services to the rest of the world are part of output figures as a FATS variable, but

are not included as economy B’s mode 3 consumption of services. It could be supply of services through

modes 1, 2 or 4. Similarly, Company C’s production and delivery of services within economy C is supply

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of services through mode 3 to consumers of C (from economy A). The services output produced by

company B (or company C) but provided to non-resident consumers outside their economy of

establishment should be accounted for as trade in services (either mode 1, 2 or 4) between the economy of

residence of this company and the economy of residence of the consuming entities. In other words this

information is already covered in balance of payments services data of respective economies. When

analysing the international supply of services by mode, only those data derived from the FATS

framework that correspond to mode 3 should be considered, to compare to data derived from the BOP

services account.248

15.10. Within the list of variables recommended for FATS compilation, employment is also one of great

interest particularly if compilers are able to separately identify the portion of employees from abroad (i.e.

non-residents). This would be useful in relation to mode 4 commitments, as further described in section

C.4 of this chapter as well as chapter 16. If possible, data on the number of intra-corporate transferees

would be useful particularly given the high level of commitments made in trade negotiations for this

category of persons.

15.11. The variables should be broken down according to:

i. The country of location of the foreign affiliate for outward FATS or the origin of ultimate

control/FDI for inward FATS;

ii. The activity of affiliates;

iii. The type of products produced by the foreign affiliates for the variables for which such a

breakdown is possible, at a minimum distinguishing services from goods. Although this is

generally seen as a longer term goal, some compiling economies have already compiled such

data, or such a breakdown is feasible; and

iv. For output or sales, Distinguishing between those within the host economy, with the home

economy and third economies.

15.12. Supplementary data may also need to be compiled as a separate dataset in the specific

circumstances of some economies such as the existence of significant joint ventures, or where control

cannot be determined solely using the guideline of more than 50% ownership of voting power, or in

economies where control is not possible by law.

15.13. FATS often require integrating multiple data sources, which can present measurement challenges.

Different data sources are often necessary to identify the population covered by the framework, as well as

the breakdowns by partner country.

C. Selecting data sources

15.14. Data source for FATS are described in chapters 5, 6 and 10. Comparison of data sources is shown

in chapter 11. When beginning FATS compilation, to select data sources one should take into

consideration the fact that mode 3 supply of services as measured through FATS is most likely to occur in

the context of multinational groups, in particular those with important and numerous FDI relationships.

In other words, in particular on the outward side, large companies are more likely to be the most

248 Keeping in mind other considerations with respect to the comparability of these data, see chapter 20 on data and

metadata dissemination.

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important players for supplying services abroad. As a starting point, it may therefore be useful to consider

focusing on larger (services) companies or those with important FDI transactions and positions, which

could provide an intermediate low-cost solution for compilation. However, one should not underestimate

the role of smaller companies because (i) in the context of inward FATS, foreign affiliates of large

multinational groups may not necessarily be large themselves and (ii) in the context of outward FATS, the

international role of small and medium enterprises is becoming increasingly important. This means that

although such an intermediate solution may be useful in the short-run, in the longer-run compilers should

consider compiling a FATS dataset representative of the entire population. In the context of employment,

it is also important to note that larger (services) companies/affiliates are more likely to recruit many non-

resident employees (i.e. from the perspective of the compiling economy) or have important intra-

corporate movements of their personnel.

15.15. Collecting source data and compiling FATS implies the need for various stakeholders to

cooperate. For compiling FATS, as done in many economies, the data sources should be used in a

complementary way, in particular for inward FATS. For example, although the main data source to

collect data may be a survey under the responsibility of one agency (e.g. statistical office, central bank),

often the information relating to the identification of (part of) the population to be covered and/or the UCI

is available from another data source (e.g. other surveys, enterprise registers) that can be under the

responsibility of another agency (e.g. central bank or another administrative body). In addition, in many

economies the collection of data from financial institutions is conducted by the central bank whereas the

collection of data of other types of units is conducted by the statistical office.

15.16. It is therefore a good practice to assess whether cooperation of various stakeholders is necessary

and if so, to identify possibilities and responsibilities for linking information (e.g. common identifier in

registers/administrative sources) before beginning FATS compilation. This process has been implemented

by many economies, and often enables the compilation of FATS with little or no additional burden for

reporters or work for compiling agencies. Information on legal frameworks and institutional arrangements

is provided in chapters 2 and 3 respectively. If there is a difference in statistical units underlying (i)

information on ownership or financial information at the enterprise level and (ii) operational data at the

establishment level, then compilers must account for this difference in their compilation procedures.

C.1 Which data source to choose?

15.17. A comparison of data sources for FATS is suggested in Chapter 11. Chapter 6 provides more

detail on the information that should be sought from these data sources and how they could be used.

15.18. Inward FATS variables can in general be obtained from four main sources:

i. Survey used to collect information on a compiling economy's business structure, identifying the

foreign-controlled population of firms, as well as the country of the UCI. This information could

be sourced from the survey itself by including the appropriate items, or by cross referencing with

information available from other sources (e.g. business register, FDI register). Coverage of

(services) activities is an important consideration when choosing such a source, as in many cases

it "only" covers business activities (i.e. excluding education, health, recreational service activities,

agricultural, mining activities).

ii. Survey used to collect foreign direct investment information, where questions would be included

to identify the variables of interest. Again it would be necessary to identify within the population

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of foreign direct investment enterprises those that are foreign-controlled as well as the economy

of the UCI249.

iii. A dedicated FATS survey.

iv. Administrative sources (business registers, tax return or regulatory reports such as for banks or

insurance companies, or more generally on foreign investment, privatization monitoring, etc.)

15.19. Economies that have business statistics this source may be preferred for inward FATS. This

option has been implemented by many economies. Some others have preferred using (existing) FDI

surveys to collect FATS. In fact, this may be an interesting solution as the FATS population may be

relatively easy to isolate (directly from the survey, or from the register used for establishing the FDI

survey). But one needs to keep in mind the need not to overload an FDI survey, in particular if it needs to

be run on a quick turnaround.

15.20. The outward FATS characteristics are usually collected based on (1) FDI surveys, and (2)

dedicated FATS surveys. Outward FATS information is believed to be more difficult to obtain as it

relates to the activities of firms established outside the compiling economy. As a starting point it may be

useful to consider using an FDI survey to obtain data on outward FATS, keeping in mind the pros and

cons of using such a source. A number of economies have chosen this option, particularly when starting

to collect the most important outward FATS characteristics. Alternatively, a FATS survey could be

developed.250 In general, it would be advisable to conduct a periodic census for outward FATS (i.e.

including all units identified as belonging to the target population of reporting units). Between censuses,

sample surveys could be conducted. Administrative data could also be considered for compiling outward

FATS if the data include relevant variables.

15.21. For some of the variables supplementary sources may be needed, such as merchandise trade

statistics or BOP data on goods or services for the trade variable, research and development surveys for

relevant variables, or administrative or other sources for data for some specific (services) activities

(finance, insurance, oil, mining, other major industries). If needed compilers may also refer to other

sources to gather information on structures or operations of multinationals, such as industry associations,

free zone authorities, stock exchange and securities commissions, special registers of foreign companies

such as those maintained by some international organization (e.g. UNCTAD, OECD, Eurostat) or private

companies (e.g. Dun and Bradstreet), the Internet, and partner country statistics. Again, compilers need to

be cautious of how all this information, including the data collected, aligns with the FATS

recommendations. These sources could also be useful to verify or validate some of the FATS information

compiled. For counterpart statistics it is important to note that the information is likely to be confidential

and should not be able to provide information on individual businesses. Aggregate information may be

available but care should be taken over the interpretation of concepts and the implication of different

compilation methods.

15.22. Although not advised, some countries apply cut-off thresholds. For practical reasons (reduction of

the costs and the burden) such thresholds can, nevertheless, be considered acceptable as long as they are

kept at minimum and estimations are provided for the population under the threshold.

249 The identification of the UCI is discussed in sections E.5.

250 For example if the FDI survey needs to be run on a quick turnaround, or if compilers do not want to unduly

overburden FDI firms that are not part of the population to be covered by FATS.

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15.23. To summarize, compilers may have various options for sourcing their data for compiling FATS,

and the choice will depend on the situation in each country. However:

i. For inward, it may be preferable to consider sourcing data from business statistics keeping in

mind that these statistics may need to be complemented for activities that may not be covered by

this dataset, e.g. agricultural activities or various types of social services). Another solution, at

least as a starting point, could be to consider an existing inward FDI survey.

ii. For outward, an FDI or dedicated FATS survey could be used, although the former may be easier

to implement as a first solution.

iii. If an FDI survey is used, response burden should be considered, particularly if the survey is

conducted on a quick turnaround and because a portion of FDI firms are not part of the FATS

universe (i.e. firms with influence relationships, but not control).

iv. The link with FDI, in particular to identify the statistical population, is an important point that

should be considered when choosing a data source and when identifying the population to be

covered and the UCI.

C.2 Country experience: Austria

15.24. The two major sources of the inward FATS statistics in Austria are the comprehensive structural

business statistics that Statistics Austria collects and the direct investment survey that the OeNB conducts.

Foreign-controlled enterprises are a subset of direct investment enterprises, which also include minority

holdings above a 10% threshold and below the 50% majority holding level. The fact that the OeNB has,

for many years, compiled direct investment information on a per-enterprise basis and has included a

question on the “ultimate controlling investor” (UCI) in its survey, allows the OeNB to analyze multiple

minority ownership structures and to establish the country in which the ultimate parent is located, as is

required for FATS statistics.

15.25. As the OeNB’s direct investment survey includes only enterprises above a certain threshold,

instances of foreign-controlled ownership below the threshold need to be identified for the inward FATS

statistics in a second step. This is done by an automated analysis of the administrative Company Register

data. However, the information available does not allow for determining whether the corporate

headquarters of these generally small enterprises are located in a third country; therefore the country in

which the institutional unit exercising immediate control is located is, by default, considered the country

of ultimate control.

15.26. In a third step, the enterprises under direct foreign control determined on the basis of OeNB

surveys and IT-based analyses of Company Register data are checked for any first and second-tier

affiliates they may have in Austria. To this end, an algorithm is applied to Company Register data to

establish, in a step-by-step procedure, all majority holdings in Austria of the enterprises identified thus

far. The process described above enables the OeNB to submit an exhaustive list of all resident foreign-

controlled enterprises to Statistics Austria.

15.27. Statistics Austria’s first task is to link the OeNB’s list of enterprises with the entries in its own

business register. This is feasible using three common identifiers, namely the OeNB’s internal key, the

NSIs unit identifier, and the official company code which is stored in the public Company Register. These

identifiers are available in both data-bases, thanks to a long standing practice of the mutual exchange of

units can be matched automatically, without any manual intervention. Next, Statistics Austria once more

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checks the data, thereby eliminating “inactive” business units from the OeNB’s list. Such inactive units

may appear if they have not yet started economic activity or if enterprises are being liquidated. In some

cases, control relationship may be unclear – e.g. where a change of ownership occurs during the reference

year – and may be corrected at this point in time.

15.28. The most important step is then to retrieve the required characteristics for inward FATS from the

existing database for structural business statistics. The values in this database may be either a direct result

from the SBS survey, if the enterprise in question was part of the sample, or they may be imputed data,

based on regressions with employment and turnover as exogenous variables, if the relevant enterprise was

not part of the sample. In any case, the data used for reporting inward FATS statistics are exactly the

same as for SBS statistics, which is an important aspect of quality. Every second year, the data is

supplemented by information about the R&D activities of foreign affiliates in Austria. These R&D

characteristics of foreign affiliates are to be derived from the available R& D statistics by linking data sets

at the individual enterprise level.

C.3 Country experience: Spain

15.29. The Spanish INE has long recognized the importance of indicators of Spanish subsidiaries of

foreign companies and has carried out several pilot studies or surveys on subsidiaries abroad in the years

before entry into force of the European regulations. Reducing the statistical burden is a strategic objective

of the INE and that, within this line of action, one of the theoretical principles to consider when starting

and developing new statistical projects is promoting the use administrative data and prioritizing them in

relation to the collection in the field, whenever a reliable and timely administrative source from which

they can effectively meet research objectives is available.

15.30. Consistent with this view, and in parallel with some pilot studies, the INE explored the possibility

of obtaining the information from the Foreign Investment Registry of the Ministry of Economy and

Competitiveness (MINECO). This Register is formed from statements by the Directorate General for

Trade and Investment, and more specifically the Directorate General of International Trade in Services

and Investment, collected about foreign investment in Spanish companies and Spanish investment in

foreign companies, both as regards flows and stock.

15.31. Specifically, in the case of Spanish investment stock in foreign companies, Spanish resident

investors that make investments in foreign companies whose net worth exceeds a threshold and in which

the investor's share capital or total voting rights are equal to or greater than 10%, must submit an annual

report on the development of foreign investment in the first nine months of each calendar year. Also

included in this report is the investment in foreign companies whose activity is the holding of shares in

the capital of other companies, regardless of the amount of the investment. Holders of foreign branches

also report the size of the investment in the annual report. Information is obtained from the companies in

which the investor invests and in turn, investee companies. Finally the third level of the chain of

participation in subsidiaries is reached, although less detailed information from the latter is collected.

15.32. The Foreign Investment Registry covers Foreign Direct Investment in Spain and Spanish Direct

Investment Abroad, published annually and included in the National Statistical Plan (PEN), and presents

Foreign Direct Investment in Spain and Spanish Direct Investment Abroad quarterly and bi-annually as

well as the PEN. Foreign Investment Registry statistics are also obtained on Spanish Investment in

Foreign Securities and Foreign Investment in Transferable Securities Spanish, both flows and position. In

meetings between the two institutions involved (MINECO and INE), officials discussed the

methodological alternatives, implement procedures and legal issues arising from the eventual transfer of

the relevant files. Further analysis of the information provided by the Register and comparative studies

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conducted with pilot surveys highlighted the quality and wealth of information, as well as the role it could

play as a source of primary data to meet the objectives.

15.33. Finally, after the evaluation of the various advantages and limitations associated with each of the

procedures, the administrative source was chosen as a more effective means of achieving the objectives of

this research. However, it should be noted that while the data derived from said Investment Register are

considered as the primary basis for generating key information, the data has been supplemented with

information from the European Register of Groups (*) in order to obtain the final results of the

investigation. It should be noted that the coverage of branches in the Investment Register is not complete

as far as the population of subsidiaries are concerned, because according to the current rules, companies

are not required to declare investments in companies with assets of less than a threshold. The results of

the subsidiaries from the third level of the chain of participation are not shown either. It has therefore

been necessary to perform additional processing and estimation taking into account European Register of

Groups (information on enterprise groups from private databases and records units in the statistical offices

of the individual Member States and the countries of the EFTA) to measure the activity of these

subsidiaries and through appropriate adjustments, to derive the final results of the statistic.

15.34. In conclusion, the statistical design for the primary data generated from the Foreign Investment

Registry of the Ministry of Economy and Competitiveness, can reduce the statistical burden on

enterprises while allowing for national dissemination of the main results on Spanish subsidiaries abroad.

D. General compilation issues

D.1 Which statistical unit to consider?

15.35. For inward FATS, the statistical units are all the enterprises (or establishments) and branches that

are under foreign control and for outward FATS, the statistical units are all the enterprises (or

establishments) and branches abroad that are controlled by an institutional unit resident in the compiling

economy.

15.36. MSITS 2010 makes no recommendation as to the choice between enterprises or establishments

for statistical units and explains that both approaches have strengths and weaknesses (see chapter 6 and

MSITS 2010 paragraph 4.13-4.14). In addition, if the collection takes place at the enterprise level, then it

is possible that it is also done at the local enterprise group level.251 There is, therefore, an even greater risk

of interpretation of the activities of the local enterprise groups as it will regroup units engaged in multiple

activities, making data classification more difficult when it comes to compilation. The statistical unit for

FATS will in fact heavily depend on the statistical units of the existing national statistical systems if

defined, or on the limitations that exist in the data collection system. Because the statistical units can

have an important bearing on how the statistics are interpreted, both in isolation and in comparison with

other data sets, the compiler should consider this when compiling FATS. In addition, it is a good practice

that metadata on the statistical units used in collecting FATS be disclosed in explanatory notes given that

the level of consolidation may affect users’ interpretation of the statistics.

15.37. Compilers should also consider that units may differ between inward and outward FATS. For

example, to the extent that for inward FATS, structural business surveys are the basis, the unit for this

compilation is likely to be an establishment (recognising the need for a degree of industry homogeneity

251

It is advisable that these enterprises in the host economy that are part of a common enterprise group are

identified and see how this consolidation question can be addressed.

235

within the unit); for outward FATS, the use of FDI surveys as a potential basis will tend towards an

enterprise or local enterprise group as the unit for compilation. The use of different units for inward and

outward FATS will make within country comparisons and balances difficult, particularly for business

counts. This is why compilers in the longer term should identify ways, if possible, of aligning the

statistical units used in both inward and outward FATS.

D.2. Choice of reference period, periodicity of compilation and valuation of monetary

variables

15.38. MSITS2010 does not make any recommendation as to the choice of the reference period for

compiling FATS.252 In practice, economies that are compiling FATS use years as a reference period. At

the time of this writing, such a choice seems reasonable from the perspective of users, as well as with

respect to the reporting and compilation burden. However, in the future there may be a need for data

referring to shorter periods of time, e.g., quarters, at least for some main FATS aggregates.

15.39. MSITS2010 also does not make any recommendation as to the periodicity of update of FATS

data. In practice, agencies producing FATS do so every year, at least for the variables that are deemed to

be the most important (i.e., priority variables). In some cases it may be reasonable to consider compiling

FATS less frequently (e.g. every odd year) for the variables/breakdowns of minor importance or for those

that are most complicated to produce.

15.40. In principle, data for a given reference year should correspond to the calendar year, but firms may

report on a fiscal or accounting year basis if that is what is available. In addition, it should be noted that

some characteristics are compiled from already existing data, in particular for inward FATS. For these

characteristics, the reference period may have to be taken as a given and might not always coincide with

the calendar year. Compilers should clearly inform users of the reference period used, and if there are any

deviations for some variables.

15.41. Consistent with other economic statistics, activity should be recorded as it occurs rather than

when the related payment is made (accrual basis). Flow variables should be recorded for the whole

reference period, while stock variables should, if possible, be recorded as of the end of the reference

period. An exception is the employment variable, for which use of a period average is preferable (see

also section D.4) if the employment is subject to strong seasonal variation. Data for a given reference

period are mainly valued at the average prices and, if relevant, average exchange rates of that period. For

stock variables (for example, property plant and equipment), values of source data might be recorded at

historical cost and will largely reflect prices at the time the asset was acquired rather than prices of the

reference period. In such a case, revaluations to reflect current-period prices should be made by the

compiler.

D.3. Treating the Activities of Special Purpose Entities in a FATS context

15.42. Special Purpose Entities (SPEs) are engaged in various activities and take various forms. Thus,

compilers should pay attention to the treatment of SPEs in compiling FATS. Although there is no precise

definition of SPEs in the 2008 SNA, BPM6 and BMD4, these documents include some elements that help

to better identify SPEs and their activities.

15.43. A unit can be considered an SPE, if it meets the following criteria:

252 HEGI recommends that the calendar year is used as a reference period.

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i. It is a legal entity:

i. Formally registered with a national authority253 and

ii. Subject to fiscal and other legal obligations of the economy in which it is resident;

SNA 2008, paragraph 4.6.for definition of a legal entity.

ii. The entity is ultimately controlled by a non-resident parent, directly or indirectly;

iii. The entity has no or few employees, little or no production in the host economy and little or

no physical presence in the economy in which it is created by its parent, which is typically

located in another country;

iv. Almost all the assets and liabilities of the entity represent investments in or from other

countries;

v. The core business of the entity consists of group financing or holding activities; i.e.,

channelling of funds from non-residents to other non-residents. However, in its daily

activities, managing and directing plays only a minor role.

15.44. According to the 2008 SNA, judgment has to be made regarding the independence of an SPE as

an institutional unit. However, non-resident SPEs owned by residents (and resident SPEs owned by non-

residents), which are the main focus of FATS, are treated as independent institutional units by convention.

When those SPEs transact by their own decision, their transactions, in principle, should be recorded in the

same manner as those of non-SPE foreign affiliates.

15.45. At the same time, however, it should be considered that SPEs are often established to facilitate

cross-border ownership of enterprises and thus generally do not have any substantive (services) activities.

Thus, special treatment of SPEs in FATS (and FDI statistics) might provide economically more

meaningful data and thus enhance their usefulness.254 For example, it would be relevant to separately

identify SPEs and to compile supplementary data not considering certain types of SPEs.

15.46. Nevertheless, some SPEs are engaged in services activities in addition to passing through funds,

and such types of entities should not be ignored in FATS. The appropriateness of considering SPEs in

FATS depends on their activities. Identifying their activities is not straightforward but one way of doing

so is to classify SPEs according to the 2008 SNA sector classification assuming that such classification is

conducted by statistics compilers of host countries.

15.47. Among various types of SPEs, holding corporations, shell companies and conduits are often

established only to channel the funds from non-residents to non-residents. Thus, supplementary data

looking through such pass-through entities could be useful for users in relation to FATS. In contrast,

royalties and licensing companies, merchanting companies, and securitisation companies are engaged in

non-captive financial and non-financial activities. The other types of SPEs provide financial services

although most of them are captive financial corporations. Thus, these non-pass-through entities should not

be looked through.

253 This excludes non-resident units that have been registered for VAT purposes only, which may be the case in

some EU-countries acting as a hub for the imports of goods to the European Union.

254 See BD4 for more information.

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15.48. Compilers should also consider that it may be difficult to collect information on SPEs given their

little or no physical presence or how they are accounted for in the national statistical system. In fact the

treatment of these in national statistics will strongly influence the possibilities for the FATS compiler. See

chapter 6 for more information.

15.49. More guidance on SPEs and their treatment in statistics may be found in Eurostat's FATS

Recommendations Manual, as well as the UNECE/OECD/Eurostat publication on "The impact of

globalization on national accounts" in chapter 4.

D.4. European Union practice

15.50. In the European statistics, special purpose entities are relevant for both inward and outward

FATS. The Eurostat FATS Recommendations Manual further clarifies that "They should be excluded

from the target populations of statistical or reporting units only if they had no turnover and no

employment during the reporting period."

15.51. There is no single approach to how SPEs should be treated, even though the main principle to be

followed is that the SPEs should not be automatically excluded from the target population as they carry

out important economic transactions with their respective parents or associated enterprises. SPEs should

be excluded only if they had no turnover and no employment during the reference period.

D.5. Other considerations

15.52. It is good practice that compilers evaluate the validity of reported data and establish checking

procedures in the context of FATS (e.g. registers, etc.). Survey processing staff will need to evaluate the

reported data to ensure accuracy, consistency, and reasonableness, and this is particularly relevant for

FATS. Many of these techniques will be related to the usual work expected from compilers in other

statistical domains. For compilers that have chosen such a solution to gather FATS data, the strong link

between the structural business statistics and inward FATS should be taken into consideration when

validating the data. Consistency of information, in particular for the identification of the population or

UCI could be ensured by checking with other registers that some compilers may have at hand, for

example registers of enterprise groups or foreign-owned enterprises. More information on evaluating the

validity of reported data are available in chapter 19.

15.53. In most countries there are legislative requirements for confidentiality that necessitate avoiding

disclosing information, and these would also naturally apply to FATS. Multinational companies that by

definition are involved with FDI and FATS may be particularly sensitive about such matters for

competitive reasons. Even countries in which FDI and FATS data collection are mandatory maintain

strict confidentiality. This is particularly relevant given the granularity of the data obtained through the

compilation system, i.e., breakdowns by detailed country, by detailed activity and by product.

15.54. For example, when compiling data by activity (e.g. according to ICFA Rev.1 categories)

categories may sometimes have to be suppressed (that is, not separately shown) so as to preserve the

confidentiality of those data for individual companies. This need for suppression occurs most often at the

most detailed level of the classification, when smaller countries are involved or in cases where the data

are cross-classified by country or area. Other possibilities exist to ensure confidentiality of information,

such as perturbation techniques which may be sufficient to mask individual responses and increase the

utility of the statistics for the analysts. The compiler should therefore identify appropriate techniques to

ensure the confidentially of data reported by individual companies. (See Chapter 20 for further details on

dissemination and confidentiality issues).

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E. Compiling FATS Variables

15.55. Economic variables — operational and financial — with regard to FATS should be collected

primarily for their usefulness for trade policy needs and for analysing the globalization phenomena.

Practical issues associated with obtaining data must also be considered. With such considerations in mind,

and in the interests of harmonization with other international guidelines (see paragraph 15.6), MSITS

2010 recommends that the FATS variables to be collected include at least the following basic measures of

foreign affiliate activity:

i. Sales (turnover) and/or output;

ii. Employment;

iii. Value added;

iv. Exports and imports of goods and services;

v. Number of enterprises.

15.56. In the context of this Compilers Guide, output and/or sales (turnover) are the variables of most

interest, followed by employment and number of enterprises. Although the five variables identified above

constitute a basic set that can provide answers to a variety of questions, additional variables may prove

useful in addressing specific issues (among these variables are compensation of employees, gross fixed

capital formation, total assets, and research and development expenditures). MSITS 2010 suggests several

additional measures that might be considered for collection by countries that are able to compile such

information. Most of the “basic” and the “additional” variables, as well as their definitions, have been

drawn from the 2008 SNA.255 It may not always be specified, but there is a particular interest in obtaining

detailed data for services sectors (either activities or products if relevant) for all the variables listed below.

E.1. Sales (turnover) and output

15.57. Sales and turnover are terms which are used interchangeably in this Guide. They refer to the

totals invoiced for the sales of goods or services rendered, including all duties and taxes, excluding

consumption and sales taxes (i.e. VAT type taxes). Sales/turnover also includes all other charges passed

on to the customer (transport, packaging, etc.), even if these charges are listed separately in the invoice.

Reductions in prices, rebates and discounts as well as the value of returned packing must be deducted.

Charges for the use of intellectual property are included. Income classified as other operating income,

financial income and extra-ordinary income in company accounts is excluded from turnover. It is

important to note that revenue of long-term contracts, such as building contracts should be recognised by

reference to the stage of completion of the contract. For insurance, turnover/sales correspond to gross

premiums written and for pension funds they refer to total pension contributions. For financial services

excluding insurance, pension funding, and auxiliary services, turnover refers to the explicit fees charged

for the services provided (fees and commissions receivable) as well as interest and leasing income,

income from shares, net profit on financial operations, income on foreign exchange transactions and other

operational income.

255 Other variables not mentioned in the Manual on Statistics of International Trade in Services as basic and

additional variables may also be collected in order to cover important needs, in particular “hours worked” (SNA

2008, paragraph 19.78) which are relevant in the context of the measurement of productivity. More details on

variables and their definitions may be found in OECD's BD4 and HEGI.

239

15.58. The variable sales or turnover is usually easy to compile because it is easy to collect and besides

the usual adjustments for nonresponse, under-reporting or grossing-up, no specific calculations are needed

to produce the final data. In addition, sales or turnover generally offer more options for disaggregation, in

particular for having a breakdown by service product.

15.59. As indicated above, output256 is a preferred variable considering mode 3 supply of services.

Output is a superior and more refined measure than sales for most purposes and is recommended as the

preferred variable for compilation. Following the 2008 SNA, output differs from sales mainly because it

includes changes in stocks of finished goods and work-in-progress. In general, these considerations do not

apply to services. There are also differences in measurement applicable to wholesale and retail trade,

insurance, and financial services industries. For affiliates in wholesale and retail trade, insurance, and

finance, sales may include non-service elements or may exclude the value of services provided without an

explicit charge.

15.60. For the wholesalers and retailers, their output of services should be measured as trade margins—

wholesale or retail sales of goods or services less the goods and services purchased for resale. While not

in the core list of variables to compile, and even though it is only mentioned as a suggestion for

compilation in MSITS 2010 (paragraph 4.65), compilers will need to make sure that data on purchases of

goods and services for resale in the same condition as received are collected or can be estimated.

15.61. For insurance, international economic accounting guidelines recommend measuring output as

gross premiums earned plus premium supplements minus estimated claims incurred (either estimated

claims or benefits due) and, in the case of life insurance, minus the net increase in life insurance actuarial

reserves. For financial intermediaries, in addition to the explicit fees charged, compilers should include a

measure of implicit service fees as well as financial intermediation services indirectly measured.

15.62. In general, output statistics can be compiled directly from data collected (i.e. services sales or

turnover) or extracted from existing sources, making necessary adjustments and taking the above points

into account. The latter may entail that additional data collections, data from outside sources, and

estimation methodologies must be used. The suggested practice is as follows:

i. Output is the preferred measure, but sales/turnover is easier to compile as a first step and may

offer more options for disaggregation. For wholesale and retail trade, insurance, and finance,

some additional calculations are needed to compile output.

ii. Activity/product breakdown257:

a. Output or sales/turnover should first be compiled by activity.

b. A breakdown of output or sales/turnover into total goods and total services products for

each activity should be provided.

c. As a long term goal, compilers should strive to produce product detail, if possible

compatible with EBOPS2010.

256 Output can be valued at producer or basic prices. The latter is generally preferred.

257 More information on breakdowns by partner or service activity and products is provided in relevant sections

under E.

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iii. Output or sales/turnover should not only be broken down by country of UCI for inward or by

establishment of affiliates for outward, but a distinction should be made as to the output actually

delivered to clients in the host economy. This is further elaborated in the section on trade

variables.

E.2. Example of United States

15.63. The U.S. BEA compiles data on sales/turnover by industry, with a distinction between sales of

goods and sales of services for each industry. To estimate the output of wholesale and retail trade,

insurance, and finance, the BEA initiated new data collections, developed new compilation

methodologies, and identified data from other sources.

15.64. To construct estimates of distributive services supplied through affiliates, the U.S. BEA collects

data on the cost of goods sold and the beginning- and end-of-year inventories of the goods for resale on

its censuses of FATS, which are conducted every five years.258 In between its censuses, BEA uses data

on the domestic wholesale and retail trade industries to produce estimates of distributive services supplied

through affiliates (based on movements in trade margins).

15.65. To estimate the value of insurance output supplied through affiliates, the U.S. BEA deducts

“normal” losses—a proxy for insurers’ expectations—from premiums earned. To do so it uses data

collected on its FATS surveys on the premiums earned and losses paid by majority-owned affiliates with

operations in insurance. BEA uses a six-year moving average of the relationship between premiums

earned and losses paid to estimate normal losses. When it first introduced this compilation method, to

avoid having to wait until 6 years of data had been collected on premiums and losses, BEA used data on

the relationship between premiums and losses from the domestic insurance industry and gradually

replaced them with data collected from affiliates. In addition, information collected on investment income

of majority-owned affiliates with operations in insurance collected on its FATS surveys are combined

with data on the domestic insurance industry to estimate the value of investment income earned on

technical reserves (i.e. premium supplements). This is done using data on the domestic insurance industry

to calculate the share of total investment income that is income on technical reserves and applying this

share to affiliates’ investment income to derive an estimate of premium supplements.259

258 Originally the data were collected through the annual surveys but moved to collecting only on benchmarks to

reduce burden on reporters and BEA resources.

259 BEA uses data from a global credit rating agency which has a focus on the insurance industry. It breaks out total

investment income earned by the domestic insurance industry into categories, including one called “investment

gains on funds attributable to insurance transactions”—that is, on their technical reserves. BEA takes the percentage

that this category accounts for in total investment income and multiplies this by the investment income attributable

to insurance for the affiliates to derive their premium supplements. The break out by destination is used to define

the destination of their sales of services.

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Figure 15.2 Impact of compilation of services output by U.S. Affiliates of Foreign multinational

enterprises, 2002

15.66. The U.S. BEA collects and compiles FATS data for banks. It constructs its estimates for financial

intermediaries based on data collected on both banks’ explicit fees and services charges, and on their total

interest paid and received to estimate the value of output by affiliates in banking.

15.67. The impact of the compilation of output /supply of services as opposed to sales of services by

foreign affiliates in the United States (inward FATS) is illustrated in the chart below. Although the impact

may differ from one country to the other, it is interesting to note that using the more refined variable

output to measure the supply of services through mode 3 may substantially change the picture as

compared to the use of sales/turnover of services. The example below shows that the preferred measure of

output increases by almost one third the estimate for mode 3 supply of services as opposed to data on

sales of services.

E.3. Value added

15.68. Value added (in services production) is also a variable of interest for analysing the impact of

mode 3 of services supply. The 2008 SNA defines the gross value added of an establishment, enterprise,

industry or sector as the amount by which the value of the outputs produced exceeds the value of the

intermediate inputs consumed. A related concept—net value added—is defined as gross value added less

the consumption of fixed capital.260 Gross value added can provide information about the contribution of

foreign affiliates to the gross domestic product of a host country, both in the aggregate and in specific

industries. Gross value added receives higher priority than net value added and is often easier to compute

because it does not require estimation of capital consumption.

15.69. Value added cannot be directly observed from accounting records. Two ways are available to

derive value added. First, as gross output (revenue) less its intermediate inputs or consumption

260 SNA 2008, paragraph 6.74.

242

(purchased goods and services used in production). The valuation of value added is linked to the gross

output. Second, value added can be derived as the costs incurred (except for intermediate inputs) and

profits earned in production. Costs generally fall into four categories: compensation of employees, net

interest paid, taxes on production and imports, and the costs of capital consumed in production.

Alternatively it can be calculated from gross operating surplus by adding personnel costs. Choosing one

or the other method of computation will depend on the availability of data, as well as the method used to

compute value added in national business statistics. For inward FATS, value added will often be easily

derived from information available from regular industrial or enterprise surveys, but for outward FATS,

value added will often have to be derived from various variables collected in FATS (or FDI) surveys.

15.70. The valuation of value added will depend on the valuation of output (basic prices or producer

prices) while intermediate inputs are always valued at purchasers' prices. Alternatively, value added can

be valued at factor cost. For more information see 2008 SNA, 2.65.

E.4. Trade variables

15.71. International goods and services transactions of foreign affiliates constitute another basic

indicator of activity. As previously described, on the exports side this variable is related to the

sales/turnover or output variables. Imports are a part of the purchase of goods and services. MSITS 2010

recommends that the trade variables reflect international trade in goods and services between residents

and non-residents, i.e. are compiled on a balance of payments basis. It should be noted that, for the above

definitions to be applicable to both inward and outward FATS, the concept of ‘residents’ has to be

interpreted in different ways. While for inward FATS, ‘residents’ refers to the compiling country where

the foreign affiliate is resident, for outward FATS it is defined as the host country where the foreign

affiliate is located.

15.72. Ideally, data would need to be compiled for exports and imports for each activity and economy of

operation of the affiliate (for outward) or UCI (for inward), by type of product for goods and services

(with a particular focus on services given the interest of this information for services trade

negotiations/analysis), as well as the origin or destination of the international trade conducted by the

affiliate with a distinction between trade with related enterprises and trade with unrelated parties.261 This

is a complex dataset to build.262 But beyond the specific focus on services provided by MSITS 2010, there

is a strong interest for such information for the analysis of globalisation and more particularly on global

value chains and trade in value added.

15.73. As outlined in the section on sales/output, for measuring mode 3, having an estimation of total

services (separated from total goods) that are sold by affiliates to entities in the economy of establishment

separated from total services (and total goods) that are exported outside the country of establishment

would provide useful and often sufficient information from the perspective of the measurement of the

international supply of services. The compilation of such variables could be done if this distinction is

possible in the data sources (most likely for the sales/turnover variable), both for inward and outward

FATS.

15.74. In the broader context of globalisation analysis, more information could be considered for the

compilation of these variables. This would mean having total goods and total services broken down as

follows:

261 The distinction between related and unrelated parties is made according to the definitions used in FDI statistics.

262 It is also important to note that exports and imports cannot normally be isolated in standard company accounts.

243

i. Exports and imports of affiliates with parent enterprise.

ii. Exports and imports of affiliates with other related enterprises (in third countries,

without distinction)

iii. Exports and imports of affiliates with unrelated parties in the country of the parent

enterprise and third countries (without distinction between third countries).

The compilation of such variables could be done for exports in the same line as described above, that is if

the distinction is possible in the data sources for the sales/turnover variable, both for inward and outward

FATS. However, for imports one would need to develop appropriate questions so that the information

necessary for the compilation of these variables is available.

15.75. The possibilities for the compilation of the more detailed product-origin/destination of trade

breakdown will largely depend on the sources used to obtain the data. Data could be derived from

information provided by reporting units in sources used for FATS (see section 15.C), whether business

activity surveys (only for inward), FATS or FDI surveys. However, these approaches may require a

significant increase in the level of detail requested from reporting units, which is something compilers

must consider before pursuing one of these approaches. If relevant, some separate questionnaires could be

used to collect the details, in particular for the larger companies for which affiliates are more likely to

conduct international trade.

15.76. However, linking information with balance of payments trade in goods (or merchandise) and

services data could ensure that these additional detailed statistics can be compiled. This can be

implemented for inward FATS.263 When the data are obtained through linkages with primary data sources

for balance of payments transactions, breakdowns by product and by origin or destination will often be

possible. If this is the case, exports and imports of services (or goods) may be disaggregated, not only by

the primary activity of the affiliate according to ICFA Rev.1 but also by product, on a basis compatible

with EBOPS 2010.264 However, to be able to do this the compiler needs to be able to distinguish in the

balance of payments data the transactions between related and unrelated parties. For services this is in line

with the text provided in MSITS 2010 paragraph 3.56.

15.77. For the inward FATS trade variables, relevant information could be obtained through the linking

of trade and business statistics, such as the in the context of the Services Trade by Enterprise

Characteristics (STEC) that some countries have been developing in recent years. STEC describe trade

flows between countries broken down by the characteristics of traders such as type of trader, activity

sector, size class, or type of ownership265. The latter variable would be of particular interest to establish

this link with the FATS trade variables and therefore produce relevant breakdowns as described above266.

263 If merchandise data are used as a source instead of goods, then compilers need to make necessary adjustments to

comply with the recommendations regarding resident-nonresident transactions in goods. If this is not possible, then

the differences in concept should be clearly documented. See MSITS 2010 Box III.1 or EU FATS

Recommendations Manual for further information. The OECD HEGI Chapter 5 also provides useful information

with respect to the measurement of intra-firm trade.

264 Naturally a similar consideration can also be made for goods/merchandise.

265 External trade by Enterprise Characteristics, European Communities, 2007

266 Precondition for establishing TEC statistics are the availability of business and trade registers in a country.

Through linking both, normally at the level of statistical unit (legal unit) and a common identifier, trade flows can be

associated to trader characteristics. For reliable statistics, a high matching rate between records in the linked

datasets is required.

244

15.78. Compilers should be mindful of the high burden for reporting and compiling this information

when considering the production of data for the trade variables. Consequently, it is advised to approach

this in stages:

i. First produce data to measure mode 3, by distinguishing for each activity (or services product if

this is available) between sales or output of services in the country of the affiliate from services

exported.

ii. Compile in a second stage trade variables, breaking down the exports and imports data into (i)

total goods and total services (ii) trade with the parent enterprises, other affiliated enterprises and

unaffiliated parties (iii) trade with the country of the parent enterprise and with third countries.

iii. In a third stage compile the more detailed information by product (group) and by country.

Synergies should be found for the production of detailed data for the trade variables, in particular for

inward FATS, e.g. STEC.

15.79. In the European Union for outward FATS, two sets of trade variables are suggested for

compilation (subject to pilot studies): "exports and imports of goods and services" and "intra-group

exports and imports of goods and services", intra-group referring to trade between enterprises controlled

by the same unit, and the controlling unit itself. The recommendations/definitions provided are in line

with those of MSITS2010 and related guidelines (BD4, HEGI). The EU FATS Recommendations Manual

also provides additional clarifications as to the trade conducted by foreign affiliates: "Exports/imports of

goods and services can be performed directly by the foreign affiliate or indirectly by means of other firms,

such as wholesalers, that are resident in the same country and act on behalf of the foreign affiliate. In this

latter case no property right transaction must occur between resident firms.

E.5. Employment

15.80. The MSITS 2010 recommends measuring the number of persons on the payroll of foreign

affiliates, whether full-time or part-time. The enumeration should specify the period covered (such as an

annual average), or, in the absence of strong seasonal or other fluctuations, a point in time, such as the

end of the year. The compilation of this variable should generally follow the national practices. Although

data on a full-time equivalent basis would be preferable, given that this measure is not widely available,

MSITS 2010 recommends that data on the number of persons employed is compiled (i.e. inclusive of

employees, working proprietors).267 To serve the information needs for mode 4, a useful extension would

be the separate identification of employment of non-residents of the compiling economy working for the

affiliate, of which those that are intra-corporate transferees (i.e. employees transferred between affiliated

enterprises).

15.81. Data on employment can be derived from the information collected through FDI or FATS

surveys, or from business statistics (for inward). Again, it could be possible to derive the data by linking

to other data sources, such as administrative sources, by using common company identifiers. Data should

be compiled as a period average, but in the absence of strong seasonal and other fluctuations it may be

compiled at a certain point in time (e.g., end of the year). The data should be derived from information

that is generally readily available from company accounts.

267 Although not recommended in MSITS 2010 other measures may also be compiled in order to cover important

needs, in particular “hours worked” (SNA 2008, paragraph 19.78) which are relevant in the context of the

measurement of productivity.

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E.6. Number of enterprises

15.82. The preferred measure is number of enterprises, but data should reflect the number of statistical

units, that is enterprises or establishments, which correspond to the data described for other variables. It is

a basic indicator of the prevalence of control by foreigners in the host economy. It should be made clear

that the enterprises to be taken into account in these statistics are those with a genuine economic activity.

Firms which have no activity, but simply set up an office in a country for the purpose of transferring

funds or taking advantage of certain tax breaks, should be excluded from this category of data.

15.83. Although the data compilation of this variable is considered as a by-product of the FATS data

collection and compilation, a number of considerations need to be taken into account, such as determining

if units have been active during the period under consideration. In addition, the number is likely to be

affected, often significantly, by the level of company consolidation and by thresholds for reporting on

surveys.268 Given that for outward FATS the data will often be reported by one unit on behalf of a group

of affiliates (e.g. country head office, regional office), it is important to ensure that data are reported and

compiled on a non-consolidated basis. Consequently, to avoid any problem of interpretation that there

may be if data do not reflect the above principles, it is important that any deviation is clearly documented

in available metadata. . Whatever measure is retained, to assist users in interpreting counts of units

(whether enterprises or establishments), compilers are also encouraged to document how the numbers

were derived.

15.84. The EU FATS Recommendations Manual provides further indications as to how this item could

be compiled. It states that "only active units which had turnover or employment at any time during the

reference period should be included. Dormant (temporarily inactive) and inactive units are excluded. This

statistic should include all units active during at least a part of the reference period." It also indicates that

not only separate legal entities which are dependent on foreign enterprises but also "local units (branches)

which do not constitute a separate legal entity and which are dependent on foreign enterprises …" should

also be included. In other words if they are considered as branches (i.e. they meet the branch criterion, see

for example chapter 14 on construction) then their operations in the country of establishment should be

reflected in FATS, and they should be counted. But if they do not then these operations should not be

accounted for in FATS.269 It also states that in the context of outward FATS the number of enterprises is a

characteristic that in principle is obtained by counting the units in the target population, although in

practice there can be collection problems when a resident parent enterprise supplies information on the

activity of many affiliates abroad. The respondent may, for example, tend to group affiliates located in the

same foreign country as a single enterprise.

E.7. Other FATS variables

15.85. Other FATS variables may, for certain countries, hold equal or even greater importance than

some of the priority variables as described in MSITS 2010. The list of additional variables provided in

MSITS2010 is the following: assets,270 compensation of employees, net worth, net operating surplus,

268 Note that HEGI also recommends the compilation of the number of consolidated enterprises. See HEGI

paragraph 267 for more information.

269 And its sales will be recorded as imports/exports under the relevant BoP services item.

270 Often referred to as the "balance sheet total." Th e OECD was at the time of writing working on the issue of

linking (real) economic variables from FATS with financial variables from balance sheets and income accounts. See

Harmonisation and integration of financial and economic measures of multinational enterprises - Final report,

OECD working Group on International Investment Statistics, March 2013, DAF/INV/STAT(2011)10/FINAL.

246

gross fixed capital formation, taxes on income, research and development expenditures271 and purchases

of goods and services. For some of these variables, data are already being compiled by some countries in

their business statistics, national accounts, etc. The definitions of these variables are provided in MSITS

2010 (paragraph 4.65). These definitions are drawn from the 2008 SNA, which may be consulted for

additional information.

15.86. Data are usually derived directly from information collected, with necessary adjustments to the

statistical process. This means that the production of such data will necessarily entail an increase in the

reporting burden of respondents (except for inward FATS if data are derived from existing data collected

on business statistics). Only one of the additional variables listed in MSITS 2010, purchases of goods and

services (intermediate consumption), can be directly derived from the basic measures recommended for

compilation. It can be derived from gross output and gross value added if intermediate consumption

cannot be collected directly.272

15.87. The list of additional variables and their definitions will also depend on those used in the

compilation of national business statistics and national accounts. In general, the practice is to compile

most of these additional items for inward FATS rather than outward, at least in the first stages of

development of the framework at the national level. The choice for compiling additional variables will

depend on the priorities and feasibilities in a given country. If the data for inward FATS are derived from

the source used for structural business statistics, then the list of variables will most likely be driven by

what is included in it. Countries could also provide variables that are not listed in MSITS2010 or in other

international guidelines, but that are of interest in that country.

E.8. Country experience: Vietnam

15.88. In Vietnam data on foreign direct investment enterprises are collected and compiled through an

Annual Enterprises Survey (AES) conducted by the General Statistics Office (GSO) since 2003. AES

cover all FDI enterprises in Vietnam. According to the results of Establishment Census 2012, number of

FDI enterprises is 9500. The separation out of FATS enterprises from the list of FDI enterprises could be

presented using the criterion of over 50% foreign ownership.

15.89. The statistical unit of the inward FATS statistics in Vietnam is the enterprise. Twelve inward

FATS variables can be obtained from the Annual Enterprise Survey data. The FATS variables which are

presently collected by the Annual Enterprise Survey include: basic variables such as sales, turnover,

output, employment, and additional variables such as: assets; net worth, operating surplus, gross fixed

capital formation, taxes on income; R&D expenditure, compensation of employees. Beside these

variables, some more detailed indicators of main activity of FATS enterprises can be also compiled based

on the data filled in questionnaire of result on main activity as manufacturing, construction, distribution,

transportation, financial services, insurance and some others. All above variables can be compiled, are

published annually comprising different detailed tables breakdown by country/kind of activity; kind of

activity/country.

15.90. Data on exported and imported goods are collected from the Customs resource through matching

customs database and enterprises survey database based on the tax code of each enterprise which is

provided by the tax office/register office whenever the enterprises finished all register schedules. The data

271 This variable is important as FDI is deemed to be a source of technology transfer. Note that the OECD Handbook

on Economic Globalisation Indicators also suggests "Technology payments and receipts." More related in formation

on R&D definitions, etc., may be found in the Frascati Manual.

272 As noted previously, it is also linked to the imports variable.

247

of service exports and imports of some enterprises are collected through ITS sample survey

quarterly/annually.

15.91. The classification of enterprises by type of activity was determined in accordance with the

Vietnamese Standard Industry Classification of Economic Activities 2007 (VSIC 2007). The data cover

all sectors except Agriculture and forestry.

F. Attribution of FATS variables

15.92. MSITS 2010 recommends that FATS variables are broken down: by activity of affiliates, by type

of service rendered and by partner country. Compilation guidelines for these three types of breakdowns

are provided below.

F.1. Activity breakdowns

15.93. Although the focus in this Guide is on services, in general the compilation should cover all

economic activities (i.e., goods and services activities). The breakdown should be made according to the

main activity of enterprises using the ISIC, Rev. 4, or using an activity classification compatible with

ISIC Rev.4. This basis of presentation allows activities of services enterprises to be viewed within the

context of the activities of all enterprises. In general, it will be easier to produce a more detailed ISIC

Rev. 4 breakdown for inwards FATS than it is for outward FATS. Compilers should, at minimum,

produce data for the activities that are of importance for their economy or international trade/investment

negotiations. In the context of information needs of trade in services negotiations, compilers should aim at

distinguishing and providing more details for services activities, and having in mind the categories as

suggested in ICFA Rev.1, which is recommended for presenting data alongside the resident/non-resident

trade in services data (see Chapter 20).

15.94. The ICFA Rev. 1 categories cover all activities but provide more detail for services than for

goods. Annex II on page 149 of MSITS 2010 offers general guidelines. However, if countries are in a

position to provide more detail than is presented in annex II, this supplementary breakdown should be

compatible with ISIC, Rev.4. A total for services activities should be compiled or estimated to better

respond to information needs on the international supply of services. It is important to note that a

presentation by activity will show data for variables according to the primary activity of enterprises.

Because a given firm will often have secondary activities in industries other than the activity of their

primary classification, the value recorded for any given activity must be interpreted as an indication of the

total activity of enterprises for which the given activity is the most important, rather than as a precise

measure of the value of that activity itself. This needs to be made clear to users (i.e. metadata).

15.95. Compiling data for some activities may sometimes be challenging, in particular if not covered in

the data sources, or given the difficulty to gather information for particular industries (e.g., financial

activities). This is particularly true for inward FATS in that if structural business data are used as a

source, then some activities may not be covered, such as agriculture or some personal or social services.

In this case compilers should derive this information from other sources or estimate the variables for these

particular sectors. Alternatively, at least as a starting point, compilers may wish to concentrate solely on

(services) activities of importance to their economy.

15.96. The activity breakdown should follow the activity of the "affiliate enterprise." For inward FATS,

the activity of the resident affiliate should be used. Frequently for outward FATS, the activity of the

resident investor is incorrectly used by compilers as an approximation for the activity of the affiliate.

Assigning an activity code - contrary to a widespread misconception - is not an easy task. For outward

FATS the only way to compile the information is by using information obtained directly from the

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respondent. In order to compile information on activity breakdowns, the compilers are encouraged to find

out if affiliates are engaged in production, trade or any other service activity; be able to assign at least 2-

digit ISIC codes; and obtain a verbal description of the activity. This should be obtained through the data

collection process (see chapter 6). By carefully assessing this information along with consultation of the

internet and public registers, compilers can derive a meaningful allocation of activity. While this

procedure is burdensome at the time the affiliate is initially accounted for, the information typically will

not need to be compiled again for a number of years.

F.2. Particular treatment for certain activities

15.97. The specific treatment of wholesale and retail trade; and finance, and insurance enterprises was

described in Section E.1, as it mainly related to the variables sales/turnover and output. Particular

attention should also be paid to other activities relating to enterprises operating ships and other mobile

equipment, as well as some leasing arrangements.273 Compilers need to pay particular attention to the

treatment of construction activities with no subsidiary or branch clearly identified in the country where

the construction project is taking place particularly when some large-scale projects have operations that

are not substantial enough for the entity in the host country to qualify as a branch. A consistent treatment

with the balance of payments/trade in services or national accounts statistics should be applied. The

criteria for recognizing if activities are substantial are described in Chapter 14. If it is identified that these

criteria are met, then the operations of the activities of this unit should be recorded in the FATS

framework. In that context, compilers may find it difficult to gather the necessary data, and may need to

turn to alternative data sources or establish new data sources (for example in co-operation with resident-

nonresident trade in services statisticians, see Chapter 6 for more information).

15.98. This Guide advises to compile information for all economic activities, with details classified

using ISIC Rev.4. The activity breakdown should follow the activity of the "affiliate enterprise" for both

inward and outward FATS. Given the needs for trade in services negotiations, compilers should aim at

distinguishing and providing more details for services activities, keeping in mind the ICFA Rev.1

presentation and at compiling a total for services activities.

F.3. Secondary activities and compilation of a breakdown by product for sales/turnover,

output and trade variables

15.99. As outlined above, MSITS 2010 recommends that FATS variables be classified by the activity of

the affiliate according to ISIC Rev. 4. Details should be produced having in mind ICFA, Rev.1 and its

more detailed breakdown for services (see above section). Using ICFA Rev.1 for presentation purposes

allows activities of services enterprises to be viewed within the context of the activities of all enterprises

and provides a link for the presentation of services FATS data and resident/non-resident trade in services

data. Within the context of this Guide there is an additional interest in compiling information on services

produced as secondary activities of enterprises, i.e., services produced by enterprises primarily engaged in

goods producing activities (e.g. agriculture, manufacturing). 274 For example, services supplied by

enterprises primarily engaged in manufacturing activities may be of particular interest in the context of

the supply of manufacturing services on physical inputs owned by others. Besides providing a bridge with

the EBOPS 2010 classification primarily used to classify resident/non-resident transactions, ICFA Rev. 1

273 See also section D.3 on the treatment of special purpose entities in FATS.

274 There is also interest more generally in knowing which services activities produce goods, in what proportion etc.

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provides a framework for displaying services produced as a secondary activity by enterprises classified as

goods producers.275

15.100. In this context, and as a longer-term goal, MSITS 2010 encourages compilers to work towards

disaggregating some of the variables by product—including sales (turnover), output, exports and imports.

This is the type of information that would be of most interest for trade negotiators and analysts. If

implemented for services, this should be done using a product classification system compatible with

EBOPS 2010. Product-based statistics are more likely to be free of problems of interpretation related to

secondary activities and are consistent with the basis on which GATS commitments are made and with

the basis of classification used for trade between residents and non-residents. In addition such a

compilation practice is important to achieve because goods-producing industries can be important

suppliers of services.

15.101. MSITS 2010 and this Guide recognize that this may be a difficult task, in particular with respect

to the data collection as it will necessarily increase substantially the reporting burden for respondents as

well as the compilation work. MSITS 2010 recognizes this and encourages compilers in a first step to at

least achieve for output (or sales) a breakdown between total goods and total services for each activity.

Such a solution, while providing more relevant data to users, would imply fewer burdens for

respondents/compilers than establishing a more detailed breakdown by product. This would be much

easier to implement, however, to achieve this compilers need to ensure that such a breakdown is feasible

or can be derived from the data sources. Some countries have been able to produce such data because the

information (or estimates) on sales of goods and sales of services was gathered through the data sources

used to collect FATS. It is also important to note that the investment income element should be separated

out from sales of services (and goods).

15.102. In structural business surveys, information is often requested on turnover with a breakdown in a

number of goods and services product groups. Consequently, if inward FATS are compiled using this

source, then a further breakdown of sales (or output) of services can be established or could be easily

estimated. Similarly, this could be achieved for the trade variables if they are included in the survey.

15.103. As described in section E.3, for the trade variables a breakdown by product may be derived from

information provided by reporting units in sources used for FATS, whether business activity surveys

(only for inward), FATS or FDI surveys. However, linking information with balance of payments trade in

goods (or merchandise) and services data could ensure that additional more detailed statistics can be

compiled. Section E.3 further describes the possibilities offered by this linking exercise. Data obtained

through this work could also help in first steps to estimate a more detailed breakdown of output or

turnover, in particular if enterprises are (services) export oriented, or if it is assumed that the pattern of

(services) exports by product is similar to that of (services) sales or output in the host economy.

15.104. It is advised that a breakdown by (service) product of output and/or sales or turnover be derived,

as well as trade variables from data sources (e.g. breakdown in FDI or FATS surveys, or for inward FATS

structural business surveys). Given the difficulty to produce a breakdown by product, for each activity

countries are encouraged to at least compile a breakdown of output or turnover into sales of goods and

sales of services (excluding investment income). For trade variables, it is considered a good practice to

investigate possibilities offered for linking FATS and resident/non-resident trade in services statistics in

order to develop a breakdown.

275 Establishing a correspondence between the two bases of classification may in particular be useful, for activities

that tend to be carried out only by enterprises that are specialized in the activity and generally do not engage in

significant secondary activities.

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F.4. Country practices: United States

15.105. The U.S. BEA compiles data on output by industry, with a distinction between goods, services,

and investment income for each industry. It can do so through the collection of such a breakdown of sales

in its FATS surveys. As described above, it then makes a number of adjustments for some industries to

arrive at the concept of supply (i.e., output) of services. A product type of breakdown, at least

distinguishing total services from total goods sales for each industry is an important achievement for trade

analysis and beyond. In particular enterprises primarily engaged in the production of goods may be

important services suppliers. As illustrated in Figure 15.3, being able to produce such a dataset enables

the United States to have a better sense of the actual services supplied to foreign markets, as compared to

the total sales (i.e., of goods and services) of foreign affiliates of U.S. multinational enterprises engaged

in services activities. At the total services level, i.e. activities versus products, the approaches show very

different results. The main factors behind these differences are the fact that sales of goods are removed for

services producing enterprises (the biggest activity contributing to this difference being wholesale and

retail trade) and services produced by goods producing enterprises are included. For 2012, data show total

sales/supplies of firms engaged in services activities 2 times higher than total sales of services/supply

products by all firms.

Figure 15.3 United States Outward FATS sales/supplies to foreign persons

For total sales/supplies of firms primarily engaged in services activities: beginning in 1999, industry

classification based on NAICS rather than SIC. Beginning in 2009 sales by bank affiliates and by the nonbank

affiliates of U.S. banks are included in the statistics. For 2009-2012, values for goods and services supplied by

majority-owned foreign affiliates in services industries to all foreign countries are used. For 1986-2008, values for

total sales by majority-owned foreign affiliates in services industries to all foreign countries are used. Total sales are

comprised of 3 components: goods supplied, services supplied, and investment income. In the 5 years leading up to

2009, investment income accounted on average for 3% of total sales.

For sales/supply of services products, beginning in 1999, sales by foreign affiliates were classified as goods or

services based on industry codes derived from NAICS rather than the SIC system, which resulted in a redefinition of

sales of services and a net shift of sales from goods to services. See SURVEY 81 (November 2001). Beginning in

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FATStotal sales of firms

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FATStotal sales of

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2004, services provided by bank affiliates and by the nonbank affiliates of U.S. banks are included in the statistics.

Also beginning in 2004, the statistics are presented as "services supplied"(equivalent to services output) rather than

"sales of services.” Compared with sales of services, services supplied adds 1) wholesalers’ and retailers’

distributive services, 2) insurers’ premium supplements, and 3) banks' implicitly-charged services; it subtracts a

proxy measure of insurers' expected losses. For more information, see SURVEY 89 (October 2009).

F.5. UCI and partner country

15.106. Determining the country of the ultimate controlling institutional (UCI) is the most important task

in the FATS compilation work. The UCI is the recommended basis for classification by country for

inward FATS, but it is also relevant in some respects for outward FATS. (See MSITS 2010 Box IV.2 and

Chapter 1, Section C of this Guide).

15.107. Although many countries were able to implement this concept, it may be difficult to define

control relationships using the criteria as defined in international guidelines. Some countries have used

the percentage of equity shares as a first estimation of the percentage of control of the voting power. In

this context compilers should note that large enterprises usually have complicated structures. Small and

medium-sized enterprises (SMEs) tend to have simple structures, and the immediate controller is often the

ultimate controller. However when there is indirect control the UCI may be more difficult to identify.

15.108. Compiling inward FATS. For inward FATS, variables for a given affiliate are attributed in their

entirety to a single country of control. As descriptors of the operations of affiliates, they should not be

factored down by share of ownership of voting power (or equity). Nor are the values of the variables to be

apportioned between the controlling enterprise and any foreign minority owners of voting power.

15.109. Data on the UCI should be directly available as a by-product of FDI statistics.276 Alternatively

information on the UCI can also be drawn from the FATS or other data sources, or derived from a

combination of sources and/or registers. If the UCI cannot be extracted directly from existing data, the

decision about the UCI should be based on a step-by-step analysis of control relationships up the

ownership chain in the enterprise group. MSITS 2010, BD4 and HEGI suggest some factors that could be

used to decide how to define the country of the UCI for specific examples, in particular in the case of a

group of affiliated investors, (i.e. determining the status of the different investors, e.g. direct relationships

vs. indirect, government entities, SPEs etc.).

15.110. MSITS 2010 concludes that in the absence of any such factor that could be used as a basis of

attribution, the value of FATS variables may be allocated evenly among the foreign countries of control.

However, data so allocated may pose problems of interpretation, and efforts should first be made to

determine a basis for allocation to a single country. See MSITS 2010 section H.1 for more information.

The Eurostat FATS Recommendations Manual provides useful additional considerations on the

determination of the UCI. If necessary, it is advisable to check with important partners about how the

decision on the UCI has been achieved for bigger players. This can in particular be relevant at the

276 BD4 "strongly encourages" reallocation of all FDI positions (voting power of 10% or more) to the country of the

UCP of the direct investor. To the extent that the UCPs of all direct investors in resident enterprises are identified,

the UCPs of those direct investors with controlling interests in residents will be available. In order to apply the

directional principle, FDI statistics will identify whether the resident direct investment enterprise has a foreign or

domestic ultimate controlling parent (noting that this parent will be controlled by itself and so will have a resident

ultimate parent if there are no controlling links above it).

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regional level, where a multinational enterprise may have established an affiliate/regional headquarters in

one country which controls affiliates in other countries of the region.

15.111. Frequently, the first foreign parent and the ultimate investor are the same. Although for inward

FATS the recommendation is to allocate data to the country of the UCI as a first priority, in practice this

may be something difficult to achieve, in particular in the initial stages of development of a FATS

national compilation framework. In practice, many economies initially developed their inward FATS

classifying information on the basis of the immediate controlling country, before moving to a

classification according to the country of the UCI. This guide proposes such an approach for the

compilers that are not able to determine the UCI when they start compiling FATS. In fact, that

information on immediate controllers are available by referring to FDI data. If FATS entities are

identified through linkages with FDI data or collected directly on FDI surveys, data on the country of

immediate foreign parent should be readily available. To facilitate comparisons with those data, MSITS

2010 encourages compilers to make available some data classified by the country of the first foreign

parent on a supplementary basis.277 However, in light of the relevance of the ultimate-controller basis and

the demonstration by a number of countries that compilation on this basis is feasible, this Guide advise to

compile data on an ultimate controller basis as soon as achievable (i.e., as data sources, linking

procedures or compilation procedures permit).278

15.112. For certain countries, it may be of interest to compile some operations data beyond the control

relationship, e.g., for associates (share of control between 10 and 50 per cent). This may be driven by the

fact that in these particular countries the law does not allow foreign investors to own a majority equity

stake (for all activities, or strategic ones for the compiling economy). In such cases, and if of interest to

the compiling economy, information could be compiled on operations, but with separate breakdowns for

the activities of majority-controlled affiliates (over 50 per cent owned, i.e. FATS) and minority owned

affiliates (e.g. 10 to 50 per cent).279 However, a clear distinction should be made between both datasets in

order that users are informed as to differences with international guidelines.

15.113. Compiling outward FATS. Outward FATS are statistics on foreign affiliates controlled by

residents of the compiling economy and should include all controlled foreign affiliates, regardless of

whether the control in the affiliate is held directly or indirectly through a chain of ownership and

regardless of whether the direct investor in the compiling economy is the UCI unit or is, instead, an

intermediate investor in an ownership chain. The data should be allocated to the country where the

operations of the affiliate are taking place.280 It is consistent with the treatment of foreign-controlled

enterprises in the 2008 SNA, in that the value added in production by the enterprise is attributed in all

cases to the economy of location of the enterprise. In other words, it is included in the GDP of the

economy where the enterprise is located. In addition variables should not be apportioned according to the

277 As a matter of comparison, BD4 encourages that sup plemental inward FDI position statistics be compiled on an

ultimate investing country (UIC), and the corresponding industry sector..

278 Identification of the UCI can also be used to identify cases of round-tripping in inward FATS statistics. Round-

tripping refers to the channeling abroad by direct investors of local funds that are then subsequently returned to the

local economy in the form of direct investment.

279 It is important to note that for the latter this will lead to double counting when comparing with data compiled by

other countries.

280 This is in contrast to the guidelines for FDI. According to BD4, if the ownership is through a directly held

affiliate located in another country, the variables should be attributed to the country of that affiliate. BD4 included

in its research agenda the presentation of FDI positions by the country where the affiliate is located (ultimate host

country). Because of the difficulties in tracking financial flows from the immediate counterparty to the ultimate

destination, most countries only present FDI data attributed to the immediate counterparty.

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level of control (e.g. 100% of sales should be reported, even if the mother companies controls less than

100% of the voting power).

15.114. However, because the activities of an affiliate held through an ownership chain could be recorded

in the FATS of both the ultimate and the intermediate investors, and in order to facilitate international

aggregation without double counting, compilers are strongly encouraged to identify the aggregate share of

FATS variables accounted for by enterprises for which the compiling country is the ultimate controller.

Of particular interest will be data on this set of foreign affiliates belonging to ultimate investors resident

in the compiling economy. See section G for more information on UCI and regional aggregations.

15.115. It is advised that FATS data should be attributed geographically as a first priority to the economy

of the UCI unit for inward FATS and to the economy where affiliates' operations are taking place for

outward FATS. If control relationships cannot be clearly established, compilers should adopt a step by

step approach to determine them. For big players it is a good practice to investigate ways to coordinate

with compilers in major counterparty countries. This Guide further advises that ownership of 50% or

more of equity shares could be used in the compilation process as an approximation to determine control.

However compilers should aim at working on the basis of control relationships. Although the first priority

for inward FATS is to allocate variables to the UCI, in first instances compilers can consider producing

data according to the country of the immediate controller. In fact this is suggested as a supplementary

dataset in MSITS 2010. Outward FATS should be compiled for all affiliates controlled by enterprises

resident in the compiling economy. For reporting to regional/international organisations, outward FATS

data should also be compiled for the subset of affiliates of UCIs of the compiler's economy (i.e.

controlling units in the compiling economy that are not themselves controlled from abroad).

15.116. European Union. Identifying the UCI plays a crucial role as all data for foreign affiliates under

direct or indirect control should be attributed to the country of the UCI. If the information on the UCI is

not available from the existing data, the European statistics on FATS follows a general rule, which says

that the identification of the UCI should be based on a step-by-step analysis of control relationships up the

owner chain in the enterprise group. Once the top enterprise of the group is identified, its decision-making

ability must be examined.

15.117. An important source for identifying affiliates and allocating them to the UCI should be the future

EuroGroups Register (EGR), which, at the time of this writing, is under development. The EGR should

cover step-by-step all multinational enterprise groups operating in the European Union. This will help to

identify the correct country code of the UCI to which the enterprises belong. With a full and well

developed EGR, no double counting or gaps would exist and the same data sets from different compilers

would be linked.

G. Regional aggregation

15.118. This section is mainly for compilers of regional/international organisations, but also provides

more insights as to the reason why outward FATS data are also needed on a UCI concept (i.e. for outward

FATS only data where the parent entity is not itself controlled from abroad), as opposed to a national

concept (where all outward FATS are considered whether the mother company is a UCI or not). Indeed in

this context data will be compared from one country to another, and in certain cases it will be necessary to

compute regional or world aggregates. If all countries apply international guidelines in the same way, in

principle, if UCIs are detected in a consistent way, inward FATS data compiled by countries will be

duplication free. This will not be the case for outward FATS, as the main recommendation is to compile

data on foreign affiliates of all controlling entities established in the compiling economy, whether UCIs or

units who are themselves controlled from abroad. However, following international recommendations,

compilers should also compile information focusing on affiliates of UCIs of the compiling economy. This

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is the information that should be used by regional or international organisations when constructing

aggregates for outward FATS.

15.119. In producing such aggregates it is important that common rules for collecting and compiling

FATS are adopted by the countries participating in the group (i.e., beyond the international agreed

definitions). An important aspect to consider when producing these aggregates is the possibility of

distinguishing intra-regional FATS from FATS with the rest of the world. To do this, it is necessary that

countries compile information according to agreed intra- and extra-regional definitions and/or have the

necessary partner country detail. For outward FATS, it is important to use the data compiled by countries

referring only to the affiliates of ultimate controlling units of the compiling economy (i.e., foreign

affiliates of resident units not themselves controlled by non-residents). A set of guidelines on the basis of

international recommendations and the level of detail provided should be established. Finally, it is

necessary to ensure that confidentiality of information is still ensured when computing regional

aggregates (see the description of the EU experience above).

G.1. European Union Experience

15.120. The legal framework for the provision of foreign affiliate statistics in the European Economic

Area (EEA) is the Regulation No. 716/2007 of 20 June 2007. In addition, Eurostat publishes the FATS

Recommendations Manual, which provides a common methodological framework on the definitions and

concepts to national compilers in order to produce a harmonized set of FATS data across the Member

States. Having a comparable set of the FATS data is a pre-condition to compile meaningful, reliable and

high-quality European aggregates.

15.121. IFATS and OFATS data are collected from the European Member States, candidate and EFTA

countries on an annual basis; data. Data collection has been mandatory starting with the reference year

2007. One of the most important concepts when looking at the European statistics is that FATS should be

compiled according to the UCI concept. The UCI is the institutional unit (enterprise, branch) proceeding

up a foreign affiliate's chain of control that is not controlled by another institutional unit (enterprise,

branch).

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Chapter 16 Compilation of additional indicators on the international supply of

services

16.1. Scope. The purpose of this chapter is to focus on the compilation of additional indicators on the

international supply of services, in particular data on the number of persons/trips relevant to modes 2 and

4, the use of data on services production, prices, employment or sectoral performance indicators. Also,

linking of trade and business registers offers the potential for the compilation of new types of data.

Section A introduces the general purpose of this chapter and Section B provides a summary of good

practices with respect to additional indicators on the international supply of services. Section C contains

an overview of the compilation of variables on the movements of natural persons under modes 4 and 2 of

supply of services. Section D describes the linking of business and trade registers. Finally, section E lists

possible existing additional indicators and the level of detail necessary for a full analysis of services

sectors in the context of the international supply of services.

A. Introduction

16.2. While most of this Guide provides good practices for obtaining the value of the international

supply of services (i.e., the value of trade in services or sales/output of services of affiliates), trade

negotiators and analysts need additional information on the market performance of individual service

sectors, such as foreign direct investment flows and stocks, research and development expenditure in

affiliates, income flows relating to foreign affiliates active in services sectors, etc. In the same way as

there is interest in the monetary and non-monetary measures of merchandise trade, non-monetary

information drawn from various quantitative indicators is also important to assess trade commitments and

to conduct further in-depth analysis on the international supply of services (e.g., number of modes 4 and 2

persons, number of foreign affiliates established abroad in the context of mode 3, etc.).

16.3. This chapter aims at presenting these additional data items many of which are already defined

within other statistical frameworks and may be extracted without additional cost if the level of detail

needed is readily available (i.e., the frameworks for foreign affiliates statistics, foreign direct investment

statistics, and sectoral statistics; e.g., tourism and education). These additional data items will be further

detailed in section E. Linking trade and business registers is also a new line of work that compilers should

be aware of, given the potential that such an exercise offers for compiling new sets of data of interest to

policy makers with little additional effort or costs (section D).

16.4. However, meeting some user needs requires the development of new data compilation systems, or

the extension of existing ones. For example, in the case of mode 2, availability of information on the

number of persons/trips (section C.2) who are traveling abroad and consuming services, whether for

personal or business reasons, is in high demand. Such extension is even more valid for a variable of

greater interest to negotiators and analysts -- the number of persons moving to provide services under

arrangements covered by mode 4 (section C.1).

16.5. Knowing how many people are providing services abroad (flows, stocks, as well as the number of

associated trips) is very important for analysis of both GATS and international mobility. First, as stated

above, like for merchandise trade, it is non-monetary (quantitative) statistics that may usefully

complement value data about mode 4 supply of services. Second, given the interest that mode 4 generates

amongst officials and research institutions involved in the international supply of services and/or

migration issues, quantitative data provide a useful gauge about the relative importance of mode 4

movements of persons within wider economic international mobility. This is why this chapter focuses

particularly on mode 4 number of persons and trips. The chapter identifies sources which could be used

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and elaborates how relevant statistics could be produced. In the context of mode 4, a subset of the

population of business travellers will be of particular interest, but other categories of internationally

mobile individuals will also be of relevance.

B. Summary of good practices

16.6. The identification of mode 4 movements and stocks in existing sources is a new area of work.

This Guide suggests dealing with this issue in stages. For incoming and outgoing mode 4 movements,

compilers have to take into account the needs of users (in particular for categories of primary interest) and

various possibilities offered by each data source (and possible drawbacks).

16.7. As a starting point it is suggested to compile rough estimates of the size of mode 4 movements in

terms of the number of natural persons or, if easier, to collect data on number of trips. This could be done

if appropriate sources are identified, grossed-up or estimated using an appropriate data model. However,

the objective is to have more pertinent and detailed data on number of persons. Breakdowns by purpose,

type of service supplied, country of origin or destination should be compiled, for inbound and outbound

flows and stocks. To enhance the usefulness of the compiled data they should be produced, in the long run,

with a breakdown by length of stay and occupation/skills of individuals (e.g. using ISCO-2008 or ISCED

2011).

16.8. Compilers should strive to obtain, as a first priority, information for the mode 4 categories of

persons which are of most interest to their economies (generally contractual service suppliers, whether

employees or self-employed, or intra-corporate transferees), whether incoming or outgoing. This could be

done by analysing the needs for information. A longer term goal would be to have data for all mode 4

categories and all service sectors, both for incoming and outgoing persons/trips, therefore enabling overall

international comparisons.

16.9. The compilation of mode 2 data on inbound and outbound flows of persons should be given more

priority than to the compilation of data on stocks, except if deemed necessary for specific services sectors

or categories of persons(for example, education/students or health/medical patients). Data should be

broken down by purpose of movement, by type of service consumed (using EBOPS 2010), as well as by

destination/origin of persons or trips. Although of less priority in the context of MSITS 2010, a

breakdown according to length of stays could be compiled.

16.10. For mode 4 and mode 2 quantitative indicators, it is a good practice to concentrate on obtaining

annual statistics first, as this should be sufficient to serve most analytical and monitoring needs. If in

future compilers identify the need for more frequent statistics, their compilation could be envisaged but,

maybe, at a less detailed level.

16.11. Given the policy relevance of such information, compilers are encouraged to analyse the national

possibilities for compiling trade in services data by enterprise characteristics, by linking trade in services

data with information drawn from the statistical business register. Although foreseen as a longer term

objective, compilers should keep in mind the needs to be identified with users for additional indicators in

relation to services trade analysis and negotiations. Needs should be identified with users, but a list is

suggested to serve as a starting point in section D. Given that this information is linked with needs of

other statistical frameworks this Guide strongly advices that trade in services compilers cooperate with

compilers in charge of the data collection and compilation in respective statistics domains.

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C. Mode 2 and mode 4 movements and stays

16.12. The supply of services involving movements of physical persons is defined in the GATS as

follows: (i) movements and temporary physical stay abroad of consumers of services (mode 2); and (ii)

movements and temporary physical stay abroad of persons to supply services (mode 4)281. Mode 2 is

generally well understood as it refers to any potential consumer traveling or temporarily staying abroad

for any purpose (e.g., leisure, studies, health, business or employment) and consuming services while

abroad. Mode 4 movements and stays are concepts more difficult to grasp. As described in Box 1.1, mode

4 can, in general, be further described as covering foreign natural persons entering the host economy to

directly fulfil service contracts (contractual service suppliers, either self-employed or employees of a

foreign service supplier);282

work in a foreign affiliate that delivers services (intra-corporate transfer or

directly recruited by the affiliate);283 or negotiate services contracts or the establishment of services

related commercial presence without actually carrying out service transactions).

16.13. The availability of data on the number of natural persons moving (flows) between countries to

consume (mode 2) or to supply (mode 4) services and on foreign natural persons present at a certain point

in time (stocks) is highly important for trade policy making, monitoring and for the analysis of global

supply of services, as well as broader tourism and migration policy.284 Data on the movement of natural

persons should include detailed information on the characteristics and activities of such persons. This

could also be useful for estimating the value of services consumed or supplied by them in the cases when

value data cannot be obtained from other sources.

16.14. Taking into account the information needs, an indicative list of the variables covering movements

(and stays) of natural persons under modes 2 and 4 is provided in the following sections (sub-sections B.1

and B.2). The prioritization of the variables is also discussed. It is advised that compilers consider the list

and incorporate it in their data collection and compilation programmes taking into account their specific

needs and circumstances. In this context this Guide strongly encourages compilers to coordinate with the

entities in charge of the other (and broader) statistical frameworks used to collect and compile such data

(e.g., tourism, migration or employment statistics).

16.15. Compilation of number of persons/trips does not necessarily always demand sophisticated

compilation methods,285 but it requires availability of a rather focused and efficient data collection

mechanism. Due to this entanglement of the collection and compilation of the number of mode 2 and

mode 4 movements and stays, this chapter mainly presents the types of breakdowns required and

complements chapter 11 by presenting the potential sources of information. The collection of number of

persons moving abroad (or trips) and/or on the characteristics of trips is dealt with in the context of

surveys of businesses (chapter 6), of persons and households (chapter 7) and administrative sources

(chapter 9), respectively.

281 Further information on definitions and recommendations on mode 2 and mode 4 may be found in chapter 1 of

this guide as well as chapters 2 and 5 of MSITS 2010.

282 In general the transactions would be measured as trade in services (mode 4) in the balance of payments services

account, see chapter 14, section C.

283 The supply of the service to the client is through mode 3, and the transactions would be recorded by FATS as

services output of foreign affiliates, see Chapter 15

284 See also MSITS 2010, chapter 5 Section A.

285 Either data would need to be grossed up to be representative of the whole population, or alternatively data could

be used in a data model to be grossed up.

258

16.16. It should be noted that the information on number of persons traveling during a given period of

time is difficult to collect as many sources rather provide information on the number of the trips (or on

fractions thereof).286 This means that a same person may be counted more than once in a reference period.

In other words, one will not be observing the number of persons, but rather the number of

trips/movements or number of permits. However, while in certain cases, it may be possible to identify

individual persons and link them to trips/movements or permits, such identification will most likely not

be feasible in the majority of data sources. For mode 2, this issue may not necessarily be important, as

statistics based on trips/movements are consistent with the information needed; but for mode 4, this issue

may be important, as the primary interest may be more on number of persons, with the number of

movements and/or permits being of secondary relevance. However, if data on trips are of a good quality,

then such data can be used to estimate the number of persons travelling under these two modes.

16.17. Quality issues need to be considered in the context of the compilation of data on the number of

persons and or movements/trips in relation to modes 2 and 4; namely: do the primary observations cover

the whole population of interest or the most important sub-groups; can we observe the characteristics of

the relevant statistical units; do we observe (obtain good approximations of) the characteristics of interest

using particular data sets? Are the observations reliable and the resulting statistics sufficiently accurate for

both levels and changes/differences? Do we get the statistics with the required frequency and timeliness?

16.18. Building stronger institutional arrangements is, therefore, a precondition for success in compiling

quantitative indicators on mode 2 and mode 4 movements and stays. No single source can provide

statistics on all these categories, and the direction of movements (e.g. incoming/outgoing) adds a

difficulty for data producers. Thus, it will often be necessary to combine statistics based on different

sources and data collection methods. This is an additional argument for encouraging different institutions

to work together. The development of clear guidance for the administrative forms and statistical

questionnaires will be very important given that this subject is often difficult to understand. It should be

noted however, that the challenge is to make respondents understand what information is requested. This

does not necessarily mean that the statistical concepts have to be fully explained as the relevant statistics

may be derived by the application of algorithms to the responses to questions that are easy to understand

and concern information that respondents can easily recall or obtain from records readily available to

them.

16.19. Flows and stock data need to be compiled for modes 2 and 4 quantitative indicators. Compilation

of flow data requires attention to such issues as differences in coverage of data sources methodology of

making necessary adjustments, grossing up, etc., of gathered information so that the resulting statistics are

a fair representation of the target population and are of sufficient quality. Stock data are connected with

flow data, as they result from the accumulation of flows of previous periods and they are changed by the

inflows and outflows in the period under consideration. However, compiling a base or benchmark figure

for the stock at a given time may be difficult, in particular given the high mobility of persons concerned.

For stocks related to mode 2 or mode 4, presence in the compiling economy, arriving of inbound persons

or trips would add to the inward stock, whereas those departing would subtract from the inward stock.

For stocks related to mode 2 or mode 4, presence abroad, returning outbound persons or trips would

subtract from the outward stock, whereas those departing would add to the outward stock. Compilers will

286 For example the border surveys capture information about a particular individual on a given trip. Since a person

can make several trips during the same reference period the number of trips and the number of persons travelled are

usually not the same.

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need to ensure that these calculations are made at a specific (and regular) point in time within the period

under consideration (e.g. beginning, middle or end of the period).

C.1 Movements and stays of persons related to mode 4

16.20. As described in chapter 11, the potential data sources for mode 4 movements are enterprise

surveys (see chapter 6 for more information), administrative sources (chapter 9), and household and

labour force survey, population censuses and border/passenger surveys (chapter 7). There are no

dedicated and comprehensive data sources for mode 4 movements and stays, which means that compilers

could use one or the other source depending on the type/category of inward or outward stocks of mode 4

for which information has to be compiled. This could be established based on identified needs and

potential sources. For example:

i. Trade in services surveys would probably be the best source to collect data on contractual

services suppliers alongside the data on the value of the contracts:

ii. FATS data sources could be useful on intra-firm movements287 or direct recruitments by

foreign affiliates;

iii. Other enterprise surveys, covering specific services sectors, or temporary employment

agencies could also be specially tailored to capture information of interest on mode 4.

iv. Border/passenger surveys should be considered for obtaining characteristics of those

traveling for business, work or employment purposes, combined with counts of border

crossings;

v. Household/labour force surveys could help to obtain information for outgoing mode 4

persons, in particular the self-employed, and if relevant combining this information also with

counts of outgoing persons/trips;

vi. Business registers (see Chapter 5) might contain information needed to identify potential

mode 4 self-employed service suppliers;

vii. Administrative sources (migration records, registers) might be used, in particular in

receiving countries, and could offer useful records, for example, on counts of persons or trips.

Work permits or documents issued in the context of social security coordination and

employment services could also be considered. In other words there may already be relevant

administrative information on short term movements of workers. However, compilers need to

ensure that in administrative sources, the category(ies) that could be of interest for mode 4 are

defined in a way close enough to the coverage (and if possible breakdowns) recommended in

MSITS 2010 and this Guide. If well-defined and used appropriately, entry/exit cards could be

used to make a first selection of border survey respondents that could potentially be of

interest in the context of mode 4. These respondents could then be surveyed to obtain more

refined information;

287 Whether the employer-employee relationship remains with the sending firm, i.e. corresponding to the rendering

of services by the sending firm to the receiving one; or the employer-employee relationship is with the receiving

firm.

260

viii. . Similar considerations could be put forward for other sources. Finally, partner country data

may provide useful information given that it may be difficult/not possible to collect details on

characteristics of incoming persons/trips through surveys of enterprises or households, or

using administrative records for outgoing persons. In the same way population sources tend

to reflect outbound mobility better than inbound, which contrasts with migration data where

emigration is much harder to capture than immigration. As a consequence partner country

information could turn out to be essential and be used/compared through the use of a

clearinghouse for such data statistics. This however implies that the data collection and

quality of the compiling country depends on partners’ willingness and capacity to collect and

provide quality data, as this normally involves coordination, cost and in the case of trade

negotiations also certain interests, a central brokering institution may be important. Compilers

therefore need to be cautious in using partner country data (definitions, national

laws/regulations in place may differ, etc.). Refer to chapters 5, 6, 7, 9 and 10 for a more in-

depth description of the respective data sources.

All sources identified above offer some potential to collect data. However, it is important to

identify/coordinate with those in charge of these respective data collection mechanisms to see if it is

possible and not too burdensome to identify, collect and compile data on the mode 4 categories of interest

to the economy (both inward and outward) and their breakdowns. A comparison of data sources by

purpose of mode 4 movement/stay and direction of movement is provided in chapter 11. Alternatively,

the compilers are advised to explore a possibility to combine obtained information and develop an

appropriate model to derive the data and breakdowns of interest (see chapter 17).

16.21. For compiling data on mode 4 movements and stays, two groups of persons should be

distinguished: those who will not be in an employer-employee relationship in the country in which they

are temporarily present and those who will be in an employer-employee relationship in the country in

which they are temporarily present (this refers solely to part of intra-corporate transferees and those

directly recruited by foreign affiliates). This Guide advises the following statistical treatment of these two

groups

Persons who will not be in an employer-employee relationship in the country in which they are

temporarily present the mode 4.

The variables are flows and stocks and should be broken down as follows:

Outbound:

i. Flows: the number of natural persons of the compiling country who departed to other

countries to render services (or negotiate a contract or establishment of commercial

presence), as well as on the number of their trips.

ii. Stocks: the number of natural persons of the compiling country who were present in

other countries at a certain point in time in the reference period (e.g. beginning,

middle, or end of period) to render services (or negotiate a contract or establishment

of commercial presence).

261

Inbound:

i. Flows: the number of natural persons of other countries who entered the

compiling country to render services (or negotiate a contract or establishment of

commercial presence), as well as on the number of their trips.

ii. Stocks: the number of natural persons of other countries who were present at a

certain point in time in the reference period (e.g. beginning, middle, or end of

period) in the compiling country to provide services (or negotiate a contract or

establishment of commercial presence).

The information on number of inbound/outbound flows (persons and trips) and stocks (persons)

will have to be broken down by:

i. Purpose of (mode 4) movement/stay abroad(outbound) or in the compiling

economy(inbound) with at least a separate identification of the four main

categories of mode 4 movements: service contract either by self-employed or

employee -intra-firm trade or not-, or sales/commercial presence negotiation;

ii. Service category;

iii. Country of destination (outbound) or origin (inbound);

iv. Duration (length of stay);

v. Skills/occupation of persons.

Persons who will be in the employer-employee relationship in the country in which they are

temporarily present. ,

The variables to be collected are the same as for the first group, except that the breakdown by

purpose of stay should identify those relating to the movements between affiliated companies

(intra-corporate transfer) from those who refer to a direct recruitment by a foreign affiliate in the

country of temporary stay. The status of employment for both categories is being an employee of

the foreign affiliate. In addition for the service category, since the employment of these persons is

not necessarily directly related to the supply of the service by the affiliate to clients, it is

recommend compiling data broken down by type of service activity of the affiliate/employer

(using ISIC Rev.4 /ICFA rev.1).

This Guide advises that the compilation of data on stocks should be given the same priority as the

compilation of flow data in view of their great importance for the GATS mode 4 analysis.

16.22. Compilers should strive to obtain information for the mode 4 category of most interest to their

economy (generally contractual service suppliers, whether employees or self-employed, or intra-corporate

transferees), whether incoming or outgoing. Identifying categories of interest could be done by

conducting an analysis of the potential size of the population based on the types of agreements signed by

a country (e.g. free movement of persons, etc.), the estimated value of mode 4 trade, if certain visas that

are issued are strongly related to trade in services, which services sectors are assumed to be a mode 4

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comparative advantage of the economy (and reversely how big could mode 4 imports be) etc. The

different circumstances in each country determine locally specific forms of trade in services through

presence of natural persons. A methodological approach to the production of statistics on mode 4 persons

should take into account, not only market specifics, but also for incoming persons/trips, the national

regulations of immigration and labour policies, as well as those of foreign investment and trade in

services supply through presence of natural persons as well as effectiveness of regulations and policies.

For instance, if foreign investment in a service industry is strictly controlled then intra-corporate

transferees could not be considered for estimation or if low skilled workers cannot get work permits then

estimation of mode 4 person number could be concentrated on other higher skilled occupations. Therefore,

a step by step approach should be adopted. In early stages each economy could establish a necessary

statistical capacity for compilation on mode 4 movements and stays depending on their economy's

circumstances, identifying simplifying features to determine key categories of data and major authorities

to cooperate with, and compilation should be based on facts and in responding to recommendations of

MSITS2010. A longer term goal would be to have data for all mode 4 categories and all service sectors,

both for incoming and outgoing persons/trips, therefore enabling overall international comparisons.

16.23. With respect to the periodicity, compilation of (detailed) data on an annual basis should serve

most information needs. However, given the strong link of this information with trade/labour mobility

policy, it could be of interest to also envisage the compilation of some information for shorter periods, for

instance on a quarterly basis, at least for main aggregates.

16.24. As indicated previously, depending on the source used, the compilation of data on trips is

significantly less resource intensive and provides a satisfactory information basis for policy purposes and

estimation of missing value data. Therefore, as a general rule, this Guide advises that compilers first

concentrate on the compilation of data on inbound and outbound trips and use these data for the

compilation of data on persons as necessary.

16.25. For the country of destination or origin, the primary focus should be on the country of the

supplier and that of the consumer of the service. In the case of receiving countries (where mode 4 data

will be of primary interest given direct relation with commitments made), priority should be given to

identifying the country of origin of the supplier, in particular for contractual service suppliers-employees

where this can be more difficult to establish as it can differ from the country of the individual(s). When

the source data does not enable this, the country of origin of the person could be used as a reasonably

good indication of the country of origin of mode 4 trade in services.

16.26. The identification of purposes of business, work or employment related movements using

internationally agreed definitions ensures the compilation of comparable data needed for trade and other

purposes. Adopting such an approach can also facilitate the estimation of some value data for

resident/non-resident trade in services transactions. Compilers are advised, as a starting point, to make use

of the list of purposes of trip/migration provided in table V.3 of MSITS 2010, which is based on the

classification of purposes of tourism trips provided in IRTS 2008 and from the list of migrant and non-

migrant categories provided in RSIM Rev.1.288 This list contains two main groups: the first one refers to

the tourism visits/trips, and the second refers to all the other RSIM Rev.1 categories. Within tourism

visits/trips, two main purposes are identified: (a) personal and (b) business and professional. The first

group is broken down into 8 items (none is of interest in the context of mode 4), while the second is not

subdivided. In view of the information needs related to mode 4, it is advised that compilers subdivide this

latter group as identified in MSITS2010 table V.3:

288 See IRTS 2008, paragraphs 3.15 – 3.21 and paragraph 5.26 (5th bullet point); and RSIM Rev.1.

263

i. contractual service suppliers, self-employed,289;

ii. contractual service suppliers, employees of a juridical person (of which intra-firm trade in

services which is equivalent to intra-corporate transfers where the employer-employee

relationship remains with sending entity);

iii. services sellers and persons responsible for setting up commercial presence.

Within the RSIM categories of migrant work/employment-based settlement (i.e. where the employer-

employee relationship is in the country of destination of the person), a separate identification of those

intra-corporate transferees or those directly recruited by services producing foreign affiliates would

complement the mode 4 information needs.

16.27. The compilers should take into account the MSITS 2010 recommendation that notwithstanding

the difficulties involved, they should break down relevant statistics between permanent and non-

permanent stays according to their national definition of residence, regardless of whether stays may be

substantially longer than the one year guideline generally suggested by statistical systems. In this

connection, it should be recalled that in tourism statistics the duration of trips is measured in terms of the

number of overnight stays, and only will include those not exceeding one year. In the case of mode 4

where the employer-employee relationship stands in the country of temporary stay, one should turn to

migration statistics. Migration statistics only refer to short-term (3 months to 12 months) and long-term

(more than 12 months) stay. In both frameworks there are no recommendations on groupings as identified

in MSITS 2010. MSITS 2010 recommends,290 as a long term goal, that the breakdown for mode 4 stays

should be provided by:

i. stays of less than three months;

ii. stays of between three months and less than one year;

iii. stays of between one and three years;

iv. stays of between three and five years, and;

v. stays of more than five years.

When it comes to the length of stay, the information needs triggered by the GATS for the variable number

of persons or for number of trips go beyond those used as guidelines in international statistical standards.

Consequently compilers should adapt this classification to their national needs and statistical systems (and

laws) including the needs of national tourism statistics and migration statistics, as well as other types of

statistics.

16.28. The detailed multipurpose international classification of services is provided in CPC, Ver.2, while

more aggregated service categories adopted for use in statistics on service transactions between residents

and non-residents are contained in EBOPS. Compilers should select the services classification for use in

the context of movements of natural persons/trips under mode 4 depending on their needs and

circumstances, but are advised to do so on a basis compatible with EBOPS 2010 to facilitate the analysis

of this information as well as link, if possible and relevant, with the compilation of some balance of

289 This category is to be compiled for mode 4 purposes if there is not an employer-employee relationship in the host

economy. See Box V.2 of the MSITS 2010.

290 MSITS 2010, paragraph 5.26, 5th bullet.

264

payments services items and FATS. If a product classification cannot be used, then the field of activity of

the service supplier could be used (i.e. using ISIC Rev. 4 or ICFA Rev. 1).

16.29. Although not completely consistent with GATS definitions, such an integrated approach with

tourism and/or migration statistical definitions will strengthen the institutional arrangements in data

collection and data compilation and will ensure a more efficient use of limited statistical resources, while

providing information that can be used as reliable indicators on mode 4. Another potential benefit of

cooperation or coordination could be to ensure consistency between enterprise and household/labour force

surveys that have work conditions/policy as common subject matters, and could, therefore, be combined

to obtain data on mode 4. 291

16.30. The breakdown by skills/occupations is entirely optional. However, it is advised that countries

follow the International Standard Classification of Occupations (ISCO-08) and/or the International

Standard Classification of Education (ISCED) 2011 if such data are compiled.

Country experience: China - compilation of mode 4 number of persons

16.31. China was developing the methodology to estimate the number of mode 4 persons for many

years. This work was focused on two areas: overseas contracted projects and overseas labour service

cooperation. The former refers to overseas construction projects carried out by Chinese firms and their

foreign affiliates. It includes persons working in projects where the establishment of a branch or affiliate

is not necessary (either for short-term projects, or those which do meet the criteria for the establishment of

a branch), i.e. referring to contractual service suppliers in the construction sector (most of the income

refers to these projects). It also covers employees sent by the mother (construction) company to work in

affiliates or branches abroad (intra-corporate transferees). The overseas labour service co-operation refers

to contractual service suppliers. They are employed by the China Labor Service Co-operation firms which

offer services to overseas firms and organization (i.e. clients abroad) based on service contracts. Data on

outflow and stock of mode 4 persons by the type of contract is almost completely covered by China's

direct data collection. Self-employed contractual service suppliers are not covered, as well as intra-

corporate transferees in other sectors.

16.32. According to the Regulation of Overseas Contracted Projects and Regulation of Overseas Labor

Service Cooperation of China, qualified enterprises to be able to sign contracts should apply and get

approval for the right to trade services through presence of natural persons. The relevant authority is not

only responsible for applications of enterprises or service suppliers, but also participates in the collection

and aggregation of data on outflow and stock of mode 4 persons in the category of contractual services.

Two statistical programs have been jointly established by the Ministry of Commerce and the National

Bureau of Statistics. According to these programs, relevant enterprises are obligated to report required

291

A similar approach to the work of Eurofound could be established for mode 4 information purposes In its work

Eurofound aims at providing information on the quality of living and working conditions in Europe. In order to

realise this goal they combine three surveys, each targeting a different population to get specific information. The

European Working Conditions Survey questions workers to gain insight on the quality of work and employment.

The European Company Survey targets managers and employee representatives in companies to gather information

on workplace practices. The European Quality of Life Survey interviews European citizens to get a perspective on

living conditions and perceptions of quality of life. Despite these differences in terms of target population,

Eurofound aims to harmonise survey methodology whenever possible, to ensure that lessons learned in one survey

are implemented in the others.http://www.eurofound.europa.eu/surveys/methodology/index.htm.

265

information, such as the type of service project, outflow and stock of persons, occupation or overseas

work, length of stay, revenue, country of destination, etc. Administrative sectors at all levels collect data

and check it. The national authority is responsible for aggregation and annual publishing of the data in the

China Statistical Yearbook and the Chinese Statistics of Trade in Services, as shown in table 16.1 below.

Data are also broken down into 8 sections of the Industrial Classification of the National Economy of

China (agriculture, forestry, animal husbandry and fishing; manufacturing; construction; transport;

computer services and software; accommodation and restaurants; scientific research, education, culture,

sanitation and sports; others.

Table 16.1Outflow and stock of mode 4 Chinese persons in 2012 (contractual services)

Unit: persons

Variable

Country (region)

Total Contractual Projects Labour Contracts

Outflow Stock Outflow Stock Outflow Stock

Total 511745 850181 233365 344618 278380 505563

Angola 23525 43604 17445 31905 6080 11699

Russia 15354 18822 4502 4088 10852 14734

. . .

Note: Stock indicates the total number of persons sent overseas by the end of the year.

C.2 Movements and stays of persons related to mode 2

16.33. The possible sources for quantitative data on mode 2 movements and stays are in most cases

closely related to the tourism/travel data collection and compilation mechanism. Household surveys

(including labour force surveys) can capture information on individuals who have travelled abroad

(outbound flows). Border or passenger surveys could be used to gather information on persons who have

travelled abroad (outbound flows) as well as on those who have travelled to the compiling country

(inbound flows). These will mainly provide information on the characteristics of the travel/trips, while

border counts (or counts in ports of entry-exit) will provide figures on the number of entries or exits. As

described in the previous section data from this source could also be used to satisfy (some) mode 4

information needs. Chapter 7 further describes data collection through surveys of households and persons.

Administrative sources are also a source that could be used in this context, although it may be difficult to

clearly identify the categories of interest (see chapter 9). Enterprise surveys could also be used to obtain

the mode 2 demand side statistics (if employers are asked to report on the travel abroad of their

employees), but most likely they will be used to generate the supply side data (surveys targeting

accommodation services, tourism attractions, or specific services sectors such as health or education

establishments). Other sources may also be of interest depending on the situation of countries. A data

model could be used to combine information from multiple sources in order to obtain mode 2 statistics

with relevant breakdowns (see chapter 17). A comparison of data sources by purpose of mode 2

movement/stay is provided in chapter 11.

16.34. Quantitative data should be compiled on mode 2 for inbound and outbound flows and stocks as

follows:

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Outbound:

i. Flows: the number of natural persons of the compiling country who departed to

other countries to consume services, as well as on the number of their trips.

ii. Stocks: the number of natural persons of the compiling country who were present

in other countries at a certain point in time in the reference period (e.g. beginning,

middle, or end of period).

Inbound:

i. Flows: the number of natural persons of other countries who arrived in the

compiling country to consume services, as well as on the number of their trips.

ii. Stocks: the number of natural persons of other countries who were present in the

compiling country at a certain point in time in the reference period (e.g. beginning,

middle, or end of period).

The information on number of inbound/outbound flows (persons and trips) and stocks (persons)

will have to be broken down by:

i. Country of destination (outbound) or origin (inbound);

ii. Purpose of stay abroad (outbound) or in the compiling country (inbound);

iii. Types of (services) products consumed;

iv. Duration (length of stay).

In the majority of cases, mode 2 stock information will be of minor interest to users/policy makers. It is,

therefore, a good practice that compilers identify with users the relevant categories of persons/purposes

where stays will most probably be of a more long-lasting nature and consequently stock data of more

interest, for example in the case of students.

16.35. Compilers should select the services classification for use in the context of movements of natural

persons under mode 2 depending on their needs and circumstances, but are advised to do so on a basis

compatible with EBOPS 2010 (in particular the travel breakdown by product consumed) to facilitate the

analysis of this information as well as link if possible and relevant with the compilation of some balance

of payments services items and FATS. In view of the information needs related to mode 2 and tourism it

is also advised that countries build their breakdowns in a way which is also useful for tourism statistics.

Such an integrated approach will strengthen the institutional arrangements in data collection and data

compilation and will ensure a more efficient use of limited statistical resources.

16.36. For the purpose of stay abroad or in the compiling country, compilers are advised as a starting

point to make use of the classification of purposes of tourism trip provided in IRTS 2008. This

classification contains two main groups of purposes: (a) personal and (b) business and professional. IRTS

2008 suggests a breakdown of the first group into holidays, leisure and recreation; visiting friends and

relatives; education and training; health and medical care; religion/pilgrimages; shopping; transit; and

other. The second group is not subdivided.292 Note that from the perspective of this Guide it may also be

useful to gather information on purposes other than tourism related (e.g. education purposes for more than

one year, or those who are temporarily abroad for employment purposes).

292 See ITRS2008, section B.1 for more information.

267

16.37. Compilation of data on an annual basis should serve most information needs. However, it may

also be of interest to obtain some information for shorter periods, for instance on a quarterly basis at least

for some main aggregates. This would, in principle, also be linked to the needs of other statistical domains

(e.g., tourism).

16.38. The table below shows an example for presenting data on mode 2 number of persons, mainly

relating to tourism purposes. It is drawn from the UNWTO Compendium of Tourism Statistics. An

extension that would serve the needs as identified in MSITS 2010 would be gather information of

purposes other than tourism related (e.g. education purposes for more than one year, or those who are

temporarily abroad for employment purposes).

D. Linking services trade data with the business register

16.39. Nowadays many compilers have started projects to link merchandise trade statistics to the

business register at the micro-level, in order to produce so called Trade by Enterprise Characteristics

(TEC) indicators (as published e.g. by Eurostat and the OECD293). These data indicate which firms – by

for example industry, size class, foreign ownership, or geographical (sub-national) region – are actually

engaged in international trade. This information is considered very policy relevant as it shows the

importance for example of SMEs, or foreign owned firms, in total trade, and gives insight into which

industries use what kind of imported products, which is vital for the analysis of global value chains.

294

16.40. Similar data-linking activities can be conducted in the area of trade in services and are called

Services Trade by Enterprise Characteristics (STEC). These data are compiled by combining the

information from enterprise or establishment trade in services surveys (generic or specialized), with the

business register that contains information on industry classification, size class and other relevant

stratifying variables. A well-maintained statistical business register (see chapter 5) is essential for such a

data linking exercise. Microdata linking is greatly facilitated when the trade in services surveys are

sampled directly from this register and use the same statistical unit. Similarly, it is recommended to

identify the full population of firms engaged in trade in services trade, for example via a multi-annual

census or via VAT registers, in order to facilitate the grossing up of the data.

16.41. It should be noted that given the diverse nature of trade in services data sources, the total value of

trade in services cannot be fully attributed to individual enterprises. Compilers should not see this as a

weakness, but rather as a consequence of the fact that some service categories, notably travel, as well as

for some others, are collected through certain methods which renders the linking to the business register

conceptually impossible.

16.42. It is a good practice that compilers carefully consider confidentiality issues when disseminating

STEC data, as a more detailed breakdown of services trade by industry and size-class may make it easy to

identify individual firms. In such instances, it is preferred to publish a set of tables that break down

services trade according to only one enterprise characteristic (e.g., either industry OR size class), rather

than a more detailed table that contains many confidential cells.

16.43. Further, as described in chapter 5, statistical business registers could prove useful in the

compilation of additional data to support the analysis of service industries and enhancing comparability

293 See for Eurostat:

http://epp.eurostat.ec.europa.eu/statistics_explained/index.php/International_trade_by_enterprise_characteristics and

for OECD: http://www.oecd.org/std/its/trade-by-enterprise-characteristics.htm

294 See e.g. the OECD-WTO TiVA project, www.oecd.org/t rade/tiva.

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and consistency across collections, e.g. the particular example of potential mode 4 self-employed service

suppliers was indicated above.

E. Other indicators of interest for the global analysis of service industries

16.44. Other indicators of interest for the global analysis of service industries are listed in MSITS 2010

paragraphs 5.83-5.86 and 5.111-5.112. This chapter has already dealt in detail with the compilation of

variables related to the persons crossing borders and staying temporarily abroad in the context of mode 2

or mode 4. Beyond the FATS variables of direct interest on the international supply of services (i.e.,

turnover/sales or output, employment, in particular intra-corporate), Chapter 15 has also extensively

described the compilation of other variables and their breakdowns. Out of these variables, the number of

enterprises and assets of foreign affiliates are of direct interest with commitments that could be made in

trade or investment negotiations.

16.45. For the other indicators, MSITS 2010 does not suggest new recommendations for compilation,

but rather indicates which statistics and with which (additional and reasonable) breakdowns they could be

compiled in order to be useful for trade in services policy makers and analysts. It builds upon existing

data already compiled by many countries and collected by many regional and international agencies. The

set of other indicators detailed below is in no way exhaustive, rather, it contains the indicators that will

most likely be of interest to the majority of users:

i. Foreign direct investment statistics

a. Financial transactions, income and positions

b. By destination and origin of investment (immediate and ultimate)

c. By type of service activity (if possible with a total for services)

ii. National accounts statistics and Structural business statistics by industry

a. Value added, output, employment, capital formation

b. By type of service activity (if possible with a total for services)

iii. Employment statistics by type of service activity (if possible with a total for services)

iv. Sectoral statistics:

a. Tourism (beyond number of inbound and outbound visitors which is discussed above)

1. Number of establishments, hotels and similar establishments, food and beverage

serving activities, travel agencies and other reservation services activities

2. Number of rooms, number of bed-places (including occupancy)

3. Number of employees by tourism industries

b. Research and development: Gross domestic expenditure on research and development

(total, financed by business enterprise, by government, by higher education)

c. Audiovisual services

1. Number of internet radio stations, radio channels, television channels

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2. Number of indoor cinemas (of which multiplexes)

3. Number of distribution companies (of which foreign controlled), number of film

exhibitors (of which foreign controlled)

4. Number of national feature films produced (of which 100% nationally produced,

and internationally coproduced)

5. Gross box office receipts of feature films exhibited (of which foreign feature

films)

6. Number of admissions of feature films exhibited

7. Number of feature films exhibited (of which national, and foreign)

d. Postal and courier services

1. Number of permanent post offices (of which staffed by administration officials)

2. Income for letter post, parcels and logistics services, postal financial services

3. Number of letter-post items, of ordinary parcels (of which domestic service, and

international service – dispatch)

e. Construction

1. Number of contractors (of which foreign controlled)

2. Construction of new building (of which dwellings, non-residential, residential)

3. Cement production

f. Finance and insurance

1. Domestic credit provided by the banking sector

2. Insurance density

3. Insurance penetration

4. Interest rate spread

5. Market capitalization

g. Telecommunications: Number of fixed (wired-) broadband internet subscriptions,

Internet users, secure internet servers, telephone subscriptions, mobile-cellular telephone

subscriptions

h. Transport: air, sea, road, rail etc.

1. Fleet (by country of ownership, by country of registration etc.)

2. Network

3. Freight transport (national and international)

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4. Passenger transport (national and international)

5. Container port traffic

i. Education services

1. Number of students (primary, secondary, tertiary education)

2. Outbound and inbound mobile students (students from a given country studying

abroad)

3. Public, private current expenditure on education (primary, secondary, tertiary

education)

j. Environmental services

1. CO2 emissions, NOx emissions

2. Population connected to wastewater collecting system

3. Population served by municipal waste collection

4. Hazardous waste generation

5. Organic water pollutant (BOD) emissions

6. Other greenhouse gas emissions, HFC, PFC and SF6

7. Water pollution

k. Health related and social services

1. Number of hospital beds

2. Number of physicians, dentistry personnel, nurses and midwives

3. Life expectancy at birth

4. Health expenditure, public and private

5. Out-of-pocket health expenditure

16.46. The sources and recommendations on the above statistics are available from the relevant

international manuals and guidelines. Some of these publications are included in the list of references in

box 16.1. To respond to these information needs, compilers are strongly encouraged to discuss with users

what type of information would be necessary, as well as discuss with those in charge of the collection and

compilation of these statistics to identify what would be used or could be envisaged for compilation (these

could cover diverse units of the statistical office as well as various government agencies).

16.47. In addition to indicators that describe the performance of services industries, indicators to judge

services flows on an inflation-adjusted base would be useful. However, export and import price indices

for services are not easy to compile. While the Voorburg Group focuses on the measurement of producer

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price indices, the IMF's Export Import Price Index Manual295 offers guidance for measuring prices of

internationally traded services.

16.48. Services for which prices can be compiled using existing data collection systems fall into the

domain of transport. Among price-related time series, the US Bureau of Labour Statistics (BLS), for

example, is compiling air freight, air passenger or ocean liner freight rates. On travel and tourism the US

BLS derives price information from a subset of the CPI for lodging, food, beverages, etc. from foreign

visitors by country of their residence. However, beyond transport and travel, price information on

internationally traded services is scarce and further research is needed on developing the respective

information.296

Box 16.1 References for other indicators of interest for the global analysis of service industries

 International Recommendations for Tourism Statistics 2008, UNWTO

 Manual on Statistics of International Trade in Services 2010, chapter 5.

 SNA 2008

 BPM6

 BD4

 System of Health Accounts, OECD

 Framework for cultural statistics, UNESCO UIS

 Measuring cultural participation UNESCO UIS

 ISCED 2011, UNESCO UIS

 ISCO 2008, ILO

 Frascati Manual : Proposed Standard Practice for Surveys on Research and Experimental Development, OECD

 WTO's Integrated-Trade Intelligence Portal (http://i-tip.wto.org/services/), statistics module

 IMF, Export and Import Price Index Manual, Theory and Practice

 http://epp.eurostat.ec.europa.eu/statistics_explained/index.php/International_trade_by_enterprise_characteristics

and for OECD: http://www.oecd.org/std/its/trade-by-enterprise-characteristics.htm

 OECD-WTO TiVA project, www.oecd.org/trade/tiva

295 Available at http://www.imf.org/external/np/sta/xipim/pdf/xipim.pdf

296 IMF (2009), Export and Import Price Index Manual, Theory and Practice, p. 282.

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Chapter 17 Estimation and modelling of missing data , forecasting or back-casting

17.1. Scope. This chapter describes the use of models and estimates to complement the observed data

required for the compilation of statistics on the international supply of services, which are frequently

needed because: (a) part of the required information cannot be collected or can be gathered only at an

unsustainable cost, and/or (b) the available sources cannot provide the required coverage, detail,

frequency and/or timeliness foreseen by the international standards, and/or (c) the various sources to be

combined in the collection system are partially overlapping. The chapter consists of the following

sections: summary of good practices (section A); imputation for filling data gaps and for data editing

purposes (section B); forecasting, back-casting and revising time series (section C); allocating to

individual EBOPS items and trading partners (section D); and model-based estimates (section E).

A. Summary of good practices

17.2. In order to properly carry out imputations needed for filling data gaps and for data editing

purposes, it is a good practice that compilers first check and load data from primary and secondary

sources followed by integration, processing and analysis of data. If the compiler believes that editing of

the source data might be needed, the source data provider should be contacted to edit or adjust data if

deemed necessary.

17.3. For dealing with unreported or aggregated transactions due to thresholds applied by ITRS,

different approaches could be used, such as collecting information on small value transactions from

periodic sample surveys or from an analysis of small transactions before the thresholds were raised. If a

threshold is established, it is a good practice that transactions below the threshold level are reported in an

aggregated amount and classified using the appropriate code. Alternatively, statistical estimations can be

applied which can be updated periodically with actual data.

17.4. When data are not available on a sufficiently timely basis, the compiler may extrapolate certain

series from earlier periods or interpolate new data points within a range of known data points. The choice

of extrapolation or interpolation method should be based on the characteristics of the past series and the

range of information available at the time of compilation. If other, more frequent, indicators provide

evidence of seasonality in the series, then the data models and interpolation techniques should take these

into account.

17.5. For back-casting, in absence of relevant indirect measures, compilers may consider using a

constant percentage change between the start and end points if no better approximation is feasible. It is a

good practice that these relationships be analysed to verify that they hold over time in order for the

compiler to decide the appropriate back-cast time period. Again, if other, more frequent, indicators

provide evidence of seasonality in the series, then the back-casting techniques should take this into

account.

17.6. Model-based estimates can be used for various statistics on the international supply of services.

For instance, for estimating travel services, a model could be constructed using primarily the number of

visitors and other short-term individuals traveling (partially available from tourism statistics or

transportation operators) and estimates of per capita expenditure obtained from occasional surveys of

persons who travel. Additionally, for estimating the value of mode 4 and the number of persons moving

under a mode 4, model-based estimates could be developed using existing statistics on the international

supply of services, travel information (including model-based estimates of a number of travelers), as well

as existing data from, for example, tourism, migration, or employment statistics. In this context, it is

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advised that compilers analyse available metadata, familiarize themselves with the methodologies behind

data from other statistical frameworks, cooperate closely and exchange the relevant microdata with the

other statistical domains and institutions involved.

17.7. Compilers should strive to systematically allocate all services transactions to the relevant

individual EBOPS services categories, at the most detailed level possible, as well as to appropriate trading

partners. If diverse transactions are bundled into a single payment or receipt, the compiler should estimate

the relevant share of services transactions and allocate estimates to items/partners as relevant.

B. Imputation for filling data gaps and for data editing purposes

17.8. Data gaps may arise in preliminary stages of compilation for various reasons, including non-

responses from establishment surveys, lack of timely reporting or missing entries in secondary data

sources. Compilers should consider taking the following steps to identify data gaps, missing replies, and

suspect outliers and impute data.

i. The first step is to check and load data from primary and secondary sources. Namely, the data

should be standardized to fixed formats in advance (produced in separate processes). When

loading data, checks on codes, the completeness of necessary fields, and value ranges should be

run automatically. For primary source data, or directly reported data, only incorrect records

should not be loaded. For secondary data sources, or data that are not submitted directly by the

reporter (including administrative sources), the complete file should not be loaded until reviewed

and fully corrected;

ii. The second step in imputing data gaps and missing replies is the integration and processing of all

data. After the data files have been checked, corrected, and loaded as described above, the data

should be tabulated and processed. Data that are missing or otherwise not reported by survey

respondents can be imputed using statistical procedures such as the mean value reported by

respondents with similar characteristics or the average change for such variables from the prior

period.297 Imputation procedures are especially important for universe (benchmark) surveys that

are designed to provide results for the entire population and that form the basis of future annual or

quarterly surveys. In some cases missing values, if not provided by respondents during regular

follow-up procedures, can be obtained from financial statements and commercial databases.

iii. The third step in this process is checking the data, which involves data analysis. As part of this

analysis, significant increases and decreases in time series, e.g., of imports or exports, also as a

share of net exports, of a particular service or with a particular country (or group of countries) are

examined. The analysis should be done step-by-step, using a top-down approach, meaning

starting from total services with partner world to more detailed levels of imports, exports, and net

figures. The aim of macro-editing is to focus on suspicious values influencing publication totals.

It also leads to gains in efficiency. Analysis is also done to trace a dubious enterprise or source

that may need to be edited and possibly adjusted. A similar approach can be used for other

statistics on the international supply of services;

iv. The fourth step is the editing of primary and secondary sources. After having traced an

enterprise or other source with dubious data, the unit/source should be assessed by the editing

team and be contacted by phone or email to edit or adjust the data if deemed necessary. This will

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be done depending on the issue identified and the result of the investigation. Various methods can

be used to adjust or edit, for example using an average of previous periods, growth rates for

available data, etc.

17.9. Another issue related to filling data gaps is when a threshold is applied for reporting/collecting

data. In many ITRS, thresholds are established for reporting transactions to prevent undue reporting

burdens and processing costs, which may imply that a considerable amount of transactions may be

missing, especially small value service transactions.

17.10. Different approaches to dealing with transactions falling below the threshold could be applied,

such as carrying a small (ad-hoc) sample survey or other sources (e.g. credit card data). Also, estimation

can be carried out through an analysis of small transactions before the threshold was raised, or through

empirical research.

17.11. For example, as described in the country experiences of Chapter 8, research conducted in Japan

suggests that the frequency of transactions increases exponentially as a value of transaction decreases and

that statistically, a Pareto distribution fits the data well.298 Compared to using information on transactions

from before a threshold increase, this approach to estimating below-threshold transactions has the

advantage in that the estimations can be updated periodically with recent data. Further, statisticians are

able to choose another statistical approach if the implemented method does not fit the data well.

B.1. Country experience: the Netherlands

17.12. Imputation for filling data gaps at Statistics Netherlands is conducted according to the four-step

process described above. After checking and loading primary and secondary response data, imputations

are made for non-responses. For non-responses from large enterprises (LE) and small and medium

enterprises (SME) and special purpose entities (SPEs), imputations are done on the basis of the average of

the last four quarters of responses. For LE, if there is no response for Q-1, Q-4 receives a higher weighted

average. For SME, if there is no response for the last four quarters, no imputation is made. For travel,

imputation is based on Q-4 data. Other sources are imputed entirely on the basis of Q-1. To gross up (e.g.,

for SME data), each stratum is weighed, based on the number of enterprises in the population and the

number of responding enterprises or imputed responses. Source data are at different level of detail in

terms of services and/or countries involved in the international transaction. LE source contains the most

detailed data; Travel is also detailed; and all other sources are less detailed. All these sources’ data are

‘converted’ to the most detailed levels on basis of the corresponding LE data (mean of last 3 years). After

ensuring all data are fully detailed, tabulation takes place by aggregating or summing up these

components to more condensed groups of services or countries.

17.13. The Netherlands checks its data according to a top-down approach. At Statistics Netherlands, this

analysis is carried out with the use of Macroview, an interactive tool for top down analysis of statistical

data. Major built-in analysis scans within Macroview include: (a) Quick scan (all services and aggregates,

in graphical form); (b) External deliveries scan (selected services and underlying enterprises); (c)

Complete scan (all services and aggregates and all country (groups), all sources, all underlying enterprises

and weighing factors).

17.14. The editing of primary and secondary sources is submitted to the editing team with specific

assignment information. If the assessment concerns a LE or SME enterprise, the enterprise is contacted by

298 Japan will employ statistical methods starting with the implementation of BPM6. See chapter 8 (paragraphs 8.42

– 8.48) for the full description of Japan’s country experience with its ITRS.

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phone or email. If needed, the data of the enterprise will be edited or adjusted and loaded again. If the

assessment concerns another source, the source data provider is contacted and if needed, a new source file

will be made and loaded again.

C. Forecasting, back-casting, and revising time series

17.15. Not all sources may supply data on a timely basis. In those instances, the compiler may have to

extrapolate certain series. Compilers are advised to consult the BPM6 Compilers guide, which explains a

number of interpolation, extrapolation and forecasting techniques that range from very simple, such as

using the value from the previous period or same change as occurred in the previous two periods, to more

complex techniques that draw information from models, taking account of seasonality in sub-annual

series.299 These techniques can be applied to various types of statistics.

17.16. Similarly, historical statistics on the international supply of services are also important (e.g. for

analysis purposes). Compilers are often asked to provide long time series, especially when new

guidelines, new data sources or a compilation methodology are introduced. Since it is often difficult to

collect source data on the new basis for a long historical period, suitable overlap periods and the stability

of relationships over time need to be analysed to decide how far back in time the data can be revised. To

generate series for earlier periods similar techniques as for forecasting can be used (for example, by. a

constant (percentage) change, possibly accounting for seasonality.

17.17. Back-casting is also very important for providing long time series for new classifications based

on EBOPS 2010. A first step could be to use the EBOPS 2010 - EBOPS 2002 correspondence table,300

taking into account that some new EBOPS 2010 classifications are not directly related to those based on

EBOPS 2002 (such as manufacturing services). It may also be difficult to relate the two classifications if

only main services aggregates are compiled, although some new recommended breakdowns can be

derived from data for earlier periods based on relationships between old and new classifications in a

recent overlap period.

C.1. Country experience: Australia

17.18. The Australian Bureau of Statistics (ABS) maintains long time series for national and

international accounts. A large proportion of these series are maintained in original, seasonally adjusted

and trend variations. The introduction of changes to compilation methods and treatments can result in

shifts to the levels of component and total series. If the shift in level is sufficient to distort the seasonally

adjusted time series, the ABS revises the historical series to make the time series as continuous as

possible.

17.19. In some cases there is not sufficient detail available to adjust the historical series directly. In these

cases, the ABS estimates the shift in level of the series by comparing estimates at one point in time for

both the current and new basis (although comparison for additional periods is desirable).

17.20. Ideally any change in the level of a series would be measured over a sufficient time period to

enable seasonal patterns to be observed. This is possible for some modelled estimates, but for estimates

based on surveys, the cost of producing two estimates for one or more time periods is expensive both in

processing costs and provider burden. In these cases, alternative methods may be needed.

299

See e.g. BPM6 Compilation Guide, paragraph 8.29 and 8.30.

300 Available on the UNSD website.

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17.21. To ensure consistent treatment of time series, the ABS has established a standard approach to

measuring shifts in the level of series. The size of the level shift induced by a methodological or

measurement change is assessed using regression analysis techniques on ratios between the current

published estimates and actual or simulated estimates produced by the revised methodology. In cases

where the level shift was found to be significant in the seasonally adjusted series, the historical series is

back casted to make the time series as continuous as possible while maintaining, as far as possible, the

integrity of the period to period seasonally adjusted movements, taking into account real world changes.

For a small number of lower level series it may not be possible to create a valid time series and these

series are marked 'not available' for periods prior to when data collection commenced.

17.22. Where it is not possible or necessary to maintain a long time series, an approach of ‘bridging’ the

current published estimates and the estimates produced by the revised methodology is used. ‘Bridging’

means that estimates on both the current and new basis are produced for one point in time and both sets of

estimates are released along with analysis to help users understand the differences between the series.

This technique is particularly relevant for series where modelling beyond a certain time may not be

appropriate.

D. Allocating to individual EBOPS items and trading partners

17.23 Compilers should make every possible effort to allocate collected data on services transactions to

the appropriate individual EBOPS items. Throughout the data collection and compilation process,

compilers should as much as possible avoid using existing or catch-all services categories (e.g., "other

business services", "other business services n.i.e.", “services not allocated301,” “undefined”) or catch-all

partner categories (e.g., “not allocated,” “undefined”) to assign services transactions for which precise

identification of one EBOPS 2010/partner category is not readily clear. Indeed, assigning unidentified

services transactions to EBOPS categories such as “other business services n.i.e.” (or one of its parents if

this level of disaggregation is not available, e.g. "other business services")302 will artificially inflate, and

sometimes in very large proportions, the value for this specific EBOPS category and its parent categories

(e.g., “technical, trade-related and other business services” and “other business services”). This practice

decreases the analytical usefulness and reliability of these statistics, and will also increase bilateral

asymmetries because unidentified services will be classified in different ways by different reporting

countries.

17.24 Consequently, compilers should strive to systematically allocate all services transactions to the

relevant individual EBOPS services categories, as well as appropriate trading partners. To the extent

possible, this allocation should be done at the most detailed level. If diverse transactions are bundled into

a single payment or receipt, the compiler should, to the extent possible, estimate the relevant shares of

services transactions and allocate estimations to items/partners as relevant. It is advised to use the most

appropriate modelling and statistical techniques, based on the information available to compilers. Such

practices should be clearly documented in the metadata to improve users’ understanding with respect to

the interpretation and quality of the data.

301 The Eurostat BoP Vademecum (2012 edition), defines “services not allocated” as follows: “This item was created

due to the fact that some Member States are unable to allocate certain amounts to specific services. This results in a

discrepancy between the sum of individual services and the total services item. If a Member State encounters this

problem, they should record such residual item under item ‘SN’ which corresponds to the code for ‘Services not

allocated’. Only services whose origin cannot be determined should be included under this label.”

(http://forum.europa.eu.int/Public/irc/dsis/bop/library).

302 As defined in MSITS 2020, paragraph 3.252 and the EBOPS 2010-CPC2 correspondence table 9

http://unstats.un.org/unsd/tradeserv/tfsits/msits2010/ebops2cpc_detailed.htm).

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17.25 It is reiterated that compilers should make every effort to allocate all services transactions to

individual EBOPS 2010 services categories; however, if there is no possible solution in every case,

compilers should use a category to be labelled "not allocated," which will be shown at the same level as

the main services items (i.e., not included within any of the services items) or main partners.303 The

corresponding values should only be included at the total services level if such a category corresponds to

the classification shown, or at the total World level if it relates to the partner breakdown shown. Metadata

should clearly document when total services or total partners include not allocated elements (see chapter

18).

17.26 Compilers should also establish rules to make allocations across the correct geographical partners

if transactions are recorded under “services not allocated.” One possible method of performing this

allocation is to consider the shares of geographical distribution evident in total World trade in services. It

should be noted that the allocation by nature of transaction and by partner country are independent; e.g., it

is sometimes the case that transactions cannot be allocated to individual services items, but can be

allocated to trading partners.

E. Model-based estimates

17.27. When source data are not timely or otherwise adequate, compilers may also choose to create a

data model to estimate (part of) statistics on the international supply of services.304 The data model

elements should be based on the compiler’s judgment of the specific information available. Some data

models can be relatively simple. For example, they may be based on proven relationships between

different data sources and variables. An additional straightforward approach for monthly or quarterly

estimates of items with strong seasonal fluctuations, is to look at relationships of relevant data series from

the current period (quarter or month) from each of the preceding (pre-determined number of) years. When

quarterly results become available, monthly estimates would then be reconciled so that the three months

equal the corresponding quarter. Models can also be more complex, based on mathematical and

econometric approaches, including exponential smoothing, linear and logistic regression, polynomial

interpolation (or cubic splines), and multilevel models to account for hierarchical relationships among

variables.

17.28. For estimating travel services, a model could be constructed using primarily the number of

visitors and other short-term individuals traveling (partially available from tourism statistics or

transportation operators) and estimates of per capita expenditure. However, it should be noted that these

data are not always accurate, as the transport operator may not always collect information on the

residence of the customer. Furthermore, when collected, the information may relate to the nationality of

the customer and not the residence. Estimates of per capita expenditure could be obtained from occasional

surveys of persons who travel. If necessary, separate data models may be designed to measure education

and/or medical-related travel based on information from relevant institutions or special surveys (e.g.,

survey of students).305 However, in order to enable the use of tourism statistics, the differences in terms of

303 It is important to note that the role of EBOPS 2010 items labelled as "other" or "not included elsewhere (n.i.e.)"

is not to include transactions for which the compiler cannot determine to which EBOPS item they belong to, but

rather corresponds to a residual list of services which are not identified as belonging to specific EBOPS items. In

other words these "other" or "n.i.e." items are actually defined, and correspond to a specific list of CPC Version 2

products (see EBOPS 2010-CPC Version 2 correspondence table available at

http://unstats.un.org/unsd/tradeserv/TFSITS/msits2010/ebops2cpc.htm).

304 BPM6 Compilation Guide, 8.17 and 8.25.

305 BPM6 Compilation Guide, 12.75.

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the coverage between balance of payments definitions, on the one hand, and tourism statistics as used in

the International Recommendations for Tourism Statistics 2008 (IRTS 2008) (as well as in Tourism

Satellite Account: Recommended Methodological Framework 2008 ), on the other, need to be

understood306 (also see chapter 14 of this Guide).

17.29. For estimating the value of mode 4 and the number of persons moving under a mode 4, model-

based estimates could be developed, using existing statistics on the international supply of services, travel

information, as well as existing data from tourism, migration, employment statistics, etc. All of this

information could be used for building an estimation of mode 4. More information on combining different

data sources is provided in chapter 13 Model-based estimates are a cost-efficient way to use existing data

to compile modes of supply data.

17.30. For such an approach to be efficient, compilers need to analyse existing metadata, familiarize

themselves with the methodologies from other statistical frameworks, cooperate closely and exchange the

relevant microdata with the other statistical domains and institutions involved. Some adjustments to the

data or data collection tools will probably be needed, in particular to obtain the relevant breakdowns and

to clearly distinguish the population of interest. For example identifying or estimating the population

qualifying as visitors or traveling for short term-employment, including appropriate breakdowns would be

necessary as inputs for data models for estimating travel or the number of mode 2 persons/trips. For mode

4 this would entail distinguishing within the group of traveling persons that are employed, those that will

have an employer-employee relationship in their country of origin (mode 4) and those that will have this

relationship in the host economy.307

17.31. For example, tourism data sources could be used for collecting further information on the

characteristics of mode 4, while some adjustments on different concepts and terminology in both

statistical domains would almost certainly be necessary. Subsequently, an estimation of the number of

mode 4 persons and of the value of mode 4 trade could be derived by grossing up the figures by using a

model based on research.

17.32. A similar approach could be adopted for other types of sources, such as labour force surveys,

household surveys or even business surveys. Adding options in the questions asked to respondents could

serve to identify mode 4 persons in such data sources.

E.1. Country experience: Austria - a model to estimate monthly BOP data

17.32. In Austria, the Oesterreichische Nationalbank (OeNB) is responsible for compiling and

disseminating statistics on the international supply of services, including the balance of payments. In

cooperation with Statistics Austria, the OeNB collects data on Trade in Services on a survey basis, which

is conducted quarterly. In contrast to financial transactions, the OeNB found it unfeasible to employ

monthly surveys on real economic transactions due to cost-benefit considerations, as data are not

available on a monthly basis for most of respondents. Accordingly and due to the lack of user needs for

monthly data, national figures on trade in services are published as quarterly time series only. At the same

time, the OeNB has to fulfil monthly reporting requirements according to EU regulation.308 To meet

306 Ibid., 12.76.

307 Actually, defining services contracts versus employment relationships is something that would better serve the

compilation of tourism statistics as well as migration statistics.

308 Regulation (EU) No. 555/2012 amending Regulation (EC) No. 184/2005 on Community statistics concerning

balance of payments, international trade in services and foreign direct investment; ECB’s Guideline of 9 December

279

100

120

140

160

123456789

inital time series

result after step 1 and 2

distribution of the difference between

monthly estimates and quarterly results

these ends, the OeNB has introduced a monthly estimation model to derive monthly Balance of Payments

data from quarterly reports.

17.33. The model produces total figures – credits and debits - for goods, services, compensation of

employees and current transfers. In addition to global figures, a regional breakdown is available for Intra-

and Extra-EU-trade, as well as trade with Intra- and Extra-Euro area. When assessing the model described

below, it has to be kept in mind that the results are not intended to be published as such; rather, they enter

into EU- and Euro area aggregates.

17.34. In principle, reports have to be sent to the ECB and EUROSTAT around the 10th day of the

second following month of the reporting period. Therefore, estimation is based on quarterly time series

which are updated according to revision standards as well as exogenous variables if available. After

quarterly figures have become available monthly data are reconciled with the quarterly results.

17.35. For calculating monthly figures, the original quarterly time series is first seasonally adjusted by

calculating the smoothing component, the seasonal component and the irregular components. Three

different methods of smoothing are employed: moving average, basic exponential smoothing and

exponential smoothing according to HOLT (Holt-Winters Forecasting Method). After the original time

series has thus been prepared, three different estimation models are employed: linear regression, quadratic

regression and cubical regression. A period of either12, 18 or 24 months is used for forecasting.

Therefore, 27 different modelling techniques are in principle available. For each item, monthly results are

estimated for 24 test periods according to the different models and the quality of the results is quantified

by comparing them with the actual figures by calculating relative absolute and relative quadratic

differences.

Figure 17.1Example of Austria’s monthly estimates distribution

2011 on the statistical reporting requirements of the European Central Bank in the field of external statistics

(ECB/2011/23).

280

17.36. For services exports, an estimation model employing exponential smoothing according to Holt-

Winters Forecasting Method (and quadratic regression over a period of 12 months has proven to be most

suitable) 309 . The regression also incorporates overnight stays of foreign guests in Austria as an

independent variable. Still, in-coming travel makes up for approximately one third of Austria’s services

exports. Therefore the development of overnight stays is an influencing variable of the development of

overall services exports.

17.37. For services imports, a model with basic exponential smoothing and linear regression over a

period of 18 months has proven to be most effective.

17.38. After global values are estimated, they have to be divided into Intra-EU-, Extra-EU-, Intra-Euro

area and Extra-Euro area exports and imports. For estimating the current month of trade in services, the

regional division according to the respective quarter in each of the two preceding years is considered. In

contrast to linear regression, this method is employed for those items for which strong seasonal

fluctuations are observed, which is the case for trade in services.

17.39. When quarterly results become available, monthly estimates are reconciled so that the three

months equal the corresponding quarter. The adjustment is based on the Cubic Splines method by which

the monthly data are first seasonally adjusted and smoothed and the actual quarterly results are adjusted

for smoothing components. Then a multiple regression model with the Cubic Spline function is applied,

which serves as the basis for the monthly results to be estimated again. As a third step, the difference

between the actual quarterly result and the quarterly result based on the Cubic Spline function is

determined and distributed between the monthly estimates. This process is again accomplished by

applying the regression coefficients of the Cubic Spline function. As a last step, the monthly estimates

have to be adjusted for the seasonal and smoothing components which have been determined at the

beginning.

E.2. Country experience: India: estimation of non-response in the survey on exports of

Information Technology and Information Technology Enabled Services

17.40. In the annual survey of exports of ‘Information Technology and Information Technology Enabled

Services’ conducted in India by the Reserve Bank, non-responses occur from a number of small as well as

medium size companies. The exports figures of the non-responding units are estimated using a well-

defined methodology described below:

i. Using the observed proportions of ‘nil’ and ‘closed’ units, first the number of companies

‘reporting no export of software products’, i.e., ‘nil exports’ and ‘closed’ out of the non-

responding companies are estimated. These are then removed from the universe of non-reporting

companies to obtain the number of operating non-reporting companies.

ii. Since no information is available on the business activities of the non-reporting

companies, these are classified into four groups namely, IT services, Software product

309 For description of this method see: http://www.ons.gov.uk/ons/search/index.html?newquery=Holt-

Winters+Forecasting+Method+

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development, BPO Services and Engineering services based on the observed proportions

corresponding to these four categories derived from the responding units.

iii. As most of the small companies do not have onsite operations and an overwhelming

number of non-responding units are small companies, only offsite software exports of these

companies are estimated. For this purpose the offsite exports reported by the respondent

companies are used.

iv. The distributions of offsite exports of the responding companies for the above mentioned

four groups are observed to be highly positively skewed and hence, instead of mean, the median

of the distributions are used for estimating software exports for each group. The estimated

software exports for ith group of non-respondent companies are computed using the formula:

companies.operatingingnonrespondofno.

companiesreportedofno.total

groupiincompaniesreportedofno.

group i of(export)Median



�



v. The total software exports of India is then derived adding the reported software exports of

responding companies and the estimated software export for non-respondent companies in each

of the four groups.

E.3. Country experience: UK - experience with modelling outward FATS

17.30. Since reference year 2009, the UK has been obligated to provide Eurostat data on the majority

shareholdings outside the EU held by UK Ultimate Controlling Institutions (UCIs). This regulation

requires the UK to produce Outward Foreign Affiliate Statistics (OFATS) on an annual basis reporting on

the economic activity, turnover, number of persons employed and country of residence of subsidiaries

where a UK UCI has a majority shareholding. In order to compile these statistics, the UK adopted a

model-based approach using data from survey returns in conjunction with auxiliary information from the

Euro Groups Register (EGR) and the National Business Register.

17.31. The UK OFATS survey collects data from 200 enterprise groups where the UCI is resident in the

UK. Data items include employment, turnover and the number of foreign affiliates. These variables are

consolidated by country and industry for each parent company. By matching this returned information

with corresponding company data held on the EGR and national business register, a model is developed.

This is then applied to the remainder of the un-sampled population.

17.32. The process involves estimating affiliate employment (logistic regression, multilevel model) and

calibration:

i. Logistic regression. An initial logistic regression is used due to the prevalence of zero

returns which affects the fit of the model. Sample returns are re-coded to a binary variable

to indicate if the employment is zero or non-zero. This model then calculates the probability

that the survey response is non-zero;

ii. Multilevel model. Having developed a model to estimate if a record is non-zero, a multilevel

model is then used to estimate a value for the employment of an affiliate. The explanatory

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variables that are used in our model have a hierarchical relationship and this model attempts

to account for that. For both models, the coefficients are estimated using the sample returns

and are then used to predict the estimates when applied to the un-sampled population;

iii. Calibration. The final stage involves calibrating estimates to employment of global groups

outside of the UK. Information on global employment is available from the EGR, whilst

information on the groups UK employment is available from the national business register.

Model estimates are then calibrated to the calculated employment outside of the UK.

17.44. The estimates produced for UK OFATS are currently branded as experimental statistics by ONS,

as they are new official statistics undergoing evaluation.

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Part IV Cross-cutting topics

Part IV consists of four chapters which provide guidance on metadata (Chapter 18), quality management

(Chapter 19), data and metadata dissemination (Chapter 20), and on the uses of information and

communication technology (Chapter 21).

Chapter 18 Metadata

18.1. Scope. This chapter describes concept and structure of metadata (or data that define and describe

other data and processes310) for use within the statistical framework for describing the international supply

of services as well as good metadata compilation practices. It underscores that metadata are relevant for

the correct understanding of the content, coverage and limitations of the data, and should guide users on

their correct interpretation. The Chapter consists of the following sections: a summary of good practices

(section A); an overview of the basic concepts and definitions and the role of SDMX (section B);

indicative list of metadata items (section C); metadata standards of international and regional

organizations (section D) and country practices (section E).

A. Summary of good practices

18.2. This Guide recognizes that metadata (i) play a crucial role in the statistical production process, as

they enable and facilitate sharing, querying, understanding and using data over the different stages of their

collection, compilation and dissemination, and at their various levels of aggregation and (ii) are

indispensable for assessment quality dimensions of data, as their availability and wide dissemination

constitute a precondition of the correct interpretation of publicly available statistics and their effective

use.

18.3. It is advised that compilers take into account that statistical metadata cover the following

items311: statistical description, unit of reference, reference period, institutional mandate, confidentiality,

release policy, frequency of dissemination, dissemination format, accessibility of documentation, quality

management, relevance, data accuracy and reliability, timeliness, comparability, coherence, cost and

response burden, data revision and statistical processing.

18.4. The use of standard terminology for metadata across the various statistical domains and use of the

SDMX information model is also advised, as this will facilitate further integration of statistics, the

standardized sharing of data and the international comparability of data.

18.5. It is further advised that compilers design their metadata systems in the most efficient way so that

metadata items can be conveniently retrieved from the relevant databases, be used in the generation of the

intermediate and final datasets or in production of other metadata, and be updated and synchronized. In

this context, compilers are encouraged to design and use a data warehousing system of data and metadata

by which the dissemination of data and metadata becomes integrated with the collection and processing

components of the statistical production process.

310 See ISO/IEC FDIS 11179-1 "Information technology - Metadata registries - Part1: Framework", March 2004.

https://www.iso.org/obp/ui/#iso:std:iso-iec:11179:-1:ed-2:v1:en

311 Guidelines on IES, paragraph 5.91.

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18.6. With regard to compiling metadata, compilers are encouraged to follow standardized metadata

concepts; make use of the metadata developed in related statistical domains and already being applied in

their national statistical system; define layers of metadata; establish metadata registries; incorporate

structural metadata items into the data processing as early as possible; establish clear links between data

and metadata; and compile reference metadata.

18.7. In the case of countries with less developed statistical systems it is a good practice to begin by

setting up an exhaustive, consistent and detailed repository (possibly in the form of a metadata registry)

with both structural and reference metadata, adopting as much as possible metadata concepts that are

standardized acrossall statistical domains, both nationally and internationally. This Guide strongly advises

that the next immediate priority should be granting equal, easy, extensive and timely access to metadata to

all user groups including general public.

18.8. The structural metadata items promoted by this Guide are those defined within the framework of

the Balance of Payments Data Structure Definition (DSD), defined by MSITS 2010 and this Guide for

FATS and for additional indicators on the international supply of services. Metadata items should cover

both monetary and non-monetary (quantitative) data items which compilation is encouraged by this

Guide.

18.9. The metadata standards of international organisations should be carefully considered by

compilers, both to improve their metadata collection and compilation, as well as to ensure better

compliance with their international and regional data and metadata reporting obligations.

18.10. It is good practice that any deviations from international standards and use of estimations and

modelling to compile certain data series are clearly documented in metadata.

B. Metadata: basic concepts and definitions, the role of SDMX

18.11. Definition of metadata. Metadata are data that defines and describes other data and processes.312

Thus, data become metadata when they are used to describe other data.313

18.12. Scope of statistical metadata. Statistical metadata, according to the UN Statistical Commission,

describe various elements of the statistical processes including collection, processing and production of

statistical data and indicate the data sources and tools that are instrumental in statistical production like

statistical standards and classifications, business registers and frames, statistical methods, procedures and

software. Section C provides an indicative list of structural and reference metadata items relevant in the

context of statistics on the international supply of services.

18.13. Institutional arrangements for metadata compilation. To reduce the burden associated with

projects on metadata for statistics compiled within the framework for describing the international supply

of services, it is a good practice for compilers to closely cooperate with the specific units within the

national statistical system responsible for ensuring that metadata is produced, that it adheres to a standard

format, and that it is properly maintained and updated.

312 See ISO/IEC FDIS 11179-1 "Information technology - Metadata registries - Part1: Framework", March 2004.

https://www.iso.org/obp/ui/#iso:std:iso-iec:11179:-1:ed-2:v1:en

313 See SDMX CONTENT-ORIENTED GUIDELINES, Annex4 (2009 ) for details.

285

18.14. The UN Statistical Commission recommends the use of standard terminology for metadata across

the various statistical domains as this will facilitate the international comparison of data314; increasingly

encourages countries to treat metadata compilation and, subsequently, their dissemination as an integral

part of the statistical process in any statistical domain and promotes the standardization of the compilation

and dissemination of metadata315.

18.15. The way forward: metadata warehousing. Statistical agencies have traditionally developed

separate databases for each statistical output. While this practice may simplify development processes, it

can be a hindrance to the successful integration of statistics, especially if there is no effort to standardize

variable definitions, labels and formats. Use of a centralized data warehousing system for data and

metadata can make creating, maintaining and accessing metadata more efficient and can contribute to the

integration of economic statistics. This process is facilitated as better information and communication

technology (ICT) tools become available316.

18.16. With well-designed data warehouses, the dissemination of data and metadata becomes integrated

with the collection and processing components of the statistical production process. A data warehouse

should establish a simple and efficient process for accessing data to provide:

i. Comprehensive metadata to facilitate understanding and analysis;

ii. Consistent and coherent long-term time series;

iii. Reliable information about the availability of data;

iv. Information about the availability of updated versions of published series;

v. Contact details for the people who can provide more information about a statistical

output.

18.17. The implementation of a more comprehensive metadata system is an important prerequisite for

developing an integrated questionnaire in the statistical system. The metadata will eventually provide the

necessary coherence between the various estimates and data collection tools leading to the production of

the statistical information. For sophisticated users, metadata are not only about concepts related to units,

variables and classifications; rather, metadata are also about quality.

B.1. The role of SDMX

18.18. The Statistical Data and Metadata Exchange (SDMX) project is developed by an international

consortium317 for use in data and metadata management. The SDMX information model is applicable for

much of the information stored and processed within statistical organizations and its use by such

organizations is promoted by the UN Guidelines on integrated economic statistics.318

314 Guidelines on Integrated Economic Statistics (UN), page 40.

315 The important role in this respect was played by UNECE publication "Terminology on Statistical Metadata",

Conference of European Statisticians Statistical Standards and Studies, No. 53, Geneva, 2000.

316 See chapter 21 for more information on the use of ICT in the statistical process.

317 The BIS Guidelines, paragraph 5.123.

318 Guidelines, paragraph 5.123.

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18.19. The use of the standardized information management model is very important for compilers of

statistics on the international supply of services as various agencies participate in the data collection and

compilation at different stages of the statistical production process and the establishment of a standardized

data sharing between them results in additional efficiency gains.

18.20. The development of global Data Structure Definitions (DSDs), defining the structure to data to be

exchanged (seesection C), by the SDMX consortium and international organizations enable the broader

adoption of the SDMX standard for data collection, exchange, and dissemination.

C. Indicative lists of metadata items

18.21. This section contains the indicative lists of structural and reference metadata items which

countries are encouraged to compile as part of the production of their statistics within the framework for

describing the international supply of services. (The issues specifically related to the dissemination of

metadata are discussed in Chapter 20.) The list of structural metadata provided below stems from the

Balance of Payments DSD. The reference metadata are based on the recommendations contained in

MSITS 2010.

18.22. In the context of the SDMX, structural metadata refers to identifiers and descriptors of data, such

as concepts and attributes of variables, which are essential for discovering, organizing, retrieving and

processing statistical datasets. They can be thought of as the ‘labels’ that need to be associated to each

data item in order for it to have a meaning at all. Reference metadata are of a more general nature and

may refer to specific statistical data, to entire data collections or even to the institution that provides the

data.

Box 18.1Statistical Data and Metadata Exchange (SDMX)

1. SDMX. Statistical Data and Metadata Exchange (SDMX) is an international co-operation initiative aimed

at developing standards and the employment of more efficient processes for the exchange and sharing of

statistical data and metadata among international organisations and their member countries.

2. The rationale of SDMX is standardisation for statistical data and metadata access and exchange. With the

ever increasing ease of use of the Internet, the electronic exchange and sharing of data is becoming easier,

more frequent and important. This heightens the need for the development of a set of common standards

for exchange and sharing of statistical data and metadata, and for making processes more efficient. As

statistical data exchange takes place continuously, the gains to be realized from adopting common

standards are considerable both for data providers and users.

3. The objective is to establish a set of commonly recognised standards, adhered to by all players, making it

possible not only to have easy access to statistical data, wherever these data may be, but also access to

metadata that makes the statistics more meaningful and usable. The standards are envisaged to help

national organisations to fulfill their responsibilities towards users and partners, including international

organisations, more efficiently. Among other things they are seen as facilitating use of Internet-accessible

databases in order to be able to retrieve data as soon as they are released. Several quality dimensions can

also be improved through the use of SDMX standards, such as timeliness, accessibility, interpretability,

coherence, as well as cost-efficiency.

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C.1. Structural metadata - The Balance of Payments Data Structure Definition (DSD)

18.23. The structural metadata contains the list of concepts and attributes of variables that are necessary

to codify the reporting requirements of four international agencies319 for data collection exercises of

external sector statistics, including international trade in services320. The BOP DSD structure is based on

the methodology defined in the IMF Balance of Payments and International Investment Position Manual,

sixth edition (BPM6), the Manual on Statistics of International Trade in Services (MSITS 2010), and the

OECD Benchmark definition of foreign direct investment-4th edition. In order to code trade in services

data, the extended Balance of Payments Services classification, including the complementary groupings,

is included in the “international account item” dimension of the DSD.

18.24. The BOP-DSD, presented on the SDMX website321, includes 16 concepts and 13 attributes (see

box 18.2). Concepts are used to uniquely identify a time series and, when joined together, they provide

the series code or “time series keys,” which are the unique identifiers for a time series. When defining a

time series key using SDMX, a valid code must be assigned to each concept of the DSD. Attributes are

used to further describe the data.

18.25. When coding detailed trade in services by partner country statistics, a number of the BOP-DSD

concepts are fixed; e.g., the reference and counterpart sectors defined as the total economy (S1) when the

data refer to total trade between both related and unrelated parties322. However trade in services between

related parties can also be coded by using in the counterpart sector dimension the code S1A “affiliates”

whereas S1B should be used for unaffiliated parties.

18.26. Other concepts of the DSD are not fixed; e.g., the case of the “counterpart area” which is used to

identify the territory of the non-resident entity of individual time series. The country code list in the

counterpart area follows the ISO classification and is a "cross-domain" code list,. The codes used for

various regional groupings were harmonized across international agencies that use the BOP-DSD,

wherever possible.

319 The four agencies are the European Central Bank, Eurostat, IMF, and the OECD.

320 At the time of writing, there is not yet a DSD available neither for FATS neither for non monetary indicators of

modes of supply. A FATS DSD would include specific dimensions such as FATS characteristics: e.g., number of

enterprises, number of persons employed, etc.; Resident economic activity vs. non-resident economic activity; Items

specific to non-monetary indicators on modes of services supply would include Direction of trips: Inbound,

outbound; Country of origin or destination;

321 http://sdmx.org/?page_id=1747

322 In order to eliminate the possibility of having multiple ways of coding the EBOPS 2010 complementary grouping

“total services transactions between related entities”, this item is not coded in the international accounts dimension

of the DSD, but is coded in the Annual International Trade in Services dataflow as follows (example on the credit

side): A.N.#.%.S1.S1A.T.C.S._Z._Z._Z.$._T._X.N.

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Box 18.2 List of concepts and attributes in the BOP-DSD

The second column provides information on the coding that should be used in the context of an annual trade in

service data submission:

1.Frequency The code for the annual periodicity is ‘A”.

2. Adjustment indicator The code for no adjustment is “N”

3. Reference country or area For a reference country, a ISO 3166 code should be used

4. Counterpart Area For the partner country, a ISO 3166 code should be used

5. Reference sector The code for total economy which is used for ITS in all cases is “S1”

6. Counterpart sector Code “S1” for total economy, “S1A” for related enterprises, “S1B” for

unrelated enterprises. ref para. 18.38.

7. Flows and stocks indicators The code for Transactions which is used in all cases for TIS is “T”

8. Accounting entries Credit “C”, Debit “D”or Net “N”

9. International accounts item “S” for total services, “SC” for transportation, etc.

10. Functional category Identifies functional categories applicable of financial accounts. It is not

applicable for trade in services. Code: “Z”

11. Instrument and assets

classification

Identifies the type of financial instrument which is reported in the external

sector time series. It is not applicable for trade in services. Code: “_Z”

12. Maturity Identifies the types of maturity of the financial instrument of the external

sector statistics time series: It is not applicable for trade in services. Code:

“_Z”

13. Unit of measure Refers to a currency unit.

14. Currency of denomination Identifies the currency of denomination of the financial instrument. For

ITS, a constant “_T” is applied.

15. Valuation Identifies the method of valuation for selected transactions and positions

data. For ITS, this is coded “unspecified “_X”.

16. Compilation methodology Distinguishes between time series which are compiled according to the

methodology applied for national statistics by opposition to similar time

series which follow the specific methodology applied for economic or

currency union statistics. For ITS, this is coded as national “N”.

The BOP-DSD also uses the following 13 attributes:

I. Time format

II. Observation status

III. Confidentiality Status

IV. Pre-break value

V. Comments to the observation value

VI. Detailed description (title complement)

VII. Short title

VIII. Unit multiplier

IX. Decimals

X. Time period collection

XI. Reference period detail

XII. Compiling organisation

XIII. Underlying compilation

C.2 Example of a trade in services time series key coded according to the BOP DSD

18.27. The times series key [A.N.US.FR.S1.S1.T.C.SC._Z._Z._Z.USD._T._X.N] provides an example

of codification for a trade in services series. This times series key stands for a series in annual Frequency

“A”; with no adjustment indicator “N”; the Reference country is the United States “US”, the counterpart

area is France “FR”; the reference sector is the total economy “S1”; the counterpart sector is the total

economy “S1”; the Flows and stocks indicator dimension indicates a Transaction “T”; the accounting

entry dimension indicates that we are looking at a credit entry “C”; the international accounts item

specifies that the series relate to transport services “SC”; the functional category is not applicable “Z”; the

289

instrument and assets classification is not applicable “Z”; the maturity is not applicable “Z”; The Unit of

measure is US dollar “USD”; the currency of denomination is set to “All currencies of denomination” _T;

the Valuation is unspecified _X; and the compilation methodology is National “N”.

18.28. As noted above, attributes are used to qualify observations further; e.g., they provide information

on the “confidentiality” status or the “compiling organisation.” Attributes do not contribute to the

identification of a time series, as this is already done by using the dimensions.

C.3. Reference metadata

18.29. The following items are typically part of the reference metadata associated with statistics on the

international supply of services:

i. Legal framework and institutional arrangements (e.g., references to relevant laws and

regulations, role of all institutions involved in compilation and description of coordination of

dissemination of statistics and data-sharing agreements among these institutions, either distinctly

or as part of broader statistics (e.g., balance of payments and other external sectors statistics));

ii. Underlying concepts and definitions (e.g., definition of residence; non-residence; residence

of units, as applicable; definition of statistical value; scope of statistics on the international supply

of services and their relationship to national accounts and international merchandise trade

statistics; distinction from other international transactions; classification under relevant services

item according to BPM6/EBOPS 2010 and any deviations from international standards, if any;

ultimate controlling institutional unit (UCI) concept; definition of a foreign affiliate; definition of

direct or indirect control; definitions of statistical and reporting units, etc.);

iii. Description of core data sources (e.g., ITRS, enterprise/establishment surveys, surveys of

households or persons, administrative records, statistical models, partner country data, or

combination of sources), including specific notes on services categories or activities for which

particular data collection arrangements or combination of sources are employed and comments on

limitations of source data in terms of coverage, frequency, level of detail, reliability, availability,

etc.;

iv. Description of data collection, data compilation methods and data-processing procedures,

including frequency of data collection; description of specific procedures used for data collection,

validation, editing, aggregation, etc.; adjustments made to source data, such as imputations,

misclassification, adjustments for non-response or under-coverage; adjustments to standard data

processing procedures, such as coding, tabulation errors, etc.; indications of departures from

international standards, if any;

v. Estimation methods, such as descriptions of methods for estimating non-reported

transactions or transactions falling below customs and/or ITRS thresholds (e.g., CIF-FOB

adjustments for transportation item);

vi. Dissemination policy, including release and revision schedules; indication of the

presentational format of data; level of disaggregation, eventual commentaries accompanying the

data; etc.;

vii. Additional explanations and footnotes concerning the data as required (e.g., explanatory

notes on revisions, breaks in series, definitions of confidentiality flags, etc.);

290

viii. Quality reporting, including publication of regular quality reports that use the quality

dimensions in the Template for a Generic National Quality Assurance Framework (NQAF)323 and

that include definitions of such quality dimensions (e.g., timeliness, accessibility, comparability,

etc.);

ix. Confidentiality, including descriptions of confidentiality rules and indications of how much

data is affected by such rules.324

18.30. Compilation of metadata. Metadata are compiled at all stages of the statistics production process.

This Guide encourages countries to use the following good practices, as applicable, in metadata

compilation:

i. Use of standardized metadata concepts. In the same way as any data item, metadata items

also have to be clearly defined. Even though each statistical domain, including statistics of

international trade in services on the international supply of services, has its specific metadata

items, it is a good practice to use applicable standardized concepts that are relevant across

statistical domains (e.g., by adopting cross-domain concepts from the SDMX framework or

OECD Glossary of Statistical Terms). The aim should be to promote harmonization of statistical

information and their related high-level metadata across various institutions and statistical

domains, even if some specific metadata concepts are not applicable or are organized differently

in different domains or institutions;

ii. While developing metadata for statistics compiled within the framework for describing

the international supply of services, make use of the metadata developed in the related statistical

domains and used in your country. Statistics of international trade in services is a relatively new

statistical domain in many countries. It is very likely that the metadata policy is already in place

in related statistical domains. Compilers are advised that such metadata is carefully reviewed and

utilized;

iii. Define layers of metadata. It is a good practice to compile metadata in layers of

incremental detail and provide clear links between high-level and specific metadata concepts.

Such a layered structure of metadata will allow data users and analysts to access necessary

metadata items and to minimize the risk of misinterpretation of data content while, for example,

compiling data from various data sources, as well as to ensure clear presentation of metadata to

diverse groups of users.

iv. Establish metadata registries. A metadata registry is a central repository (usually a

database itself) with information that allows for linking of the detailed definitions (semantics)

with the codes (representations) of the metadata items used to describe a particular statistical

dataset. It is a good practice that compilers put special emphasis on the development,

maintenance and dissemination of metadata registries in order to improve the harmonization,

standardization, use, re-use and exchange of their metadata.325

323 https://unstats.un.org/unsd/dnss/QualityNQAF/nqaf.aspx. See chapter 19 for more information on NQAF and

quality reporting and management in general.

324 See chapter 20 for more information on statistical confidentiality.

325 The Euro SDMX Registry includes harmonized structural metadata, the DSDs designed for the statistical

domains, metadata structure definitions; e.g., ESMS and other related information.

291

v. Confidentiality and access to metadata during the compilation process. As metadata for

statistics on the international supply of services might be compiled by various units of the same

agency or by units located in different organizations, there might be cases when metadata

describes data subject to confidentiality rules. It is a good practice, in this context, that

confidentiality rules are set up is a such way that they will allow compilers to obtain non-

confidential data aggregates with the same metadata content;

vi. Incorporate structural metadata items into the data processing as early as possible (e.g.,

as parts of the records structure). This step will facilitate data processing including the

identification of viable options for data aggregation and subsequent presentation. It is advisable

that structural metadata are made an integral part of the database containing statistics compiled

within the framework for describing the international supply of services in such a way that it can

be extracted together with any data item and used in data processing to obtain meaningful

combined data sets.

vii. Establish clear links between data and metadata. As metadata are generated and

processed during every step of the data compilation process, there is a strong requirement to

ensure that the appropriate metadata retain their links with data. In this connection it is a good

practice to implement metadata-driven management along the various stages of the statistical

production process.326

viii. Compilation of reference metadata. Reference metadata can be presented as a detailed

explanatory note describing the scope, coverage, and quality of a dataset and can be made

available electronically alongside the database or in special publications.

18.31. Priorities in metadata management. Although ideally the management of metadata would take

into account all of the recommendations highlighted thus far, countries with less developed systems for

statistics on the international supply of services should begin by setting up an exhaustive, consistent and

detailed repository (possibly in the form of a metadata registry) with both structural and reference

metadata, adopting as much as possible metadata concepts that are standardized cross-domain, nationally

and internationally. The next immediate priority should be granting easy, extensive and timely access to

metadata to the general public. In subsequent phases the system could be improved by gradually

incorporating more advanced features; e.g., implementing a layered presentation of metadata, actively

linking data and metadata, etc.

D. Metadata standards of international and regional organizations

18.32. International availability of appropriate metadata is of great interest to all the organizations

having global or regional responsibilities. These organizations have made efforts to standardize their

requirements on scope and structure of the data and metadata which they would like to obtain from

countries. Those requirements should be carefully studied by countries, both to improve their metadata

collection and compilation, as well as to ensure better compliance with their international and regional

data and metadata reporting obligations.

326 There are several information model specifications that can contribute to achieve this goal (most notably SDMX

and DDI ), which are designed to perform different functions but can be used together in the same system, or

complement each other in the compilation and exchange of data and metadata.

292

D.1. SDDS/GDDS metadata of the IMF

18.33. The Special Data Dissemination Standard (SDDS) and General Data Dissemination System

(GDDS) are part of the IMF’s data standards initiative aimed at enhancing member countries’ data

transparency and promoting development of sound statistical systems. A dedicated electronic bulletin

board on the IMF website327 posts information that SDDS countries provide to the IMF on their

dissemination practices and offers direct links to the economic and financial data that countries

disseminate under the SDDS and information that GDDS countries make available to the IMF on their

statistical practices

18.34. For both standards, metadata are organized by country and by topic. The SDDS metadata are

available in two presentations: the current SDDS format and the DQAF format, while the GDDS uses the

DQAF presentational format. Revisions to metadata are deemed to be made regularly and are available on

the website. Metadata aspects related to statistics compiled within the framework for describing the

international supply of services are embedded in the various quality dimensions of the balance of

payments framework.

D.2. The SDMX content-oriented guidelines on metadata by Eurostat

18.35. Based on the SDMX information, model data structure definitions (DSDs) can be created for data

on the international supply of services (including FATS).328 The SDMX content-oriented guidelines have

been used to define reference metadata for the European Statistical System (ESS).329 Table 18.1 lists the

main components of the ESS reference metadata. This Guide advises compilers of statistics on the

international supply of services of other regions to take the EU recommendations into account, as

applicable, while setting up the conceptual structure of their own reference metadata for such statistics.

D.3. Ensuring consistency of metadata and data reported to international organisations

18.36. Reporting of trade in services data and metadata to all international organisations should be

consistent. This can be achieved by ensuring that the total services and main items are transmitted with

identical values to all international organisations, even if a "not allocated" category is used in a compiling

country.

18.37. As mentioned in chapter 17 (section E), compilers should make every effort to allocate all

services transactions to the relevant individual EBOPS services categories and to appropriate trading

partners and should avoid, as much as possible, using catch-all services categories (e.g., "other business

services", "other business services n.i.e.", “services not allocated330

,” “undefined”) or catch-all partner

327 http://dsbb.imf.org.

328 Available at: http://epp.eurostat.ec.europa.eu/portal/page/portal/statistics/metadata/metadata_structure; inward

FATS metadata are available at: http://epp.eurostat.ec.europa.eu/cache/ITY_SDDS/en/fats_esms.htm; while outward

FATS metadata are presented at: http://epp.eurostat.ec.europa.eu/cache/ITY_SDDS/EN/fats_out_esms.htm

329 See also the Commission Recommendation 2009/498/EC of 23 June 2009 on reference metadata for the

European Statistical System (OJ L 168,30.6.2009, page 50).

330 The Eurostat BoP Vademecum (2012 edition), defines “services not allocated” as follows: “This item was created

due to the fact that some Member States are unable to allocate certain amounts to specific services. This results in a

discrepancy between the sum of individual services and the total services item. If a Member State encounters this

problem, they should record such residual item under item ‘SN’ which corresponds to the code for ‘Services not

allocated’. Only services whose origin cannot be determined should be included under this label.”

(http://forum.europa.eu.int/Public/irc/dsis/bop/library).

293

Table 18.1 Main components of the European Statistical System reference metadata

Concept Name Descriptions

1 Contact

Individual or organisational contact points for the data or

metadata, including information on how to reach the contact

points.

2 Metadata update The date on which the metadata element was inserted or modified

in the database.

3 Statistical presentation Data description, classifications used, concepts and definitions

etc.

4 Unit of measure The unit in which the data values are measured.

5 Reference period The period of time or point in time to which the measured

observation is intended to refer.

6 Institutional mandate

Set of rules or other formal set of instructions assigning

responsibility as well as the authority to an organisation for the

collection, processing, and dissemination of statistics.

7 Confidentiality

A property of data indicating the extent to which their

unauthorised disclosure could be prejudicial or harmful to the

interest of the source or other relevant parties.

8 Release policy Rules for disseminating statistical data to interested parties.

9 Frequency of dissemination The time interval at which the statistics are disseminated over a

given time period.

10 Dissemination format Media by which statistical data and metadata are disseminated.

11 Accessibility of

documentation

12 Quality management

Systems and frameworks in place within an organisation to

manage the quality of statistical products and processes; quality

assurance and quality assessment.

13 Relevance The degree to which statistical information meet current and

potential needs of the users.

14 Accuracy and reliability

Accuracy: closeness of computations or estimates to the exact or

true values that the statistics were intended to measure.

Reliability: closeness of the initial estimated value to the

subsequent estimated value.

15 Timeliness and punctuality

16 Comparability

Measurement of the impact of differences in applied statistical

concepts, measurement tools and procedures where statistics are

compared between geographical areas or over time.

17 Coherence Adequacy of statistics to be reliably combined in different ways

and for various uses.

18 Cost and burden Cost associated with the collection and production of a statistical

product and burden on respondents.

19 Data revision Any change in a value of a statistic released to th e public.

20 Statistical processing Source data, frequency of data collection, data validation, data

compilation and adjustments.

21 Comment Supplementary descriptive text which can be attached to data or

metadata.

294

categories. To conduct such allocations, compilers could use information from partner economies; if this

information is not available or reliable, then it is advised to use the most appropriate modelling and

statistical techniques, based on the information available to compilers. (See chapter 17 for more

information on estimation and modelling of missing data.) Such practices should be clearly documented

in the metadata.

18.38. If there is no acceptable way to allocate all service, compilers should use a category to be labelled

"not allocated," which will be shown at the same level as the main services items (i.e., not included within

any of the services items) or main partners.

331 The corresponding values should only be included at the

total services level if such a category corresponds to the classification shown, or at the total World level if

it relates to the partner breakdown shown.

18.39. A "services not allocated" item is included in the BOP-DSD (because it is part of the reporting

requirements of ECB and Eurostat for the quarterly Balance of Payments (QBOP) and of the requirements

by Eurostat, OECD and UNSD for annual international trade in services332 data), whereas such a category

is not included in the QBOP data reporting requirement of the IMF. Consequently, for countries that use a

category "services not allocated," the individual services items will not add up to the total services in their

report to IMF. In this case, the compiler should indicate in the metadata provided to the agencies that that

total services do not correspond to the sum of main services items due to the presence of some

transactions that are impossible to allocate across services. Table 18.2 presents an example of data

reporting in such a case.

331 It is important to note that the role of EBOPS 2010 items labelled as "other" or "not included elsewhere (n.i.e.)"

is not to include transactions for which the compiler cannot determine to which EBOPS item they belong to, but

rather corresponds to a residual list of services which are not identified as belonging to specific EBOPS items. In

other words these "other" or "n.i.e." items are actually defined, and correspond to a specific list of CPC Version 2

products (see EBOPS 2010-CPC Version 2 correspondence table available at

http://unstats.un.org/unsd/tradeserv/TFSITS/msits2010/ebops2cpc.htm).

332 By detailed partner countries for the former and by detailed EBOPS 2010 for the latter.

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Table 18.2 Example of reporting trade in services data to IOs for the cases in which “services not

allocated” is (and is not) part of the data collection

Credit side Submission of data to

international organizations

following EBOPS 2010

(“services not allocated” is part

of data collection)

Submission of data to

international organizations

following BPM6 (“services not

allocated” is not part of data

collection)

Total Services 130 130

Manufacturing services on physical inputs

owned by others

10 10

Maintenance and repair services n.i.e. 10 10

Transport 10 10

Travel 10 10

Construction 10 10

Insurance and pension services 10 10

Financial services 10 10

Charges for the use of intellectual property

n.i.e

10 10

Telecommunications, computer, and

information services

10 10

Other business services 10 10

Personal, cultural, and rec.services 10 10

Government goods and services n.i.e. 10 10

Services not allocated 10 (Metadata need to explain the

difference between total

services and sum of sub-

components)

E. Country experiences

E.1. Italy

18.40. The Bank of Italy (BoI) adopts an integrated approach to the broad range of its statistical

programmes. BoI’s approach to management of metadata is based on two pillars: (1) an information

model, capable of fully describing the data, the processing steps and the elaboration algorithms, and (2) a

software platform, which supports the entire statistical production chain.

18.41. The BoI has designed a proprietary model called “Matrix,”333 which is based on mathematical and

statistical theory, to support all phases of statistics production process (data definition, collection,

compilation and dissemination) and all the data of interest (micro/aggregated, registers, questionnaires,

etc.). A fundamental infrastructural component of BoI’s system, representing a core part of the actual

implementation of the Matrix model, is the central statistical dictionary, a repository describing the whole

content of the statistical data warehouse, in terms of structural metadata (e.g. concepts, classifications,

data structures, processing rules) and reference metadata (e.g. methodological notes).

18.42. The Matrix model was also designed to take into account major international standards, so that,

for example, the Matrix data and metadata can be easily transformed into SDMX and other metadata

formats. Another essential feature of the Matrix model is that it enables a metadata-driven system by

333 Vincenzo Del Vecchio, Fabio Di Giovanni, Stefano Pambianco, The Matrix Model – Unified model for statistical

data representation and processing, Banca d’Italia, 2007.

(http://www.bancaditalia.it/statistiche/quadro_norma_metodo/modell_SIS/matrixmod.pdf).

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utilizing a recently introduced software platform for statistical processing called INFOSTAT. 334

Consistent with the underlying holistic approach, INFOSTAT supports the statistical production chain

end-to-end, by providing the following services:

i. Identity and access management (e.g., user registration, authentication, user profiling);

ii. Metadata definition;

iii. On-line data-entry and data upload;

iv. Support for a secure data transmission, storing and versioning;

v. Validations and handling of reporters’ feedbacks;

vi. Calculations;

vii. Data and metadata import, export and exchange;

viii. Event subscription and notification;

ix. User environment for metadata prototyping and data production;

x. Reporting and publishing;

xi. Search of information;

xii. Inquiry and download of data and metadata;

xiii. End-to-end monitoring of business processes.

18.43. An important advantage of this approach is that most of the changes in the statistical processes

(e.g., the establishment of a new survey, the production of new sets of statistics, the release of a new

publication, etc.) can be timely implemented by metadata administrators, avoiding the need for complex

software maintenance. In fact, due to an advanced user interface, metadata administration is rather user-

friendly, allowing non-IT users to accomplish it directly, without the intervention of technical staff.

18.44. The system can handle both qualitative and quantitative indicators, micro and macro data,

questionnaires, registers and unstructured data (documents), thus allowing broad integration. INFOSTAT

also adopts the Matrix model language, called EXL (expression language), to define expressions used in

data validation and in data processing phases for calculations. EXL expressions are intuitive as they are

quite similar to spreadsheet formulas, and the language is conceived to be extensible, in order to support

the great variety and variability of statistical requirements.

334 Fabio Di Giovanni, Daniele Piazza, Processing and managing statistical data: a National Central Bank

experience, paper presented at the “International Statistical Conference” held in Prague on 14-15 September 2009

(http://www.czso.cz/conference2009/proceedings/data/process/piazza_paper.pdf).

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Chapter 19 Quality management and quality reporting

19.1. Scope. This chapter provides a summary of good practices in quality management and quality

reporting (section A); an overview of basic concepts and definitions used in quality management (section

B); a description of quality assurance frameworks (section C); good practices in quality measurement and

reporting (section D) and country practices (section E). The quality management issues pertinent to

managing statistical system and institutional environment were covered in Chapters 1-3. Dissemination of

information on quality management and statistical output is further dealt with in Chapter 20.

A. Summary of good practices

19.2. Proper quality management and quality reporting on data compiled in such wide domain as

statistics on the international supply of services is especially important. Therefore, it is a good practice

that compilers responsible for statistics on services transactions between residents and non-residents,

FATS and additional indicators on the international supply of services maintain high, clearly defined and

measurable quality standards and regularly disseminate information on their implementation in order to

gain the trust and confidence of their users and data suppliers and to aid users in better understanding and

appropriately analyzing the disseminated statistics. This will ultimately raise the visibility and reputation

of the compiling agencies. The implementation of quality standards should include the application of a

formalised system that documents the structure, responsibilities and procedures put in place for satisfying

users, while continuing to improve the data production and dissemination process.

19.3. Compilers are advised to develop their own quality assessment frameworks on the basis of the

Generic National Quality Assurance Framework (NQAF) endorsed by the UN Statistical Commission and

the quality assessment frameworks developed by international, supranational and regional organizations.

They should consider that the template for a NQAF is intended to be voluntary, and not meant to be

prescriptive or viewed as a replacement for other quality frameworks already adopted or in use by a

country’s national statistical office. In this context, examples of common quality dimensions or

components include relevance; accuracy; reliability; timeliness; punctuality; accessibility; clarity;

interpretability; coherence; comparability; credibility; integrity; methodological soundness; and

serviceability.

19.4. To ensure the quality of statistics on the international supply of services, compilers are advised to

use sound statistical methodologies based on the internationally agreed recommendations contained in

MSITS 2010, while proactively managing the respondent burden. It is a good practice that countries

develop a standard for quality reports that include quantitative and qualitative indicators covering the full

range of statistical processes (i.e., data collection, processing and dissemination) and their outputs based

on the quality dimensions listed in this chapter and that are issued regularly (e.g., at least every five years

or when significant methodological changes occur). For monitoring the quality of the processes and

effectiveness of quality-improvement actions, reviews should be conducted more frequently.

19.5. Compilers are encouraged to facilitate continuous quality improvement. In particular, when

adopting new methods, compilers should assess the impact on the statistical series of adopting the new

methodology and subjecting the proposed methodology to peer review.

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B. Quality management: an overview of basic concepts

19.6. Managing quality of official statistics is vitally important to compilers’ success in maintaining

the trust and confidence of their users and data reporters. Regular dissemination of the information on the

implementation of high and clearly defined quality standards will also aid users in better understanding

and appropriately analyzing the statistics and ultimately raise the visibility and reputation of the

compiling agency.

19.7. While there are several general definitions of quality, one of the most commonly used and

succinct is fitness for use or fitness for purpose.335

19.8. The development of the Template for a Generic National Quality Assurance Framework (NQAF)

and the Guidelines to accompany the Template was undertaken by the Expert Group on NQAF in

response to a request by the United Nations Statistical Commission at its forty-first session in 2010. The

NQAF Template is intended to be used as a tool to provide the general structure within which countries

that choose to do so can formulate and operationalise national quality frameworks of their own or further

enhance existing ones. Other international organizations have also developed data quality systems.

Examples include the IMF’s Data Quality Assessment Framework (DQAF),336 which is used to assess the

quality of countries’ macroeconomic statistics, and as a standard presentation of metadata within the

GDDS and SDDS standards. Eurostat has developed its Quality assurance Framework (see box 19.1)

which contains a total of eight quality criteria for which reporting is defined in a Handbook on Quality

reports,337 while the OECD’s Quality Framework for Statistical Activities338 explicitly focuses the quality

of the data used, produced and disseminated by the OECD itself.

335 Statistical agencies have arrived at a consensus that the concept of quality of statistical information is multi-

dimensional and that there is no one single measure of data quality. Several statistical organisations have developed

lists of quality dimensions, which, for international organisations, are being harmonised under the leadership of the

Committee for the Coordination of Statistical Activities (CCSA). Description of the CCSA activities in this respect

is available at: http://unstats.un.org/unsd/accsub-public/data-quality.htm.

336

http://dsbb.imf.org/pages/dqrs/DQAF.aspx

337

http://epp.eurostat.ec.europa.eu/portal/page/portal/ver-1/quality/documents/EHQR_FINAL.pdf .

338 http://www.oecd.org/std/qualityframeworkforoecdstatisticalactivities.htm.

299

Box 19.1 Quality assurance in the European Statistical System (ESS)

1. In the European Statistical System (ESS) quality of statistics is managed in the framework of the European

Statistics Code of Practice which sets the standards for developing, producing and disseminating European

statistics.

2. In accordance with the 15 principles of the European Statistics (ES) Code of Practice and the provisions of

Regulation (EC) No 223/2009 on European statistics, quality is approached along 3 lines:

a. quality or characteristics of the institutional environment (6 principles):

1) Professional independence

2) Mandate for data collection

3) Adequacy of resources

4) Commitment to quality

5) Statistical confidentiality

6) Impartiality and objectivity

b. quality of the statistical processes (4 principles):

7) Sound methodology

8) Appropriate statistical procedures

9) Non-excessive burden on respondents

10) Cost effectiveness

c. quality of the statistical output (5 principles):

11) Relevance

12) Accuracy and reliability

13) Timeliness and punctuality

14) Coherence and comparability

15) Accessibility and clarity

Each of the 15 principles of the ES Code of Practice (1st level of quality assurance) contains specific

indicators which show how compliance with the principle can be demonstrated (2nd level of quality

assurance). Compliance with the ES Code of Practice is regularly monitored through the ESS-wide

exercise of peer reviews which start with a national self-assessment questionnaire – improvement actions

identified in the peer review exercise are then monitored and reported upon on an annual basis.

3. As a 3rd level of quality assurance, the ESS Quality Assurance Framework (QAF) has been developed in

2011-2012. Similarly to other existing quality assurance frameworks like UNSD's NQAF, the ESS QAF

provides methods and tools for implementation at institutional and process level for each of the indicators

of the ES Code of Practice as well as links to relevant reference documentation. Therefore, it provides

clear guidance to compliance assessors.

19.9. To ensure conformity of the use and interpretation of the meaning of quality dimensions by

compilers of all data sets within the statistical framework statistics recommended by MSITS 2010 for

300

measuring the international supply of services, all definitions in this chapter are taken from the NQAF

Glossary, which was endorsed by the UN Statistical Commission as part of the NQAF Guidelines.339

19.10. NQAF lists the following examples of common quality dimensions or components: relevance;

accuracy; reliability; timeliness; punctuality; accessibility; clarity, interpretability; coherence;

comparability; credibility; integrity; methodological soundness; and serviceability. The dimensions of

quality are overlapping and interrelated and, therefore, the adequate management of each of them is

essential if information is to be fit for use. SDMX defines eleven quality dimensions: relevance, accuracy,

timeliness, punctuality, accessibility, clarity / interpretability, comparability, coherence, integrity,

credibility, and methodological soundness.340

19.11. First of all, compiled statistics should be relevant, meaning that they should meet current and

potential users' needs. The compiling agency's challenge is to weight and balance the conflicting needs of

current and potential users to produce statistics that satisfy the most important needs within given

resource constraints. For a breakdown by mode of supply, such statistics should be produced for services

items that are important for the compiling economy and should preferably be developed in cooperation

with the users of such data (such as the ministries of trade, the economy or foreign affairs).

The relevant services could be identified through direct dialogue with the major users or, for the case of

data broken down by mode of supply, by examining the sector’s relative share of total exports/imports of

services.

19.12. Accuracy, or the closeness of computations or estimates to the true values that the statistics were

intended to measure, should also be ensured by compilers. It is usually characterized in terms of error in

statistical estimates and is often decomposed into bias (systematic error) and variance (random error)

components. Assessment of accuracy can either contain numerical measures of accuracy or qualitative

assessment indicators. It may also be described in terms of the major sources of error that potentially

cause inaccuracy (e.g., coverage, sampling, non-response, response error).

19.13. Statistics compiled within the framework for describing the international supply of services

should also adhere to standards of timeliness, measured as the length of time between data availability and

the event or phenomenon they describe. Timeliness is a crucial element of data quality, as it increases the

statistical information’s relevance and its ability to be used effectively by policy makers. For statistics on

trade in services, the data should preferably be produced at least on an annual basis. It is a good practice

that selected (e.g., aggregated) data series covering services transactions between residents and non-

residents, FATS or additional indicators on the international supply of services are produced and

disseminated more frequently depending on country’s needs and resources. The release date of data

should also be punctual, in that it follows the target date announced in the official release calendar.

Timeliness typically involves a trade-off against accuracy and cost.

19.14. Accessibility and clarity should also be ensured. Statistics on the international supply of services

should be presented in a clear and understandable form, and disseminated through a suitable and

convenient medium, with supporting metadata and guidance.

339 Definitions and their contexts are taken from NQAF Glossary (2012), Available at:

http://unstats.un.org/unsd/dnss/QualityNQAF/nqaf.aspx).

340 See SDMX, Metadata common vocabulary, page 109; available at: http://sdmx.org/wp-

content/uploads/2009/01/04_sdmx_cog_annex_4_mcv_2009.pdf.

301

19.15. Furthermore, statistics on the international supply of services should be comparable across

geographical areas (i.e., the degree of comparability between statistics measuring the same phenomenon

for different geographical areas); over time (i.e., the degree of comparability between two or more

instances of data on the same phenomenon measured at different points in time); and across domains (i.e.,

the comparability between different survey results which target similar characteristics in different

statistical domains). For data broken down by mode of supply, if a country is focusing on a particular type

of service, a description in terms of CPC of the service would be useful. Moreover, internal coherence (or

consistency) and coherence across domains should be ensured, as statistics are often obtained from

different sources or based on different approaches, classifications and methodological standards.

Metadata must convey such information that will help any interested party in evaluating the comparability

of the data, which is often the result of a multitude of factors.

19.16. Compiling agencies should also ensure integrity, or their values and related practices that

maintain confidence in the eyes of users in the agency producing statistics and ultimately in the statistical

product. One important aspect of integrity is the trust in the objectivity of statistics. It implies that

professionalism should guide policies and practices and is supported by ethical standards and by

transparency. Integrity is closely linked with credibility, or the confidence that users place in statistical

products based simply on their image of the statistical authority (i.e., the brand image).

19.17. Compiling agencies should also ensure that sound methodologies are used to compile statistics

that comply with the relevant international standards, including the professional standards enshrined in

the Fundamental Principles for Official Statistics.

19.18. At the same time, cost effectiveness should also be ensured. For the compilation of statistics on

the international supply of services broken down by mode, the mechanical allocation of EBOPS 2010 to

modes of supply presents a strong advantage, as this method is relatively inexpensive as it is based on

existing data and knowledge of the compiler. Finally, existing data transmission mechanisms and IT-tools

should be used to the extent possible.

19.19. Quality management and its components. Quality management is defined in SDMX as systems

and frameworks in place within an organisation to manage the quality of statistical products and

processes. Quality management refers to the application of a formalised system that documents the

structure, responsibilities and procedures put in place for satisfying users, while continuing to improve the

data production and dissemination process. It also includes how well the resources meet the requirement.

This concept can be broken down into: "assurance"; "assessment"; and "documentation".

i. Quality assurance refers to all the planned and systematic activities implemented that can

be demonstrated to provide confidence that the processes will fulfill the requirements for the

statistical output. This includes the design of programmes for quality management, the

description of planning process, scheduling of work, frequency of plan updates, and other

organisational arrangements to support and maintain planning function.

ii. Quality assessment contains the overall assessment of data quality, based on standard

quality criteria. This may include the result of a scoring or grading process for quality. Scoring

may be quantitative or qualitative.

iii. Quality documentation contains documentation on methods and standards for assessing

data quality, based on standard quality criteria.

302

C. Focusing on quality assurance

19.20. Quality assurance is a critical part of producing the statistics which ensures that the methods have

been correctly applied and that the statistics are robust and fit for purpose. Given the complexity

surrounding the compilation of statistics within the framework for describing the international supply of

services, it would be particularly relevant that organisations produce, document, implement, monitor and

maintain a quality assurance strategy, policy and quality assurance procedures which apply to regular

publications, new outputs and changes to outputs, as well as statistical outputs derived from surveys,

administrative sources and other secondary sources.

19.21. Quality assurance should be built in at each step of the statistical process, including:

i. The selection of the methods;

ii. Ensuring issues related to the quality outcomes of the methods chosen are identified;

iii. Careful checking of the outcomes of the applications of the methods;

iv. Ensuring that a sufficient range of stakeholders are engaged in the quality assurance

process.

19.22. Compilers should adopt quality assurance procedures, including the consideration of each

statistical product against users’ requirements, and of their coherence with other statistical products. The

quality assurance policy should include aspects such as control, improvement processes, quality

measures, documentation and awareness-raising. It is a good practice that the quality assurance

procedures specify clear ownership and accountability for statistics and related products.

19.23. Appropriate validation to minimise the risk of errors should also be incorporated into the quality

assurance procedures, including:

i. Validation built into the production processes wherever possible;

ii. Internal validation checks – for example, checking against previously produced outputs

from the same source, or parallel running by two people where there is a large degree of manual

intervention;

iii. External validation checks – for example, ‘sense-checking’ against other relevant sources

19.24. For all regular statistical outputs, a programme of periodic reviews should be planned and

undertaken, covering quality, methodologies and processes. More information may be found in

international guidelines on national quality assurance, such as the Guidelines for the Template for a

Generic National Quality Assurance Framework, which have been prepared and are available at the

UNSD website.341 At its forty-third session in 2012, the Statistical Commission fully endorsed the generic

national quality assurance framework template and encouraged countries to use it. The template is

provided in box 19.2.

341 Available at: http://unstats.un.org/unsd/dnss/QualityNQAF/nqaf.aspx.

303

Box 19.2 Template for a generic national quality assurance framework (NQAF)

1. Quality context

1a. Circumstances and key issues driving the need for quality management

1b. Benefits and challenges

1c. Relationship to other statistical agency policies, strategies and frameworks and evolution over

time

2. Quality concepts and frameworks

2a. Concepts and terminology

2b. Mapping to existing frameworks

3. Quality assurance guidelines

3a. Managing the statistical system

[NQAF 1] Coordinating the national statistical system

[NQAF 2] Managing relationships with data users and data providers

[NQAF 3] Managing statistical standards

3b. Managing the institutional environment

[NQAF 4] Assuring professional independence

[NQAF 5] Assuring impartiality and objectivity

[NQAF 6] Assuring transparency

[NQAF 7] Assuring statistical confidentiality and security

[NQAF 8] Assuring the quality commitment

[NQAF 9] Assuring adequacy of resources

3c. Managing statistical processes

[NQAF 10] Assuring methodological soundness

[NQAF 11] Assuring cost-effectiveness

[NQAF 12] Assuring soundness of implementation

[NQAF 13] Managing the respondent burden

3d. Managing statistical outputs

[NQAF 14] Assuring relevance

[NQAF 15] Assuring accuracy and reliability

[NQAF 16] Assuring timeliness and punctual

[NQAF 16] Assuring timeliness and punctuality

[NQAF 17] Assuring accessibility and clarity

[NQAF 18] Assuring coherence and comparability

[NQAF 19] Managing metadata

4. Quality assessment and reporting

5. Quality and other management frameworks

304

19.25. Within the NQAF, four components of quality assurance are particularly relevant for statistics on

the international supply of services:

i. Assuring methodological soundness. This requires the use of the statistical methodologies

based on internationally agreed recommendation contained in MSITS 2010 and good practices

described in this Guide;

ii. Assuring cost-effectiveness. Cost-effectiveness is assured by the implementation of

standardized solutions that increase effectiveness and efficiency, documentation of the costs of

data production at each stage of statistical process and carrying out the cost–benefit analyses to

determine the appropriate trade-offs in terms of data quality;

iii. Assuring soundness of implementation. This is achieved by carrying out such activities as

staff selection and conducting training programmes that emphasize the importance of statistics

that are fit for purpose, building in the production process data quality checkpoints and (as

appropriate) sign-offs before proceeding to subsequent stages in the statistical life cycle,

documenting procedures for the design, development, implementation and evaluation of the

statistical compilations, and consulting with stakeholders, especially users and potential

respondents, at all appropriate stages of the statistical life cycle; and

iv. Managing the respondent burden. The respondent burden is managed by raising

awareness that the requirement to collect information (user needs) should be balanced against

production costs and the burden placed on respondents (supplier costs). Compilers of statistics on

the international supply of services should be proactive in managing the respondent burden and

ensure that there are mechanisms in place to assess the necessity to undertake new statistical

surveys and that care is taken to reduce or distribute response burden. It is important that

compilers inform respondents about: (a) the purpose of the surveys (including the expected uses

and users of the statistics to be produced from the survey), (b) the authority under which the

surveys are taken, (c) the collection registration details, (d) the mandatory or voluntary nature of

the survey, (e) confidentiality protection, and (f) the record linkage plans and the identity of the

parties to any agreements to share the information provided by those respondents. Mechanisms to

maintain good relationships with individual providers of data and to proactively manage the

response burden are essential for improving quality.

19.26. Concerning the outputs produced within the statistical framework for describing the international

supply of services, NQAF lists six groups of activities, which should be carried out:

i. Assuring relevance in the context of the varying needs of users. Relevance can be assured

by consulting users about the content of the statistical work programme, prioritizing between

different users’ needs in the work programme, establishing an advisory council to assist in

setting overall statistical priorities, periodic review of the continuing relevance and cost-

effectiveness of individual statistical programmes/domains, ensuring good understanding of

the interdependencies between individual statistical programmes/domains and coordination,

harmonisation and full coverage of statistical information produced by the national statistical

system;

ii. Assuring accuracy and reliability of outputs by assessing and validating source data,

intermediate results and final outputs, using proper statistical techniques, comparing the

obtained data with other existing sources of information in order to ensure their validity,

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clear identification of preliminary and revised data, and provision of the explanations about

the timing and reasons for and the nature of revisions;

iii. Assuring timeliness and punctuality implies establishing clear release policy (taking into

account the need for different dissemination formats and frequency of data); consideration of

the trade-off with other quality dimensions; clear identification of preliminary data so that

users are provided with appropriate information for assessing their quality;

iv. Assuring accessibility and clarity by releasing statistical results with readily accessible

and up-to-date metadata, which cover used concepts and deviations, scope, classifications,

basis of recording, data sources, compilation methods, statistical techniques, etc. to allow for

a better understanding of the data;

v. Assuring coherence and comparability by establishing well defined relationships between

statistics on residents/non-residents transactions in services, FATS and additional indicators

on the international supply of services is very important; also, the relationships between

statistics on the international supply of services and other economic statistics should be well

articulated. Compilers should ensure application of efficient and documented procedures for

combination of data from various sources; provide clear identification and explanation of

breaks in the series and the provision of methods for ensuring necessary data reconciliation;

and

vi. Managing metadata, which includes provision of information covering the underlying

concepts, variables and classifications used, methodology of data collection and processing,

and indications of the quality of the statistical information to enable the user to understand all

of the attributes of the statistics on the international supply of services, including their

limitations, for informed decision-making.

19.27. In the context of point (v) on assuring coherence and comparability, a number of compiling

agencies have created a unit in charge of ensuring coherence of data collection, data quality and

coordination of work across economic statistics concerning data on large multinationals enterprises. The

unit is often referred to as "Large and complex enterprises units" and may have different tasks assigned to

it. In many countries a relatively small number of multinational enterprises accounts for a major part of

total (services) production and trade. For this reason, they are generally included in most surveys carried

out in the area of economic statistics, and consequently they are covered in the work of the large and

complex enterprise unit. Several statistical offices also realized that a more proactive dialogue with

important respondents can improve the large enterprises’ understanding of the statistical data

requirements. This is why in countries where a small number of multinational enterprises account for a

large part of the national production, there are also likely to be important (services) traders. Compilers are

therefore encouraged to identify if there is a need to consider such a unit, and if it already exists to

approach it in order to identify how to collect and compile data in a coherent way.342

C.1. Evaluating validity of reported data

19.28. It is important that due attention is paid to evaluating validity of reported data. Techniques for

this evaluation include comparing reported values for the current period to those for prior periods in order

342

More information can be found in the Guide to measuring Global Production (chapter 6).

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to ensure consistency, calculating ratios of key items, such as sales per employee or value added to sales,

to ensure reasonable results, and establishing ranges and tolerances to identify outliers for review by

survey staff. Automated checks can be included in an electronic questionnaire or in the survey processing

system to detect unusual or large changes in the data, internal inconsistencies or invalid responses.343 The

questions about the validity of reported data can be subsequently resolved through consultation with

respondents and by other means (e.g., use of relevant financial statements, regulatory filings, and other

surveys). It is also a good practice to to have staff dedicated to evaluating the data reported by specific

respondents. Establishing a relationship between the compiler and the reporter can lead to improved

reporting.

19.29. Validated responses provided by respondents at the individual company (micro) level must be

aggregated to higher (macro) levels for further review and evaluation and ultimately public release. For

universe (benchmark) surveys, validated micro data (including estimated values for non-respondents) can

simply be summed over all units. For sample surveys or other non-benchmark surveys, aggregation of

micro data will depend primarily on how the sample was selected and the associated sample weighting

factors used to develop universe estimates. For a probability sample with weights, individual values are

multiplied by the weighting factor and the weighted values are summed. For cut-off surveys or other

surveys that are not based on probability samples, aggregation may be based on using growth factors to

extrapolate the aggregate value forward from the most recent benchmark year using values from a

matched sample for adjacent years. This method assumes that the growth rates for the firms in the

matched sample are representative of growth for firms that were excluded from the sample because they

fall below the sample cut-off threshold.

C.2. Country experience: Ireland

19.30. The Central Statistics Office of Ireland (CSO) is the national office responsible for compiling and

publishing official Balance of Payments and related statistics and for implementing the related quality

assurance activities.

19.31. The surveys of manufacturing and non-financial service enterprises undertaken by the CSO are

designed to meet international conceptual and geographical requirements. Coverage is on a sample

selection basis, those surveyed being selected on the basis of statistical register information concerning

transactions with non-residents. Two types of grossing take place in the compilation of the results. For the

enterprises who report annually an estimate is made for non-response. This estimate can vary from the

last value carried forward to more complex trending/forecasting based on similarly sized and type of

enterprises and current market conditions. For non-coverage a separate grossing exercise takes place for

both services and profits. Using other data sources available (e.g. Annual Services Inquiry, Census of

Industrial Production) the enterprises and data are matched and compared and an imputation is made for

non-coverage based on a ratio derived by comparing the size of the overall data to the size of the

unmatched data. This exercise also serves as a useful quality indicator in comparing data collected via

different channels.

19.32. The survey information collected for all types of enterprises covers transactions with non-

residents concerning purchases and sales of services, income flows, transfers, as well as acquisitions and

disposals of foreign assets or liabilities. In order to facilitate compilation of the wider national accounts

statistics, the surveys also collect data on transactions of reporting enterprises with residents of Ireland.

343 See chapter 21 for more information on the use of information and communication technology.

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This allows for a wide range of edit and plausibility checks; e.g., profits earned in relation to costs and

sales; dividends paid relative to earnings.

19.33. The type of quarterly survey form issued to a company depends upon the type of company. The

survey for manufacturing and non-financial service companies requests data on all resident and non-

resident sales/purchases of services (including royalties, copyrights, licenses, etc.), assets and liabilities

(flows, stocks and reconciliation items) as well as related income transactions from companies

incorporated in Ireland and Irish branches of foreign companies. Sectoral and geographic details are also

required.

19.34. A qualified accountant is employed to provide advice on data queries from respondents and on

the various plausibility and edit checks in place. The accountant also examines and compares the data

reported on the BOP forms against the annual statutory accounts, where available. The accountant

accompanies the responsible staff when visiting respondents. The major enterprises are visited at least

once every two years while smaller enterprises are met less frequently. Enterprises are assessed on an on-

going basis for their suitability for quarterly/annual reporting.

19.35. Received data are loaded into the CSO’s relational database where they undergo various

automated consistency and plausibility checks. Further manual checking routines are carried out by

statistical staff. Depending on the materiality of the identified queries the CSO will make contact with the

enterprise concerned in order to obtain corrections/clarifications. Once verified and any further processing

has been completed, the data from all surveys are assembled and the combined data subjected to further

scrutiny and checking, at both a macro and micro level. If problems are detected at this stage the case can

be referred back to the data collection division who can contact the company if necessary to resolve the

issue. Apart from the general checking routines performed by BOP compilers additional checking is done

by a separate data consistency unit existing within the National Accounts Division. This unit carries out

checks on the consistency of monthly, quarterly and annual data returned by individual large

manufacturing and non-financial service companies to various divisions within the CSO (including the

BOP Division). Approximately 70 large companies or groups of companies are reviewed.

19.36. The work of the Consistency Unit has been extended to rationalise the data collection for the 50

largest companies/groups referred to above. The Large Cases Unit (LCU) was set up in 2010 to

coordinate the surveys issued to these enterprises. An important step was to examine the various CSO

data requests and to ensure that any particular item of data was only requested once from the respondent.

A combined survey form for these enterprise was designed which would collect not only the BOP data

but also production, turnover, services, stocks and profits. The LCU is the central point of contact for

these enterprise and works closely with both the enterprises and the various production divisions in the

CSO to ensure quality and consistency of data, while at the same time minimising the burden on the

respondent.

D. Quality measurement and reporting

19.37. Quality management implies that countries undertake steps to measure quality and report the

results of such measurements to all participants of the statistical process and general public. In this

connection this Guide advises that countries develop a standard for regular quality reports that cover the

full range of statistical processes and their outputs including publication of statistics on residents/non-

residents transactions in services, FATS and additional indicators on the international supply of services,

as applicable. Such reports can be either producer-oriented, with the aim of identifying strengths and

weaknesses of the statistical process and leading to or containing the definition of quality improvement

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actions, or user-oriented, with the aim of keeping users informed on the methodology of statistical process

and the quality of statistical output.

19.38. Quality reports should be prepared at least every five years, or more frequently if significant

methodological changes or changes in the data sources occur. For monitoring the quality of the processes

and effectiveness of quality-improvement actions, reviews should be conducted more frequently. It is a

good practice that countries base their quality reports on a set of quantitative and qualitative indicators, as

well as on a checklist covering data collection, processing and dissemination, in order to assess the

strengths and weaknesses in the statistical process and to identify possible quality-improvement actions.

19.39. Countries are advised to develop their own quality assessment frameworks on the basis of NQAF

and the quality assessment frameworks developed by international, supranational and regional

organizations.

19.40. Quality measures. Quality measures directly reflect a particular aspect of quality. For example,

the time lag from the end of the reference period to the release of particular data set is a direct quality

measure. However, in practice, quality measures can be difficult or costly to calculate. Instead, quality

indicators can be used in the quality assessment.

19.41. Quality indicators are summarized quantitative or qualitative evidences about the quality of the

data. They are generally defined with respect to some reference point and can assist in making different

types of comparisons. When countries define the quality indicators for their statistics on the international

supply of services, they are encouraged to ensure that the indicators satisfy the following criteria: (a) they

cover all dimensions of quality as defined in section B above; (b) are based on the consistent application

of a sound methodology; and (c) the indicators are easy to interpret both by internal and external users.

19.42. It is a good practice that countries maintain a balance between different dimensions of quality and

the number of indicators. The objective of quality measurement is to have a limited set (minimum

number) of indicators which can be used to measure and to follow over time the quality of statistics

compiled within the framework for describing the international supply of services and to ensure that users

are provided with a useful summary of overall quality, while not overburdening respondents with

demands for unrealistic amounts of quality metadata.

19.43. Suggested quality measures and indicators. Table 19.1 presents a possible set of indicators (and

measures) which countries might wish to consider for measuring the quality of statistics on the

international supply of services. The table is compiled on the basis of the quality measures and indicators

recommended by various international organizations including the IMF, OECD and Eurostat. The

utilization of such measures and indicators provides users with a clear and up-to-date overview of the

overall quality of these statistics.

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Table 19.1 Suggested indicators for measuring the quality of data compiled within the statistical

framework for describing the international supply of services

Quality

dimension Quality measure and indicator

Relevance 1. Gaps between key user interests and compiled trade in services statistics in terms

of concepts, coverage and detail;

2. Results of users’ satisfaction surveys and meetings with user groups.

The relevance aspect of quality could also be measured in terms of the availability of

the data to the final users. Data availability is measured through completeness and

confidentiality.

In general, data availability can be calculated as the number of reported data cells

divided by the total number of the data cells required in accordance with the adopted

data compilation methodology344.

Measure of confidentiality can be developed by taking into account the share of

values of the data cells containing confidential data in the total value of all data cells.

Accuracy 1. Differences between two successive releases of the same dataset.

2. Application of reporting thresholds.

3. Under-coverage (% of non-reporting due to thresholds, % of non-reporting due to

non-response);

4. Characteristics and frequency of revisions (e.g., as % of total value);

Mean Absolute Percentage Error (MAPE) may be used for characterising the size of

revisions. MAPE shows the average percentage difference between initial and final

estimates (between 0 and infinity inclusive). The higher is the value, the higher – the

average size of revisions. When the result equals zero, there are no differences

between the first and final estimates.

MAPE is defined as follows:

100

MAPE t

f





Where,

X = the initial estimate for characteristic X in reference year t.

X = the last available estimate for the same characteristic in reference year t.

5. Use of data validation techniques and their impact.

In the case of sample surveys-based estimates, the accuracy can be measured using

the following indicators:

344 For example, such approach is adopted by the Eurostat. See Annex 1, Table 3 of the EU Commission Regulation

(EU) No 555/2012 of 22 June 2012 amending Regulation (EC) No 184/2005 of the European Parliament and of the

Council on Community statistics concerning balance of payments, international trade in services and foreign direct

investment, as regards the update of data requireme nts and definitions, http://eur-

lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2012:166:0022:0066:EN:PDF. Also see BoP VADEMECUM,

Chapter 5.

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6. Sampling errors.

The sampling error has to be calculated on the basis of the specific survey design

adopted.

7. Non-sampling errors:

- Unit response rate,

- Item response rate;

Total measurement error (sampling errors plus non-sampling errors) can be

expressed in terms of a coefficient of variation (CV), as follows.

value

estimated

variancesampling theof estimate

CV 

A thorough description of the sample design is needed, containing all information

which is likely to affect accuracy and providing background information for the

assessment and interpretation of sampling errors.

8. Number and average size of revisions of particular datasets.

Timeliness 1. Time lag between the end of the reference period and the date of the first release

(or the release of final results) of data.

Punctuality Punctuality can be calculated as the actual date of data delivery minus the scheduled

date of publication/transmission. It shows how many calendar days the release of

data was behind (positive value) or ahead (negative value) of the deadline (e.g. as

published in an advance release calendar).

Accessibility 1. Number and types of means used for dissemination of statistics;

2. Degree to which all detailed data sets are made available to users, as a percentage

of total number of data sets produced;

3. Degree to which detailed metadata are dissemina ted.

Comparability 1 Differences that can be observed when statistics related to the same domain are

compared between geographical areas or over time. This component of quality can

be described by measuring asymmetries. For example The absolute and relative

values of asymmetries could be, calculated using partner country data, at different

levels of detail of service categories. Relative asymmetries could be calculated

giving equal weight to the datasets of the reporter and to the mirror data. Persistent

asymmetries are identified in case the top asymmetries for country A (for a given

service category and flow), are generated by the same partner country B for more

than one year.

Coherence 1. Use of common concepts, classifications, data sources and methods;

2. Availability of appropriate bridging tables.

This component of quality could be described by measuring the internal consistency

(with respect to the application of integrity rules, coherence between the quarterly

and annual data, size of errors and omissions), and external consistency (e.g.,

coherence between statistics on trade in services between residents and non-

residents and similar statistics belonging to different statistical frameworks).

Consistency with integrity rules. The integrity rules should include a set of

equations, which have to be respected in the datasets. For example: the sum of the

components should be equal to the aggregates.

Integrity 1. Statistics are produced on an impartial basis.

2. Choices of sources and statistical techniques as well as decisions about

dissemination are based solely by statistical considerations.

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3. The appropriate statistical entity is entitled to comment on erroneous

interpretation and misuse of statistics.

4. The terms and conditions under which statistics are collected, processed, and

disseminated are available to the public.

5. Internal governmental access to statistics prior to their release, if practiced in the

country, is publicly announced.

6. Products of statistical agencies/units are clearly identified as such.

7. Advanced notice is given of major changes in methodology, source data, and

statistical techniques.

8. Guidelines for staff behavior are in place and are well known to the staff.

Methodological

soundness

1. Number and degrees of divergences from the relevant international statistical

standards in concepts and measurement procedures which are used in the collection

and compilation of trade in services statistics (preferably in terms of the amount of

data affected).

* The quality dimensions “clarity/interpretability” and “Credibility” are not included in this table as there are

no identifiable quality measures or indicators for them.

19.44. One recognized good practice in relation to continuous quality improvement is process

measurement. A process is a series of actions or steps towards achieving a particular end; process quality

is an assessment of how far each step meets defined criteria; and process variables are factors that can

vary with each repetition of the process. It is a good practice that producers of official statistics define and

produce a selection of process quality measures to provide an indication of the overall quality of

processes and facilitate continuous quality improvement.

19.45. For official statistics produced from surveys, examples of process quality measures are the

percentage of ineligible sampling units found in the sample, the proportion of proxy interviews by survey,

travel time for interviewers, and scanning/keying error rates.

19.46. When dealing with statistics produced from administrative sources, process quality measures may

be the number of queries from the statistical producer to the administrative data supplier, and the

percentage of data items changed during quality assurance.

19.47. When adopting new or improved methods, quality assurance procedures should be used. These

should include assessing the impact on the statistical series of adopting the new methodology and

subjecting the proposed methodology to peer review. Various mechanisms exist to gain input from

experts into the suitability of new or improved methods. The setting up of specific peer review groups and

collaboration with users, academics and subject matter experts, for example industrialists or

demographers, can also be considered or simply peer review from a statistical colleague.345

19.48. The quality criteria as described in this chapter also apply to statistics on the international supply

of services by mode.

345 UK Statistics Authority, National Statistician’s Guidance, Quality Methods and Harmonisation

http://www.statisticsauthority.gov.uk/national-statistician/ns-reports--reviews-and-guidance/national-statistician-s-

guidance/].

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E. Country experiences

E.1. Spain - Automatic editing on statistics by modes of supply

19.49. In order to better control the quality of data on Modes of Supply in International Trade in

Services, INE has developed a software tool for recording and fieldwork treatment to facilitate the

automatic editing of modes data in the questionnaire. This software tool ensures that the editing rules

defined by the statistical expert are applied exhaustively and automatically in all used questionnaires. The

questionnaires are either automatically downloaded into the tool (in the case of web questionnaires) or

data are entered manually in the case of hard copy questionnaires.346

19.50. The editing rules in the tool are classified in two types: "strong" or "fatal" edits and "weak" edits.

Fatal edits imply that the questionnaire is not validated and INE staff has to call the respondent to solve it.

Weak edits do allow continuing with the questionnaire recording and subsequent validation processes but

an explanation must be included in the “Observations” field.

19.51. Four editing rules are applicable to modes of supply section in the survey:

i. a fatal edit is implemented to when a mode has been associated to a non-service item (note: INE

informs respondents that only services items can have a mode of supply associated to them).

ii. a weak edit is implemented when a mode 3 association is (wrongly) made to a service (i.e. the

supply through mode 3 is not possible (by definition) in international transactions data covered in

a balance of payments trade in services survey; such data can rarely be associated to Mode 3,

except for construction, see MSITS 2010 Chapter 5 for more information.

iii. a weak edit is implemented when a mode 2 association is (wrongly) made to services that

theoretically cannot be supplied by this mode according to the guidance provided in MSITS 2010

(note that travel is not covered by the survey; see the MSITS for the non-travel services that could

be supplied by mode 2 (e.g. manufacturing, maintenance and repair)).

iv. a fatal edit is implemented as to admit only mode 1 for supplying the ex-service item of

merchanting.

E.2. Luxembourg - quality management for compilation of financial services

19.52. Luxembourg is a small, very open economy anchored in foreign trade, thereby generating

significant international transactions and capital flows. Financial services (mainly investment fund

management and international private banking) are one of the mainstays of the national economy.

International trade in financial services, as reported by Luxembourg in its balance of payments, is very

significant. The Banque centrale du Luxembourg (BcL) and the Institut national de la statistique et des

etudes économiques (STATEC) are jointly responsible for establishing the balance of payments of

Luxembourg since January 2002 onwards.

346 According to INE policy, respondents can choose whether to answer questionnaires in hard copy or via the web

(although CAWI is strongly recommended).

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19.53. Asymmetries with partner countries have always been a major concern for Luxembourg

compilers. Systematic mutual exchange of results and underlying data with partner countries in the past

has led to significant reductions in asymmetries in different areas. However, asymmetry tables produced

by Eurostat identified persistent bilateral asymmetries in the field of financial services between

Luxembourg and selected partners. An in depth analysis showed that the origin of the differences lies in

the treatment of asset management costs taken out of income.

19.54. The investment fund industry in Luxembourg is the largest in Europe and serves mainly non-

residents. Almost all the activity focuses on the external sector. In principle, domestic undertakings for

collective investment have no direct employment, no offices, do not directly charge fees and in most

cases, income earned (on assets) is capitalized (i.e., not distributed to investors). Resident undertakings

for collective investment incur expenses for management and administration, payable in a very large

extent to the resident management companies. A priori, these transactions between residents are outside

of the field of balance of payments statistics.

19.55. Based on a recommendation stemming from the European Monetary Institute and in line with

National Accounts concepts, Luxembourg introduced in its balance of payments time series a procedure

to consider the management fees that are implicitly passed on to the investors.347 The economic substance

is revealed by rerouting. All income (on foreign or domestic assets) earned by the undertakings for

collective investment is assigned simultaneously to the investors, regardless if distributed or not.

Therefore, property income earned by the fund determines the income of its unit holder (investor). The

offsetting of the income assignment to the investor is both the management fees assigned to the non-

resident investors (financial services) and the reinvestment of the income.

19.56. The bilateral asymmetries observed have their origin in this specific treatment, partially because

partner countries do not always have the necessary information to perform the corresponding records.

Indeed, it is assumed that many shares of Luxembourg-based undertakings for collective investment are

held by nonresident households whose financial activities are probably not routinely covered by surveys.

19.57. The geographical breakdown comes from annual reporting to the supervisory authority that

requires an estimate of the percentage of shares or units of the undertakings for collective investment

invested in each country. However, uncertainty related to the geographical distribution is permitted; thus,

this uncertainty is a weakness of the procedure.

E.3. European Union – validation of data

19.58. Validation of data is performed by the national data providers as well as by Eurostat. Through

this process the plausibility of the data (e.g. the development of time series, possible outliers) and their

internal consistency (aggregates should match the sum of the sub-items) is verified. The strong link

between the Structural Business Statistics (SBS) and inward FATS also exists when validating the data.

19.59. In the EU countries inward FATS data are usually extracted from the data sources used for the

SBS and the results for both domains should be consistent. Some Member States have registers of

enterprise groups or foreign-owned enterprises that can be used as a basis for identification of the

population of foreign-controlled domestic enterprises and these registers are treated as the main source of

information used to identify the target populations. However, in practice, this consistency is not always

assured. One of the main reasons is that there are sometimes considerable differences between the frame

populations used for the inward FATS data collection and the foreign-controlled subset of Structural

347 BPM6, paragraph 10.124.

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Business Statistics population. This should not be a problem if correct grossing-up methods are used. In

that case, the total number of all enterprises, including domestic-controlled ones should be equal in both

SBS and inward FATS.

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Chapter 20 Data and Metadata Dissemination

20.1. Scope. This chapter consists of the following sections: a summary of good practices (section A);

an introduction to data and metadata dissemination concepts (section B); factors to consider in data and

metadata dissemination (section C); the presentation of statistics by mode of supply (section D); and

combined presentation of international merchandise and trade in services statistics (section E).

A. Summary of good practices

20.2. It is a good practice that countries continue their efforts in the implementation of the UN

Fundamental Principles of Official Statistics, according to which the dissemination of data and metadata

compiled within the statistical framework for describing the international supply of services should be

carried out with great care and attention to the needs of users while, at the same time, ensuring adequate

confidentiality of data providers. In particular, compilers should ensure the equal treatment of all users,

adequate user access, provision of advanced release schedules and pay due attention to metadata

dissemination. It is a good practice to discuss and agree with major user groups on the adequate balance

between timeliness versus reliability and accuracy. It is also a good practice to develop a revision policy

that is well-designed, transparent, well-publicized, and coordinated with other areas of statistics.

20.3. More specifically, it is advised that compilers ensure consistency between disseminated datasets

covering services transactions between residents and non-residents, FATS and additional indicators on the

international supply of services, as well as they coordinate dissemination of trade in services statistics

with dissemination of balance of payments statistics. It is further advised to disseminate preliminary

estimates of available or priority aggregates on services transactions between residents and non-residents

monthly, with the main aggregates (by main EBOPS 2010 categories and by main trading partners) being

disseminated on a quarterly basis and the full detailed data sets on an annual basis. In particular, it is a

good practice that the value data on services transactions between residents and non-residents are broken

down by: (1) direction of trade flows (exports and imports); (2) EBOPS 2010, by 12 first level categories

as a minimum but preferably by all relevant sub-categories and (3) trading partners, (4) enterprise

characteristics (if available) and (5) modes of supply, if such data are compiled or if an allocation is

performed following the recommended procedures contained in Chapter 14 of this Guide.

20.4. For foreign affiliate statistics (FATS), the selection of variables which should be disseminated

depends on the quality assessment of the compiled variables and the information needs of the country.

However, efforts should be made to disseminate the variables identified in MSITS 2010 and elaborated in

Chapter 15 of this Guide. It is advised that dissemination the following annual data are treated as a matter

of priority: (i) sales (turnover) and/or output; (ii) employment; and (iii) number of enterprises. It is

advised that the data be broken down by: (1) direction of investment (outward and inward FATS); (2)

activity (and if possible, for output or sales(turnover) by product; or at a minimum, a disaggregation into

total goods and total services for each activity); and (3) partner (economy of affiliate operations for

outward and economy of UCI for inward). Moreover, if possible, data on sales(turnover)/output that are

rendered to residents of the economy of the affiliate should be separately identified.

20.5. It is a good practice to disseminate statistics on service transactions between residents and

non-residents, FATS sales(turnover)/output data and selected additional indicators on the international

supply of services in a common report regularly (e.g., on an annual basis), presenting the international

supply of services broken down by mode, if possible. For non-monetary indicators, in particular on the

movements and stocks of persons covered modes 2 and 4, as a minimum requirement, countries are

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advised to disseminate the full detailed data sets on an annual basis, using the breakdowns as

suggested in chapter 16. It would also be desirable to disseminate main aggregates on a quarterly basis.

20.6. In terms of maintaining statistical confidentiality, compilers should strive for a full coverage

of all flows and stock data which are in the scope of trade in services statistics, while applying

appropriate methods to keep, as relevant, certain information confidential.

20.7. This Guide stresses that provision of micro-data (or data about a data provider, including an

individual person, household, business or other entity) is consistent with legal and other necessary

arrangements that ensure that confidentiality is protected and that procedures for access to micro-data

are transparent and publicly available.

20.8. It is a good practice to adopt several formats and means of dissemination to ensure that data

and metadata are delivered efficiently to all user groups. In this connection it is advised to make most

use of electronic databases: (a) to allow free and equal access to all users to any data record considered

part of official trade in services statistics; (b) to store and deliver to users extensive metadata and

knowledge base; and (c) to allow users to make queries easily and with a user-friendly interface on the

entire database, and to download query results in the commonly used electronic data formats. It is also

recommended that statistical agencies consider the application of Statistical Data and Metadata

eXchange (SDMX) standards in the dissemination of data and its accompanying metadata in order to

ensure consistency and coherence.

B. Data and metadata dissemination: an introduction

20.9. The availability of official statistics, including statistics compiled within the framework for

describing the international supply of services, is one of the cornerstones of public confidence in good

governance as such statistics can inform the debate and decision-making by governments and by the

wider community. This Guide highlights the importance of countries’ adherence to the UN

Fundamental Principles of Official Statistics which, inter alia, state that:348

i. Official statistics “provide an indispensable element in the information system of a

democratic society, serving the Government, the economy and the public”;

ii. These statistics should be made “available on an impartial basis by official statistical

agencies to honour citizens' entitlement to public information”;

iii. The statistical agencies should “facilitate a correct interpretation of the data”, and,

therefore, have “to present information according to scientific standards on the sources,

methods and procedures of the statistics”;

iv. The statistical agencies “are entitled to comment on erroneous interpretation and

misuse of statistics”.

20.10. In the light of these Principles, the dissemination of data and metadata should be carried out

with great care and attention to the needs of users while, at the same time, ensuring adequate

348 The Principles are available at http://unstats.un.org/unsd/dnss/gp/fundprinciples.aspx.

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confidentiality of data providers. Dissemination enhances accessibility of statistical information and

constitutes an indispensable building block of the integrated statistical production process.349

20.11. Below is a brief description of several good practices which countries are advised to follow in

setting up their dissemination policy:

i. Users should be treated equally, whether national or international;

ii. Data should be made available to all users at the same predetermined time;

iii. Adequate user access to data and metadata (including information on quality of data350 and

methodologies) should be ensured, in terms of making information publicly available in a

clear and easily understandable manner and in adequate forms of dissemination; making

statistics available on an impartial and timely basis; and providing prompt and knowledgeable

support services to users (e.g., “Frequently-Asked Questions”, contact information for

questions, and technical help). For a major statistical release, it is often helpful for the

statistical agency to organize a press briefing event. The highlights could be used to convey

significant findings, comparisons, and trends to assist the media, and other users, in

understanding and using the publications. Where feasible, special data services could be

provided including special or non-standard groupings of data items or outputs, and their

usefulness and their costs;

iv. An advanced release schedule should be published. It is essential that the dates in the schedule

are met.

20.12. Importance of metadata dissemination.351 The statistical agencies responsible for statistics on

the international supply of services must ensure that users are able to access and correctly interpret the

information on statistical methods, concepts, variables and classifications used in producing statistical

results. Additional guidance on dissemination of metadata is provided below:

i. Sufficient metadata should be made available to enable both the least and the most

sophisticated users to readily access data and understand their quality. It is a good practice to

structure metadata in layers of incremental detail.

352

ii. Structural metadata should be presented as an integral part of the database and be published as

part of statistical tables (e.g., in the form of flags or footnotes identifying differences in

definitions, estimations and imputations, provisional values, confidentiality, break in the time

series, etc.). by default, unless explicitly removed by the user. Reference metadata can be

presented as a detailed explanatory note describing the scope, coverage, and quality of a

dataset and can be made available electronically alongside the database or in special

publications. In addition, compilers should make every effort to ensure that users have ready

access to metadata through multiple dissemination channels, both in printed and in electronic

format (whereby Internet dissemination plays a key role), and be free of charge (regardless of

whether the statistics they describe are disseminated for a fee according to the compiling

349 Guidelines on Integrated Economic Statistics, ST/ESA/STAT/SER.F/108.

http://unstats.un.org/unsd/nationalaccount/docs/IES-Guidelines-e.pdf.

350 See chapter 19 for more information on quality reporting.

351 Also see chapter 18.

352See OECD, Data and metadata reporting and presentation handbook, 2007, page 22.

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organization’s policies.353 Any deviations from international standards or discrepancies (e.g.,

trade in services, balance of payments, tourism statistics, FATS, etc.) should be adequately

explained to the user. Whenever feasible, it is a good practice that compilers disseminate

metadata using standardized concepts that are relevant across statistical domains (e.g., by

adopting cross-domain concepts from the SDMX framework, Annex 4).

C. Factors to consider in dissemination of data and metadata compiled within

the framework for describing the international supply of services

C.1. Variables to be disseminated

20.13. MSITS 2010 contains recommendations with respect to the kinds of data variables that should

be considered for dissemination. Taking into account the elaboration of the data and metadata

variables provided in this Guide, countries are encouraged to organize their dissemination policy as

follows:

i. Statistics on value of trade in services between residents and non-residents. It is recommended

that the full detailed annual value data be broken down by: (1) direction of trade flows

(exports and imports); (2) EBOPS 2010, by 12 first level categories as a minimum but

preferably by all relevant sub-categories; (3) trading partners, (4) relation between the parties

and (5) modes of supply if such data are compiled or if an allocation is performed following

the recommended procedures contained in Chapter 14 of this Guide. It is good practice to

disseminate on a quarterly basis the main aggregates of such data (in particular for exports and

imports, by main EBOPS 2010 categories and by main trading partners). It is also a good

practice to disseminate preliminary estimates of available or priority aggregates monthly.

Compilers should ensure coherence between disseminated datasets and should closely

coordinate dissemination of the statistics with dissemination of balance of payments statistics.

ii. For foreign affiliate statistics (FATS), the selection of variables which should be disseminated

depends on the quality assessment of the compiled variables and the information needs of the

country. However, efforts should be made to disseminate the basic variables identified in

MSITS 2010 and elaborated in Chapter 15 of this Guide namely: sales (turnover) and/or

output; employment, value added, exports and imports of goods and services, and number of

enterprises. As a priority, given their relative ease in producing, and the primary interest of

users, data should be disseminated for (i) sales (turnover) and/or output; (ii) employment, and

(iii) number of enterprises. It is recommended that the data be disseminated broken down by:

(1) direction of investment (outward and inward FATS); (2) activity according to ICFA Rev. 1

or on a compatible basis such as ISIC Rev. 4; (3) if possible for output or sales by product,

using a classification system compatible with EBOPS 2010, but if not achievable as a

minimum compiling total goods and total services for each activity; (4) partner (economy of

affiliate operations for outward, UCI for inward). For sales/output, if possible, those services

rendered to residents of the economy of establishment of the affiliate should be

identified. .FATS statistics should ideally be disseminated at least on an annual basis for those

variables that are deemed to be the most important (i.e. priority variables). The corresponding

structural and reference metadata items should also be made available (see Chapter 18).

353 See OECD, Data and metadata reporting and presentation handbook, 2007, page 22.

319

iii. Countries are further advised to disseminate resident/non-resident trade in services and FATS

sales/output data in a common report.

iv. Non-monetary indicators, in particular on the supply of services by modes 2 and 4include data

on number of persons crossing borders (or trips) broken down by several classification criteria

appropriate for such modes. For countries that have not started compiling trade in services by

modes, a possible alternative would be to perform a “conceptual” allocation as presented in

chapter 14 C. It is a good practice to concentrate, at a minimum, on disseminating statistics on

an annual basis, using the breakdowns as suggested in chapter 16. However, given the strong

link of this information with trade/labour mobility policy, it could be of interest to also

envisage the compilation of some information for shorter periods, for instance on a quarterly

basis, at least for main aggregates. Countries are also advised to pay special attention to the

dissemination of the relevant structural and reference metadata in order to ensure the correct

interpretation of the data. For the other statistics described in chapter 16 section D, given that

these are compiled by statisticians in other statistical domains, no particular dissemination

practices are detailed in this guide other than the general principles described above (see also

section 20.D).

C.2. Timeliness

20.14. Timeliness of the dissemination is one of the recommended quality dimensions and should be

fully taken into consideration when developing the release schedule. The delays in time between data

collection and publishing should be monitored, as well as how the release of these data fit with the

release of related data, such as BOP and National accounts354.

20.15. When disseminating data, there is usually a trade-off between the timeliness, on the one hand,

and reliability, accuracy and level of detail of published data on the other hand. To help making

relevant decisions compilers should consider, user requirements (e.g.,. discussing trade-offs with major

user groups and making decisions public) and the timing of the collection of initial and revised data

from various sources.

20.16. Compilers are advised to publicly post (e.g., on the website of the national agency responsible

for the dissemination of the official trade statistics) before the beginning of each year an advance

release calendar of data with precise dates at which those will be released and possibly revised . It is

also a good practice to inform users about availability of such calendars using all appropriate means of

communication. In addition, to improve timeliness in the dissemination of statistics on the

international supply of services, it is a good practice to publish on a regular basis the provisional

estimates of totals, as well as of breakdowns by major service categories and main partners (see

section C.1 for more details), soon after the end of the reference period. Such estimates, by their nature,

would be based on relatively limited data content and are to be replaced by more accurate, but less

timely figures at a later date. Users must be aware of the trade-off between quality (size of revisions)

and timeliness (e.g., it is generally not a good practice to publish frequently large revisions); and

quality aspects need to be taken into account when deciding on the frequency of publication.

20.17. Compilers are encouraged to issue, as relevant, the first releases of resident/non-resident trade

in services data as follows: (a) monthly totals within 45 days after the end of the reference month, at

354 See BPM6 Compilation Guide, paragraph 17.4.

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least by main categories of services (and by major trading partners, if possible); (b) quarterly data

within one quarter after the reference period; and (c) annual data generally within six to nine months

after the reference period. The release of certain data sets such as annual FATS can be extended.

20.18. In addition, compilers are advised that the data for the fourth quarter (or for the twelfth month)

need to be compiled and disseminated in their own right and should not be derived as the difference

between the annual totals and the sum for the first three quarters (or eleven months) in order to provide

undistorted data for all months and quarters.

20.19. Regarding coherence between monthly, quarterly and annual data, countries should ensure that

additivity is always present, possibly by systematic automated checks. In the case of non-additivity,

compilers should make available the reasons underlying it in the metadata or explanatory notes.

C.3. Statistical confidentiality

20.20. Statistical confidentiality refers to the protection of information of individual statistical units and

has to be differentiated from other forms of confidentiality under which information is not disseminated

due to other considerations, for example due to national security concerns. It is a good practice to always

strive for a full coverage of all data which are in the scope of statistics on the international supply of

services, while applying appropriate methods to keep certain information confidential. This Guide

recognizes, however, the necessity of both statistical confidentiality and of balancing it against the need

for public information in cases where the application of statistical confidentiality would limit or make it

impossible to provide sufficient or meaningful information. It is also good practice to disseminate a

quantitative indicator of the amount of data subject to confidentiality.

20.21. The implementation of recommendations on statistical confidentiality depends to a large extent

on each country’s legislation and the general confidentiality policy adopted by its statistical system. The

assurance of confidentiality is essential to securing the cooperation of reporters and to maintaining the

integrity of the statistical system. Confidentiality concerns may also be a more serious issue in smaller or

less developed countries where there are fewer entities likely to be engaged in in the international supply

of services. An important challenge in the implementation of confidentiality rules is to ensure that

confidentiality is applied across all the different classifications in which data are disseminated.

20.22. Active confidentiality is advised, which implies that the statistical agency should take the

initiative to actively suppress or aggregate data the dissemination of which would enable the identification

of any individual person or entity.355

20.23. The Eurostat Handbook on Statistical Disclosure provides detailed examples and approaches to

applying sensitivity rules when applying active confidentiality and is recommended for further reading.356

355 It may be interesting to note that in the domain of international merchandise trade statistics, “passive

confidentiality” is recommended (i.e., data are tre ated as confidential only when the trader requests so on the

grounds that his or her interests would be harmed by the dissemination of their data and the statistical authority finds

the request justified based on the confidentiality rules) , unless the use of active confidentiality is already the

established, desired and accepted practice.IMTS 2010, paragraph 10.3. https://unstats.un.org/unsd/trade/eg-

imts/IMTS%202010%20(English).pdf. IMTS 2010 Compilers Guide, paragraph 1.14.

http://unstats.un.org/unsd/trade/EG-IMTS/IMTS2010-CM%20-%20white%20cover%20version.pdf356 Handbook on

Statistical Disclosure, Eurostat, 2007. http://unstats.un.org/unsd/EconStatKB/Attachment474.aspx.

356 Handbook on Statistical Disclosure, Eurostat, 2007. http://unstats.un.org/unsd/EconStatKB/Attachment474.aspx.

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As shown in table 20.1, common sensitivity rules used are: the minimum frequency rule (data suppressed

for cells that have less than a pre-determined number of respondents reporting, typically three357); or the

dominance rule in which the preponderance of the value (the exact share of which to be pre-determined

by the compiler) is derived from the top one to three entities). It is important to keep the exact pre-defined

parameters confidential. In some cases, the contributor with the second largest contribution to a cell

which is non-sensitive according to the sensitivity rules cited above is able to derive a close upper

estimate for the contribution of the largest one by subtracting his or her own contribution from the

aggregate total.358 In such cases, the dominance rule would need to be adapted (see the p% rule in table

20.1).

20.24. If one data cell is made confidential, it is typically advisable to also suppress the next available

cell with the smallest value so that the value of the primary confidential cell cannot be calculated.

Table 20.1 Sensitivity rules359

Rule Definition

A cell is consider sensitive when:

Minimum frequency rule The cell frequency is less than a pre-specified minimum frequency of n

respondents

(n,k-dominance rule) The sum of the n largest contributions exceeds k% of the cell total, e.g.,

+…=x

>k/100•X

p%-rule The cell total minus the 2 largest contributions x1 and x2 is less than p% of

the largest contribution; e.g., X-x

-x

<p/100x

20.25. It is a good practice that an overview of the confidentiality rules is published so that data

reporters are assured that their right to confidentiality is guaranteed while data users are informed about

certain data limitations, enabling them to use the data more appropriately. It is also a good practice to

provide users details on what data areas are affected most by the application of confidentiality rules and

the magnitude of this effect.

20.26. Demand for access to micro-data has been increasing amid the growing recognition of its

value for social, economic and business analysis. Arrangements for access to micro-data will vary

from country to country, but compilers should ensure that data are only made available for statistical

purposes and that access for research purposes is granted as long as the confidentiality is protected.

More information on basic principles to be adopted can be found in the UNECE guidelines.360

357 While three is a common criteria, some statistical agencies use others. For instance, the United Kingdom sets this

number at five companies. Department of Trade, Enterprise and Investment (DETI), UK. DETI Confidenti ality

Statement.

http://www.detini.gov.uk/data_confidentiality_statement__principle_5_of_the_code_of_practice_for_official_statist

ics_.pdf.

359 Ibid. Table 4-1. 360 Managing Statistical Confidentiality and Micro data Access: Principles and Guidelines of

Good Practice (2007). United Nations Economic Commission for Europe and Conference of European Statisticians.

ISBN 13: 987-92-1-116959-1. The electronic version of the guidelines is available at the UNECE Statistical

Division’s website: http://www.unece.org/stats/publ.htm.

360 Managing Statistical Confidentiality and Micro data Access: Principles and Guidelines of Good Practice (2007).

United Nations Economic Commission for Europe and Conference of European Statisticians. ISBN 13: 987-92-1-

116959-1. The electronic version of the guidelines is available at the UNECE Statistical Division’s website:

http://www.unece.org/stats/publ.htm.

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20.27. It is the role of the statistical compiling agency to decide whether, how and to whom its micro-

data are released, based on well-established rules, such as: (a) the merits of the research proposals and

the credibility of the researcher, (b) whether the risk of identification is sufficiently small and (c)

whether the confidentiality adjustments made to the data have unduly damaged the micro-data for

research purposes, among others. Legal arrangements or some form of administrative arrangement to

protect confidentiality should be put in place and made visible before any micro-data are released.

Such arrangement should cover what can and cannot be done and for what purposes, the conditions of

release and the consequences if these conditions are breached. Transparency is important to increase

public confidence that micro-data are being used appropriately and that decisions regarding access are

made objectively. The compiling agency’s web site is an effective means of ensuring transparency and

for providing information on research based on released micro-data.

20.28. Managing breaches. The statistical compiling agency should ensure that researchers are aware

of the consequences to them and their institution if there are confidentiality breaches. Legal action

could be considered if a legal offence has occurred; but at a minimum, the researcher (and possibly the

researcher’s institution) should be prevented from further access to micro-data. For minor breaches, a

warning may be sufficient.

20.29. There are a number of software products currently available for managing confidentiality of

micro-data361

and many NSOs also develop their own tailored processes and software specific to their

legislative requirements.362

C.4. Users and data dissemination

20.30. Major users of trade in services statistics that a statistical agency disseminates are likely to

include balance of payments and national accounts statistics compilers (generally the central bank or

the statistical office). Key government agencies (such as ministries of economy, or trade) are other

361 Special Uniques Detection Algorithm is a system for detecting and grading special uniques. This is needed for

confidentialising datasets by first identifying all special unique records and either disguising or removing them.

SDCMicro is free software for the generation of protected micro-data for researchers and public use, available at:

http://cran.project.org/web/packages/sdcMicro/index.html. Country-specific examples of micro-data procedures as

presented at plenary sessions of the Conference of European Statisticians held by the United Nations Economic

Commission of Europe (UNECE) are available at: http://www.unece.org/stats/documents/2013.06.ces.html. More

details regarding Remote Analysis Servers can be found in a note by the Australian Bureau of Statistics presented at

the Sixty-first plenary session of UNECE/CES, entitled “Innovative micro-data access - confidentiality on the fly”

available at: http://www.unece.org/fileadmin/DAM/stats/documents/ece/ces/2013/29.pdf.

362 Country-specific examples of micro-data procedures as presented at plenary sessions of the Conference of

European Statisticians held by the United Nations Economic Commission of Europe (UNECE) are available at:

http://www.unece.org/stats/documents/2013.06.ces.html. For example, a number of NSOs release public use files,

also referred to as Confidentialised Unit Record Files (CURFs), which are heavily confidentialised files that remove

names, addresses, geographic information and other details. Micro-data can also be made available via Research

Data Centers or Data Laboratories, either on-site or through virtual terminals installed in other organisations.

Outputs removed from these centers should be checked manually. Finally, some statistical agencies have begun

using Remote Analysis Servers, which allow researchers to submit a query via the internet to the agency’s server,

which sends confidentialised output back to the researcher. More details regarding Remote Analysis Servers can be

found in a note by the Australian Bureau of Statistics presented at the Sixty-first plenary session of UNECE/CES,

entitled “Innovative micro-data access - confidentiality on the fly” available at:

http://www.unece.org/fileadmin/DAM/stats/documents/ece/ces/2013/29.pdf.

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major users that will need detailed data on the international supply of services to assist in the

determination, monitoring or modification of specific trade or industry policies. Industry bodies,

researchers and the media may also be important users. Given the complexities surrounding statistics

on the international supply of services, users will often require support, by way of explanatory material

of key statistical concepts, for example, and their expectations may need, initially at least, to be more

closely managed. Effective interaction with users also includes the promotion of metadata so that users

can make better use of the data disseminated.

20.31. It is therefore essential that the compiling agency (or agencies) responsible for the

dissemination of data on the international supply of services negotiates with its users in terms of

content, standards, classifications, accuracy, timeliness, output format/s, and platform/s for delivery.

Such discussion would also include clarity concerning the unavoidable trade-off between timeliness,

accuracy and cost. When the users are from other government agencies, the discussion should occur in

the context of the institutional arrangements (see chapter 3). Ideally, users' output requirements would

be discussed well before data is to be disseminated as these requirements have significant impact on

decisions made throughout the statistical process, including: the scope of the collection, its cost,

required levels of accuracy, timeliness, standards, classifications, explanatory material, format of the

output, platforms for its delivery, possible or likely limitations imposed by data providers'

confidentiality requirements, and the handling of ad hoc requests.

20.32. The compiling agency should be aware that users’ requirements may evolve over time. It is a

good practice to systematically monitor changing user needs in order to ensure higher relevance of the

compiled data, for example via user satisfaction surveys. A well-designed user satisfaction survey

regarding data dissemination would normally focus on the following aspects of data dissemination: (a)

user-friendliness of the trade statistics database interface; (b) clarity and completeness of available

metadata; (c) desirability of continuation of traditional paper publications, (d) ways to improve data

and metadata presentation.

20.33. It is also a good practice to establish close and long-term relationships with representatives of

major user groups in order to identify the most effective ways of data and metadata dissemination.

This contact might be done via regular fora for structured communication involving key users and

stakeholders, such as standing advisory committees, as well as via ad hoc promotional events. While

statistics can be acceptably used and interpreted in many different ways, it is important to maintain

trust in, and the credibility of, official trade statistics. The responsible statistical agency therefore has

to prevent obviously erroneous interpretation of the data, and undertake the necessary corrective

actions if such faulty interpretations are detected (for instance, conducting press conferences and press

releases, and writing letters to the editors publications where misinterpretations have been detected). A

good practice to avoid misinterpretation of data is to place special attention to establishing direct

contacts with the main users of trade statistics whose analyses have major impact on public policy and

public opinion.

20.34. At all stages of the production cycle of statistical output a statistical agency should have

clearly formulated and documented procedures for communication with users. These procedures

should cover content, frequency, and protocols for interaction with the media and ad hoc

communication. It is a good practice to conduct regular outreach activities aiming to help users to

better understand data and put them to the most effective use, including efforts to improve the

statistical literacy of users and to prevent misinterpretation within the context of a broad public

relations strategy to deepen the general public’s understanding of the importance of statistics. For

example, the following outreach activities can be encouraged: conducting regular user group meetings

or seminars; conducting user satisfaction surveys; offering tutorials and user guides explaining how to

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find data on the dissemination website; organizing press conferences and including contact

information in press releases to assist users in the correct interpretation of the statistics; participating in

annual conferences of user groups, book fairs and other suitable events; and launching awareness

campaigns, such as a “National Statistics Day/Week/Month”. It is also a good practice in all relevant

outreach activities to raise users’ awareness of the importance of metadata for correct data

interpretation and effective use.

20.35. Working with the media. It is also in the best interest of the agency responsible for

disseminating external sector statistics to build a strong working relationship with the media, to make

it easy for journalists to report on statistical information in an accurate, timely and informative

manner, and to take steps to increase media coverage as a way of reaching the broader society with

important statistical information.

20.36. The capacity of users to pay for data is a factor to be considered in the selection of the best

data dissemination method. If users have a limited capacity to pay, and especially where the broad

dissemination of data is desired, making data freely available electronically, or providing users’ access

through making hard copies available at libraries would be useful. Regular data dissemination should

satisfy most if not all user needs. However, some users might have special needs which would require

complex data extraction, which the users might not be able to perform themselves. Countries may

consider offering such users premium data extraction services for a fee. In any case, compilers should

ensure that users are made fully aware of all available options for obtaining the required data.

20.37. Both data and metadata can be disseminated in various formats and by various means. In light

of diversity of user groups, it is a good practice to adopt several formats and means of dissemination to

ensure that data and metadata are effectively delivered. For example, press releases aimed at the

general public have to be disseminated in ways that facilitate re-dissemination by mass media, while

more comprehensive or detailed statistics intended for researchers need to be disseminated via on-line

databases, with hard copy publications used as reference materials. Similarly, an individual dataset

with a range of features may be presented using multiple dissemination methods (e.g., data in a spread-

sheet format and the explanatory notes as a PDF file). (See chapter 21 section C for more information

on the use of information technology in data and metadata dissemination.)

20.38. The method of dissemination should also give consideration to the maintenance of links

between data and the metadata, classifications, and explanatory material, so that clients can understand

and easily access all publically available statistical information. .

20.39. Statistical organisations may choose to publish a standard dataset of statistics on the

international supply of services which meets the needs of most users via the most readily accessible

means or technology (e.g. spreadsheet, printed or electronic documents). For example, in areas where

access to the internet is limited or lack of bandwidth would make downloading the data too slow,

publishing some datasets in a printed publication could be preferable to publishing everything on-line.

However,, countries are advised that it is generally no longer necessary to issue paper publications

containing many detailed sets of tables. A better practice is to focus such publications on the main

features of the statistics, presenting data in a more user friendly way by resorting to enhanced visual

elements, such as color charts and by adding more analytical information.

20.40. Statistical organisations can also provide more sophisticated data sets via different

dissemination methods to more demanding users, if necessary, and possibly with the ability to query

the data and create customised datasets. For example, data may be published at a national level as a

PDF file on the statistical organisation website, with more data available (which could or could not be

free of charge) for more detailed service categories or for more detailed geographic areas as a custom

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data request supplied to individual clients directly . In this instance, it is worth considering creating

interactive tools, such as an online table building facility, with a user friendly interface.363 It is

important that any customized, automated, or interactive systems are designed to correctly apply the

compiling agency’s confidentiality rules before the data are release.

20.41. There are a number of processes and mechanisms for the exchange or dissemination of data

and metadata between different organisations. Bringing together output in a single repository,

supported by standard services for loading and extracting content and managing associated metadata is

a good way of ensuring consistency and coherence, and can facilitate dissemination to different users

with different needs. In this context this Guide encourages countries to cooperate with regional,

supranational and international organizations to identify and apply the most efficient ways of

dissemination of their data on the international supply of services and related metadata, in particular

through a relevant use of the Statistical Data and Metadata Exchange (SDMX). Also, a new

dissemination format for the balance of payments metadata is using standardized web forms that are

accessible via an Integrated Correspondent System (ICS). This reporting method is meant to provide

reporting countries with an easy-to-use and efficient system for reporting data and metadata to IMF.

C.5. Revision Policy

20.42. Recognizing that revisions of data on the international supply of services are often necessary

and given that dissemination of the revised data are essential for users, this Guide encourages

compilers to develop a revision policy that is well-designed, carefully managed, transparent and well-

coordinated with other areas of statistics thereby allowing users to cope with revisions in a systematic

manner, which entails:

i. A detailed description of the revision policy on the responsible agency’s website,

including the data required to be revised, the frequency in which data is to be revised, and any

reasoning behind revisions;

ii. A reasonable stability of timing of the revisions, clearly reflected in the data release

calendar;

iii. A (early) notification whenever a revision requires changes in the time series going as

far back as the beginning of the series to retain methodological consistency, explaining the

reasons for the revision and providing information on its possible impact on the data;

iv. Easy access to sufficiently long time series of revised data;

v. Dissemination of all revised monthly, quarterly and annual data to ensure consistency

of all data available to users, including seasonally adjusted data and indices;

vi. Adequate documentation of revisions in the statistical publications and databases;

vii. Coordination of revision policy with data providers which might be the origin of large

revisions;

363 See chapter 21 for more information on the use of information and communication technology.

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viii. Establishment of a vintage database to measure the size of revisions and generate

quality indicators.

20.43. Data sources are often continually updated and some data sources are received on a lag,

making it necessary to revise data. Any revision has the potential to impact multiple sections/teams, all

operating on different time periods and publications, so there needs to be a consistent treatment

surrounding the revision process to maintain quality, coherence and usability of data that is published.

20.44. Revision policies should balance accuracy with usability. On one hand, it is desirable to

account for each and every possible change in the data as soon as possible. On the other hand, frequent

changes to a dataset may make it difficult for users to get a clear picture of the underlying series and

makes version control difficult. The policy should be practical to implement, and should itself be

revised if necessary.

C.8. Country experience: the Russian Federation - data revision policy

20.45. Russian external trade in services data are revised and updated within the overall framework

of the Bank of Russia’s Data Revisions Policy and Methodology, in order to ensure the accuracy and

comprehensiveness of external sector statistics and ensure the temporal consistency of time series. The

revision rules applied in practice to external trade in services time series provide for three different

kinds of adjustments:

i. Regular revisions: when published data are updated e.g. in order to replace initial

estimates with actual data (in case of time lags);

ii. Ad hoc revisions: when new information becomes available on unrecorded large

transactions or when changes are made in the compilation methodology;

iii. Technical revisions: related to the application of the double entry principle in recording

the external trade in services transactions within the balance of payments and the need to correct

the corresponding double entry, or reflect the change in the source data coverage or other

changes.

20.46. Historical data are revised as far back as possible in instances of major changes in methodology;

however they are not revised in the case of changes to the data collection systems.

20.47. The results of revisions are published. Annually the Bank of Russia prepares a detailed table of

revisions including the initial data, revised data and discrepancies, followed by detailed commentary on

data revisions. The quarterly publications also contain a detailed list of updated items, periods subject to

review, and reasons for the revisions, which are assigned special codes. The coded reasons for revisions

are:

i. Changes in the previously reported data;

ii. Improvements of compilation methodology/computation and evaluation methods;

iii. Inclusion of information from new sources on non-residents’ transactions;

iv. Corrections due to changes in the pairs of the BOP double entry transaction records;

v. Replacement of earlier estimates with actual data;

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vi. Other miscellaneous changes.

C.9. Country experience: Australia – data revision policy

20.48. The Australian Bureau of Statistics (ABS) has published the Australian Economic Statistics

Revisions Policy (ASERP). In summary, it states that economic statistics are typically high frequency

data that require a trade-off between accuracy and timeliness, and it aims to maximise both these factors.

It states that the following principles should be observed: (a) as far as possible, users should be informed

in advance of significant methodological changes which will result in revisions, (b) information on

revisions, including their reasons, should be kept and published as appropriate; (c) revisions should be

analysed to determine whether improvements in sources or methods could lead to a future reduction in the

extent of revisions.

20.49. The current ASERP has been presented with challenges. Among these include: (a) the complexity

and risk imposed on Business Statistical Centres (BSCs) from having to maintain parallel data for six to

nine months on systems that are not designed for this, (b) clients agreeing to the introduction of

concurrent seasonal adjustment and its regular revisions based to a desire to know the true result sooner.

Australia’s current policy delays the release of this true (or improved quality) data, (c) increasing reliance

on administrative data and not being able to impose our revisions policy on the administrative sources,

and (d) maintaining internal vs. external coherence for statistical data.

20.50. Trade in services statistics have developed their own revisions policy that is consistent with the

AESRP on a broad level (that is, maximising both accuracy and timeliness while taking both into

account) but also guides decisions for Business Statistical Centre (BSC) use. In summary, it states that

survey revisions may be recorded at any stage but should only be applied after the current survey data has

been finalised to ensure consistency across publication cycles particularly during periods of monthly,

quarterly and annual releases. Historical revisions should be recorded as soon as they are identified, as

they only occur once a year in statistics on the international supply of services and may not cover periods

where revisions are identified. Any revisions that do not fit the other two criteria may be applied at any

stage. For instance, if there the survey data are revised from the previous quarter, the following steps are

taken: (a) revisions are identified and confirmed, (b) revisions are documented, (c) revisions are applied

in the processing system for trade in services through to working spreadsheets, (d) these spreadsheets are

updated with only the revisions mentioned above and are sent to other areas for further processing.

D. Presentation of statistics by mode of supply

20.51. This section deals with the dissemination of statistics on the international supply of services by

the 4 modes. The allocation of FATS as mode 3 supply of services is relatively straightforward (see

chapter 15) whereas the modal breakdown or allocation of resident non- resident trade in services

statistics to modes is described in detail in chapter 14.C. It is key in trade negotiations and analysis,

and could provide statistical background for settling disputes, better evaluating market opportunities

and monitoring changes in patterns of the international supply of services. Modes of supply statistics

could possibly be disseminated on an annual or pluri-annual basis as (i) FATS data are more likely to

be produced yearly and (ii) data on resident-non-resident transactions broken down by modes may not

be compiled every year.

20.52. Given the complexity, and different levels of advancement in producing relevant data, it is

proposed to proceed in stages in the dissemination of combined information on modes of supply,

initially concentrating on monetary aspects. From this perspective it is of utmost importance that

compilers provide metadata to users on the issues of comparability of FATS and balance of payments

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services transactions data, in particular if for the former the data refer to sales rather than output, are

not broken down by product but rather by activity, or it is not possible to separately identify sales to

the residents of the territory of establishment of the affiliates.364

20.53. First combining statistics on resident/non-resident transactions in services and FATS—gives

users a broad perspective on the international supply of services. This broad perspective recognizes

the key role in the delivery of services internationally played by affiliates that are located in—but are

owned outside—the markets they serve. It is also consistent with the view many firms take of their

world-wide operations. Once countries have developed FATS and balance of payments services data,

a first step would be to report data on BOP services with no distinction of modes alongside data on

inward and outward services output (or sales) by foreign affiliates (as a close estimate of the supply of

services through mode 3), as365 shown in table 20.3. A dataset could first be produced for total

services, but then a breakdown into partners and services sectors (keeping in mind the comparability

issues that this may raise) would also prove useful.

Table 20.3 Services supplied to foreign and national markets through international transactions

and through affiliates

To foreign markets To national market

Through exports of

services (credits)

Through foreign

affiliates of resident

companies (outward,

output of services)

Through imports of

services (debits)

Through resident

affiliates of foreign

companies (inward,

input of services)

2000

2001

2002

…

20.54. Second, for those countries that have some specific services niches, there may be interest to

compile a breakdown of relevant monetary data (i.e. FATS services output (or sales) and balance of

payments services data) into modes of supply for this sector, in particular to assist the policy making

and negotiations. Data on FATS and services transactions may be collected or compiled separately or

together (as described in chapters 6, 14.C and 15). Accompanying metadata should be very detailed as

the sector under consideration might not be directly comparable with statistics possibly disseminated

by other countries on similar service sectors. Each country might indeed choose to compile services

data by modes of supply on very specific niches taking into account their comparative advantage and

the relative importance of the service for their domestic economy.366

364 Concerning FATS data, as long as they are provided only on an activity basis, it will most probably be difficult to

present a breakdown of sales or output by product using EBOPS 2010, nor ICFA Rev. 1 as suggested in MS ITS2010

Chapter 5. However it is important to keep in mind that MSITS 2010 suggests as a long-term goal to develop

statistics on sales/output of services by product, using a classification compatible with EBOPS if possible. An

interim solution is to break down output (or sales) for each activity between total services and total goods, the

former being of interest in the context of the international supply of services.

365 For a proper estimation of mode 3 one should identify output or sales of services to residents of the country of

establishment of these affiliates.

366 A description of the services sector in terms of the Central Product Classification (CPC) could be useful in order

to clarify the scope of the service under consideration which is broken down by modes.

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20.55. Table 20.4 provides an example format for disseminating statistics for a specific service for

the 4 modes of supply. Depending on needs, data could be broken down by more detailed type of

service and/or by partner, and could also be produced for both services supplied to foreign

(exports/outward) and national markets (imports/inward).

Table 20.4 Dissemination of data on the international supply of services according to the 4 modes

Through trade in services Through foreign

affiliates (output of

services)

Mode 1 Mode 2 Mode 4 Mode 3

Services X

Services Y

20.56. However, it is important that compilers aim at disseminating services data by mode of supply

at least for each main services items and direction of supply (i.e. to foreign markets and to the national

market). This is why that as a third step it is advised to disseminate a table similar to 20.4, but with the

breakdowns described above for all main sectors, with more or less detail depending on

interest/availability of data for specific services. Where no data collection or compilation by mode is

established, a possible alternative for presenting – and disseminating data would be to perform as a

starting point the “conceptual” allocation of trade in services as presented in chapter 14 section C (see

also table V.2 of MSITS 2010). If it is not possible to use FATS data (e.g. not compiled, or

comparability issues are too big), an alternative solution could be to only present the breakdown of

balance of payments trade in services into modes, and if relevant have the available FATS sales/output

data (preferably focusing on services) shown in a separate set of tables. Again very detailed metadata

has to be provided explaining the rationale for the allocation of the service items to specific modes

20.57. Presenting modes of supply data by main service sector will facilitate cross country

comparison, keeping in mind that this may be adapted according to the data availability in the country,

as well as on the compiler's knowledge of how services are supplied by or in the country. Instead of

partner world relevant economic or geographical zones or regions could be presented and would give

probably more insight views for policy decisions. If for balance of payments services transactions it is

not possible to distinguish between modes, then additional columns could be added (for example at the

right hand side of table 20.4) providing the possibility of presenting information for a combination of

modes (e.g. "modes 1 and 4", "modes 2 and 4"). It is, however, advised that the headers reflect the

(two) mode(s) most likely to be relevant for services sectors. To ensure the usefulness of the

information, the use of these additional columns should be limited, the longer-term aim being to have

all transactions shown under respective (single) modes, and therefore removing the "combined"

columns.

20.58. Finally for other indicators relevant in the context of the international supply of services, the

details of interest from a trade policy perspective should be made available or easily accessible for

policy makers and analysts. It is therefore suggested that the responsible agency at the national level

makes information (or links to it) available to users in a standardized format for example in a database

or analytical report alongside the FATS and balance of payments services data as described above.

Particular attention should be brought to mode 2 and mode 4 non-monetary indicators which should be

disseminated using the breakdowns as suggested in chapter 16 to the extent possible.

20.59. Examples are presented below for United States and New Zealand, however as presented in

this guide, other national agencies have engaged in the publication of monetary data broken down by

modes of supply, e.g. Reserve Bank of India, Australian International Legal Services Advisory

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Council. In addition some reports combining indicators from various sources are published by some

agencies in charge of analyzing the international supply of services such as the U.S. International

Trade Commission or Australia's Department for Foreign Affairs and Trade. Readers are advised to

refer to these reports for examples of dissemination of data on the international supply of services.

D.1. Country experience: the United States - combining statistics on resident/non-resident

transactions in services and FATS

20.60. The U.S. Bureau of Economic Analysis (BEA) releases statistics on international sales and

purchases of services on an annual basis.367 These statistics cover resident/non-resident transactions in

services and services supplied through locally established direct investment enterprises, or affiliates,

which are obtained from FATS. 368

20.61. The annual statistics on resident/non-resident transactions in services are consistent with the

statistics on U.S. trade in services that BEA disseminates via monthly (global aggregates for selected

types of services), quarterly (detail for more types of services and for selected partner countries and

regions), and annual releases (greatest details by service categories and by partner). The statistics on

services supplied through affiliates included in the international services statistics are derived from

FATS. Separate releases for inward and outward FATS provide detail by country and industry for all

of the data items that BEA collects. ]

20.62. In the presentation on international purchases and sales of services, resident/non-resident

transactions of exports and imports represent trade in the conventional sense and cover transactions

between residents of the United States and residents of foreign countries. They include both

transactions between unaffiliated parties and trade within multinational enterprises (intra-firm trade).

The data on services supplied through affiliates cover majority-owned affiliates and include services

supplied to foreign residents through the foreign affiliates of U.S. multinational enterprises s and

services supplied to U.S. residents through the U.S. affiliates of foreign multinational enterprises.

These transactions are not considered U.S. international transactions because, under the residency

principle of balance-of-payments accounting, affiliates of multinational enterprises are regarded as

residents of the countries where they are located rather than of the countries of their owners The

measures of services supplied are based on data that require affiliates’ sales or gross operating

revenues to be distributed among sales of goods, sales of services, and investment income.

20.63. The BEA recognizes in its reports that there are differences in coverage that make

comparisons of services supplied through affiliates to resident/non-resident transactions imprecise.

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However, the large gap between resident/non-resident transactions and services supplied through

affiliates indicates the importance of services supplied through affiliates as a channel through which

enterprises sell services to foreign markets. This could be due to the fact that selling through locally

established affiliates is the only practical method of delivery for many types of services because of the

need for proximity in both time and space between the consumer and producer. In addition to

367 See BEA’s website, www.bea.gov, by looking under “International” and clicking on “International Services.”

368 Cross-border trade in private services excludes transactions by the U.S. government (including the military).

Trade in private services is featured in the statistics on international sales and purchases of services because they are

most comparable to the services supplied through affiliates, which cover activities of businesses.

369 An example of a difference in coverage is the inclusion of distributive services in the measure of services

supplied through affiliates but not in the cross-border trade statistics. The distributive services associated with

importing and exporting goods are included indistinguishably in the value of trade in goods.

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coverage differences, precise comparisons of the relative size of the two modes of delivery cannot be

made for specific types of services because the data on cross-border trade are classified by type of

service, whereas the data on sales of services through affiliates are classified by the primary industry

of the affiliate. An example of the data release on US international supply of services is provided in

table 20.6.

Table 20.6 Services supplied to foreign and U.S. markets through cross-border trade and through

affiliates

To foreign markets To U.S. market

Through cross-

border trade Through foreign affiliates of

U.S. enterprises1

Through cross-

border trade Through U.S. affiliates of

foreign enterprises

(U.S. exports) (U.S. imports)

Billions of dollars

2008 516.3 1,116.9 372.5 701.6

2009 490.5 1,071.6 350.4 669.3

2010 538.6 1,155.2 372.9 701.2

2011 595.7 1,287.0 398.4 754.0

2012 628.1 n.a. 414.7 n.a.

Percent change from the preceding year

2008 9.8 9.6 10.4 2.6

2009 -5.0 -4.1 -5.9 -4.6

2010 9.8 7.8 6.4 4.8

2011 10.6 11.4 6.8 7.5

2012 5.4 n.a. 4.1 n.a.

n.a. Not available

* A non-zero value between -0.05 and 0.05 percent.

Note. The statistics on cross-border trade for 2003-2011 and services supplied through affiliates for 2010 are

revised from those released in October 2012.

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Table 20.5 New Zealand supply of services to foreign markets by mode and broad type of services

D.2. Country experience: New Zealand - disseminating trade in services by mode of supply by

broad service types and by partner

20.64. New Zealand disseminates two tables presenting services exports by modes of supply for main

services items and for main partners. Mode 3 is out of the scope of the BOP survey which is used to

collect the information on trade in services by mode so only modes 1, 2 and 4 are presented in two

tables. Table 20.5 presents exports of services by mode of supply and broad type of services and is

provided below. A similar table shows by mode, the main partners to which services are supplied.

E. Combined presentation of international merchandise and trade in services statistics

20.65. The presentation of an integrated set of statistics is recommended by the UN Statistical

Commission as such will benefit the users, in creating a better understanding of the disseminated data

and reinforcing messages for evidence-based policy and decision making.370

20.65. Users expect that trade statistics cover both goods and services and are presented to them as a

coherent data set. Such presentation of the data is essential for enabling users to better understand

international trade between country A and B and a country’s export and import profile.

20.66. To meet this user expectation it is a good practice that compilers, in addition to making trade in

services statistics available in their own right, closely cooperate with compilers of IMTS in order to

370 Guidelines on Integrated Economic Statistics, paragraph 5.115.

http://unstats.un.org/unsd/nationalaccount/docs/IES-Guidelines-e.pdf.

Presence of

natural persons (3)

Consumption

abroad (4)

Information and commuinication technology services 642 69 14

Financial services 189 2 1

Trade and sales services 551 34 20

Business services 831 66 25

Technical and prof essional services 343 137 9

Intellectual property 469 … …

Miscellaneous services 136 84 12

Entertainment and recreational services 219 71 24

Services not elsew here classified 43 -- 1

Total 3,424 463 105

2. Cross border supply is w hen the w ork is perf orme d in New Zealand and delivered to a customer overse as (eg by Internet,

phone, or mail).

3. Presence of natural persons means the w ork is pe rformed by a New Zealand employee w orking in a fore ign country.

4.Consumption abroad is w hen the customer travels t o New Zealand to take delivery of the service.

Sym bols :

…not applicable

-- amount too small to be expressed

Source: Statistics New Zealand

1. Data may not add to stated totals due to roundin g.

Year ended 30 June 2011

NZ$(million)

Broad service type

Mode of supply (1)

Cross-border

supply (2)

333

develop a policy of presenting some data on resident/non-resident trade in services and merchandise trade

alongside each other (as appropriate), accompanied with appropriate explanation of their scope including

conceptual overlaps and numerical assessments of such overlaps. It is also good practice to provide

guidance on interpreting the data, including examples on how the data can and cannot be used.

20.67. In particular, a combined presentation of the data should be considered, as long as users are

informed of the methodological differences behind the figures and the data are made as comparable as

possible beforehand. For further discussion of the methodological differences between trade in services

and merchandise trade (e.g., in terms of coverage, timing, valuation, and classification) and for

adjustments needed to make the data comparable, see Annex D.

E.1. Country experience: Germany

20.68. In 2011 the Deutsche Bundesbank and German Statistical Federal Office decided to present

merchandise trade data combined with trade in services data in a collaborative publication for interested

users on a yearly basis. It was published for the first time in 2012 on the websites of both institutions and

is available only in an electronic version.

20.69. It contains annual data from 2009 on of merchandise trade from Foreign Trade Statistics (FTS)

broken down into main industrial groupings, selected economic activities and country groups. Due to the

methodological differences between FTS (movement across the border) and Balance of Payments

concepts (change of ownership) the publication also provides some basic information about the total

corrections made to reconcile merchandise trade with the goods account on a Balance of Payments

Basis.371

20.70. Trade in services is broken down by major service items like travel, transport, construction or

financial services and by country groups already used for merchandise trade. To highlight the relevance of

the aggregates for the economy, the publication further contains a table with relations of exports and

imports of merchandise and services to GDP.

20.71. The publication provides users for the first time a complete picture about the German trade with

the Rest of the World in a coherent way. However, the current version is quite condensed and so the

Bundesbank has to wait for users' feedback. As mentioned before, the publication will be updated on

regular basis at the end of year following the reporting period (t-1).372

371 For further details about the necessary adjustments, see Table 10.2, page 161, in the BPM6.

372 An English version of the publication is currently not available. The German version can be found under:

http://www.bundesbank.de/Redaktion/DE/Pressemitteilungen/BBK/2012/2012_12_07_ausfuhren_waren.html.

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Chapter 21 Use of Information and Communication Tec hnology

21.1. Scope. This chapter provides a summary of good practices associated with the use of information

and communication technology (ICT) (section A) in the collection and dissemination of statistics

compiled within the framework for describing the international supply of services. The ways in which

ICT can be used at the data collection stage are discussed in section B, while the data compilation and

dissemination stages are reviewed in section C. The topics covered include electronic data collection and

compilation methods, including electronic questionnaires, computer assisted personal interviewing,

internet data collection, and data and metadata warehousing, as well as technological considerations at the

dissemination stage. The chapter also includes country examples on implementing web-based statistics

reporting portals and a mobile application for data dissemination.

A. Summary of good practices

21.2. Compilers are encouraged to consider implementing electronic data collection methods (such as

electronic questionnaires, computer-assisted personal interviewing, internet data collection and electronic

file transmission), as they offer the possibility of improving the accuracy and timeliness of statistics,

reducing survey cost and reporting burden, and diminishing the compilation burden. Given the

complexities of collecting data on the international supply of services and its various dimensions,

adopting an electronic data system may assist in collecting detailed breakdowns by e.g. type of service,

partner country, or mode of supply, as well as for different types of variables.

21.3. It is a good practice that electronic data collection methods, especially electronic surveys, include

the use of built-in automatic edits and other devices, such as automatic data fills and calculations, prompts

for missing fields, and automatic skipping of not applicable questions, which allow the respondents to

avoid errors and to fill in the questionnaire more easily and faster.

21.4. Compilers should also be aware that use of electronic questionnaires may introduce certain bias

in survey results (at least in the early stages of implementation), whereby some potential respondents may

be unable to participate due to lack of access to, or lack of familiarity with, the appropriate technology.

21.5. Compilers are advised to design their processing systems in an efficient way so that data and

metadata can be conveniently retrieved from the relevant databases, be used in the generation of the

intermediate and final datasets, and be updated and synchronized. In this context, compilers are

encouraged to design and use a data warehousing system of data and metadata by which the dissemination

of information becomes integrated with the collection and processing components of the statistical

production process.

21.6. Compilers are further advised to choose the form of technology used for dissemination based on

the nature and quantity of data to be published. In making these decisions, statistical organisations should

also consider the needs of their users, e.g. publish a standard dataset which meets the needs of most users

via the most readily accessible technology, and provide more sophisticated data sets via different

dissemination methods such as online interactive databases (free or not). Printed publications can also be

produced more easily with an effective use of information technology.

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B. Use of ICT at the data collection stage

21.7. Electronic data collection includes the use of electronic questionnaires via computer assisted

personal interviewing (CAPI), computer assisted telephone interviewing (CATI), computer assisted web

interviewing (CAWI), and internet data collection (possibly via an internet portal), among others.

Electronic forms may ease the collection for data but also present new challenges and opportunities, for

example in improving editing. In particular, it offers the possibility of using built-in edits previously not

possible in paper or other non-electronic modes of data collection. More generally, electronic data

collection can result in other efficiency gains by allowing for study and upgrading of current editing

practices or editing practices associated with other non-electronic collection modes, analysis of different

problems using multimode data collections, measuring the respondent burden, and measuring the quality

and reliability of responses in order to provide valuable information to other survey processes.

21.8. The use of electronic questionnaires improves the accuracy and timeliness and, at the same time,

reduces survey cost, reporting burden and processing burden. First, the elimination of the need for the

statistical agency to manually enter data from surveys prevents a common source of error. Moreover,

improved accuracy results from the possibility of adding built-in automatic edits in electronic

questionnaires, which allow the respondents to avoid errors or reduce the time spent in filling-in

questionnaires. For example, devices such as automatic data fills and calculations, prompts for missing

fields, and automatic skipping of not applicable questions could help the respondent to fill in the

questionnaire more easily, more accurately, and faster. Although, as with any form of questionnaire, it is

possible for survey respondents to misinterpret the questions, electronic questionnaires would help to

reduce this risk by including within the electronic forms notes explaining the type of information that is

expected from respondents and definitions of key concepts. Therefore, the use of electronic

questionnaires is encouraged as it enhances data quality, and, in the case of statistics compiled within the

framework for describing the international supply of services, can also help in the collection of multiple

variables (e.g. receipts or payments for services, associated quantity indicators such as number of mode 4

persons/trips) and accompanying dimensions (service type, partner, relation between the parties, modes of

supply, etc.).

21.9. It is very difficult to measure the real impact of the use of such questionnaires on accuracy, given

the self-selective nature of the respondents that choose the electronic option. Compilers should also be

aware that use of electronic questionnaires may introduce a certain bias in survey results (at least in the

early stages of implementation), whereby some potential respondents may be unable to participate due to

lack of access to, or lack of familiarity with, the appropriate technology (e.g., those without a computer or

internet access, the elderly, low-income groups, or the lowly educated).

21.10. There are several methods that compilers can employ to encourage respondents to provide data

via electronic questionnaires. For example, compilers can explain the time-saving benefits of such

questionnaires to respondents or can offer incentives (e.g., temporary access to or previews of information

on survey results, or free deliveries of customized data queries). Compilers are also advised not to

underestimate the value of providing a high-level of customer service and thanking respondents for their

responses, regardless of the method of questionnaire response. Finally it is important to note that the

success of the implementation of such a process also lies in the co-operation of survey managers and IT

specialists.

21.11. Computer Assisted Personal Interviewing (CAPI). CAPI is a computer assisted data collection

method for replacing paper-and-pen methods of survey data collection and usually conducted at the home

or business of the respondent using a portable electronic device, such as a laptop, notebook or tablet. As

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the technology advances to provide lighter devices with longer battery life and more user-friendly

software, CAPI is expected to be used more often, especially for quick turnaround surveys.

21.12. Internet Data collection (IDC). IDC is a means of quick survey data collection by utilizing the

Internet in which respondents submit responses using web-based forms, sometimes available on statistics

“portals”. A system administrator retrieves the completed forms and routes them for further processing.

Existing systems of IDC often produce ready-made data files with all answers, which can subsequently be

combined – if necessary – with data obtained by other modes of collection.

21.13. Electronic file transmission. Compilers may also collect data via transmissions of data files (e.g.,

spreadsheets or in text format) through a secure website or e-mail address. This method has the advantage

of eliminating the need for the compiler to manually enter data from a survey; however, there is less

guarantee of automatic edits or checks for accuracy built into the data file in as straightforward a way as

possible in an electronic questionnaire.

21.14. Extensible Business Reporting Language (XBRL) reporting. XBRL is an XML-based computer

language developed for the electronic transmission of business and financial reports. Some regulatory

agencies have established processes for businesses to fulfil their mandatory reporting requirements using

XBRL standards. XBRL tools have also been developed for reporting of financial information to taxation

and statistical agencies. These tools reduce the cost of compliance for businesses by building reporting

requirements into standard accounting software packages in a way that automates the process of reporting

to government agencies.

21.15. The core methodology is an XBRL taxonomy that defines all the data items that the relevant

agencies require from businesses. An essential step in developing taxonomy is harmonising the data items

collected by different government agencies. If two agencies require the same definition of a data item, it

is given the same name. If the different agencies establish that they need different definitions, then they

are specified with different names. This harmonisation process not only simplifies reporting by businesses

by standardising definitions, but it also assists with integration of statistics, ensuring that different

collection agencies have coherent data definitions.

B.1. Country experience: Germany's statistics reporting portal

21.16. As in other countries, the former principle to collect data exclusively using paper forms was

replaced by offering respondents certain possibilities to transmit the requested information by electronic

means; e.g., a spreadsheet which can be uploaded via the so-called extranet infrastructure of the Deutsche

Bundesbank373, or via the submission of an electronic report or in extensible markup language (“xml”)

format.

21.17. The reaction of the reporting community on these offers was very positive, resulting in an

annually-increasing share of reports transmitted electronically. Although in the beginning the target was

to motivate notably “big players” (representing a high share of the overall reported data) to use the

electronic means, in the latter years the focus shifted to also encompass less sizable reporters (small and

medium enterprises). This shift was in response to the conclusion that only a complete electronic data

collection enabled efficiency gains in the different stages of the statistical production chain (editing,

aggregation, dissemination, etc.) and the reduction of the reporting burden.

373 For more details see: http://www.bundesbank.de/Navigation/EN/Service/Extranet/extranet.html.

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21.18. The statistical reporting portal was designed to allow all respondents to electronically and

securely transmit their data on international transaction and positions to the Bundesbank. The respondent

can either manually enter the data or import it into the portal from another source in a prescribed data

format (i.e., CSV format). In addition, the portal contains a range of help functions and plausibility checks

to ease the creation of reports; e.g., when entering data, drop-down lists show the selection options

available. The data are automatically checked and any potential errors are identified. The portal is also a

multi-client system, meaning that it can be used by third-party submitters, such as a lawyer’s office

reporting on behalf of their clients.

21.19. The main advantage of the portal is the possibility to receive higher-quality data more quickly

than paper or other electronic data collection means. Other advantages include the high level of security,

the user assistance (e.g., plausibility checks) and the integrated interface to upload large files.

21.20. At the time of writing the Bundesbank receives more than 86% of the referenced transaction

volume electronically. This high proportion of electronic reports encouraged the Bundesbank to change

its legal requirements so that all respondents transmit the requested information solely by electronic

means.

B.2. Country experience: United States

21.21. The Bureau of Economic Analysis (BEA), an agency of the U.S. Department of Commerce,

started collecting international investment data via the Automated Survey Transmission and Retrieval

(ASTAR) system in the year 2000. The system was subsequently also used in connection with surveys of

trade in services. One of the key features of the ASTAR system is its ability to allow respondents to work

at their own pace until the data are ready for submission. The system also incorporates data export and

import capabilities for integration with other software, such as spreadsheets, as well as encryption features

that safeguard the confidentiality of the reported data. In 2005, BEA began researching electronic filing

alternatives in the face of evolving technology and selected e-forms as the basis of its second-generation

electronic survey data collection program, called eFile.

21.22. One of the main benefits of the eFile system is the lower cost of maintenance when compared

with ASTAR. The eFile system is supported and maintained in-house and not by external contractors.

More specifically, BEA can build the fillable forms in-house (using the forms supplied by the Census

Bureau), whereas ASTAR must be supported by external contractors.

21.23. Another key benefit and feature of eFile is the password-protected portal site, which allows

respondents to manage their own passwords, whereas for the ASTAR system, the respondents must

contact BEA at the beginning of each reporting cycle to receive period-specific passwords. The ease of

eFile password management reduces BEA’s burden of maintenance and may also encourage more

respondents to use the eFile system.

21.24. The eFile system also has the potential to collect more accurate data, as fillable forms allow more

flexibility in checks for validity and form-specific logic than ASTAR. Additionally, BEA can better

ensure data security, as respondents save and submit their encrypted data on the BEA website. Lastly,

eFile users receive confirmation of their submissions almost instantaneously, whereas ASTAR

respondents receive confirmation only after the data have been loaded into BEA’s internal database. BEA

plans to phase out ASTAR and convert to eFile for all of its surveys. In addition, the development of a

feature allowing respondents to import their data directly into eFile without the need to enter data

manually is seen as a major improvement. The survey managers and IT specialists at BEA are committed

to work together to continually improve and augment the system..

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C. Use of ICT at data compilation and dissemination stages

C.1. Data and metadata warehousing374

21.25. With well-designed data and metadata warehouses, the dissemination of data and metadata

becomes integrated with the collection and processing components of the statistical production process.

Use of a centralized data warehousing system for data and metadata can make creating, maintaining and

accessing data and metadata more efficient and can contribute to the integration of economic statistics, as

well as help in bringing together the various set of statistics responding to user needs with respect to the

international supply of services.

21.26. As better IT tools have become available, many statistical agencies are moving towards the

development and population of such data warehouses. A data warehouse should establish a simple and

efficient process for accessing data to provide:

i. Comprehensive metadata to facilitate understanding and analysis;

ii. Consistent and coherent long-term time series;

iii. Reliable information about the availability of data;

iv. Information about the availability of updated versions of published series;

v. Contact details for the people who can provide more information about a statistical

output.

C.2. Means of dissemination

21.27. Both data and metadata can be disseminated in various formats and by various means. This

Guide advises that the statistics compiled within the framework for describing the international supply

of services are made available to users through the electronic databases maintained by the responsible

agency.375 An efficient use of IT may also ease the production of statistical publications (whether in

electronic or paper form).

21.28. The nature of the data to be published will have a significant influence on the form of

technology used for dissemination. For example, large, detailed datasets are likely to be more

appropriately published electronically, which increases the ability of users to adapt the presentation of

the data to satisfy their information needs. Likewise, where very large amounts of data are involved,

the ability to query the data and create customised datasets could be useful. In this instance, it is worth

considering creating interactive tools, such as an online table-building facility, with a user-friendly

interface. Often such online facilities also provide the option to display the data in interactive graphs

or maps, or via other forms of visualization such as infographics. Such visualizations can be a great

374 See chapter 18 for more information on data and metadata warehouses.

375 Such databases should: (a) allow free and equal access to all users to any data record considered part of official

trade in services statistics; (b) contain an extensive metadata and knowledge base; (c) allow to make queries easily

and with a user-friendly interface on the entire database, and to download query results in commonly-used data

formats (such as spreadsheets and comma delimited text files), thus reducing the need for personalized handling of

most data requests and greatly enhancing efficiency of data dissemination.

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help in communicating data and information (e.g., trends over time, distributions, comparisons across

groups, geographical origin/destination) clearly to users and can make complex information stories

easy to grasp.

21.29. Website-based electronic publications can also contain data and metadata presented in html-

format, as a downloadable document (e.g. PDF) or spreadsheet format. Internet access is clearly a key

consideration when assessing user accessibility, and the (additional) publication of some datasets in a

printed format. It should be considered in those areas where internet access is limited or where lack of

bandwidth would make downloading the data too slow. (see chapter 20, section C for more

information on data and metadata dissemination).

C.3. Country experience: Austria

21.30. The Austrian central bank (OeNB) offers a statistics mobile application (app)376 that connects

mobile users to the broad range of data provided by the OeNB, including pertinent press releases. The app

runs on Android or iOS mobile devices and was designed for smartphones, but also works well on tablets.

This tool app enables the OeNB to meet its social responsibility of providing sound financial statistics to

the broad public in a highly efficient and user-friendly way. A mobile app can reach out to a large number

of recipients and address fast-emerging target groups who are heavy users of modern technologies.

21.31. The app provides access to the following domains:

i. OeNB, Eurosystem and monetary indicators

ii. Interest rates and exchange rates

iii. Financial institutions

iv. Securities

v. Prices, competitiveness

vi. Economic and industry indicators

vii. Financial accounts

viii. External sector

ix. International comparisons

21.32. Users can select specific time series to be displayed as tables and charts. Data can be filtered for

specific frequencies and ranges, and can also be forwarded to an e-mail address for access through

another end device, such as office PCs. Bookmarks allow for quick and regular access to specific time

series. Moreover, the app automatically suggests a list of the most frequently accessed time series. Users

are alerted to new developments through integrated statistical press releases and can also access

explanatory notes and publication schedules. Users can install the app via the Android and iOS app

markets or by scanning the QR code provided on the OeNB's website.

376 http://www.oenb.at/en/Statistics/Statistics-App.html.

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21.33. The OeNB launched its app in 2011 and reached about 4,000 users in the first year. A specific

function allows for carrying out highly flexible user surveys, on which basis the application can be

adapted to user needs.

21.34. The app complements the mix of communication tools used by the OeNB, such as web presence,

publications geared to specific target groups and several instruments aimed at enhancing financial

literacy. Substantial synergies have been achieved by implementing the app in the existing IT

infrastructure. Basically, the app serves as an alternative tool for presenting data extracts from the

database that feeds the statistics applications of the web portal - the app connects to this database through

an in-house developed interface. The software itself was developed by an external software consultant.

The whole project took about 18 months to develop and implement. The efforts required to maintain the

app are limited, as it is built upon an existing and well-established infrastructure and administration is

highly automatized.

Application Of Manual Statistics

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