Globalization and Business Registers

Conclusions from Canadian Project to redesign the Business Register

In the context of production of the

System of National Accounts

Business Register Design

• Maintain full legal structure detail including external “children” of parent companies and ultimate country of control and ownership links with “parents” or “other related” companies abroad

• Keep full operating structure all legal entities to articulate production and ancillary units as reflected by accounting units which are revenue centres, cost centres and investment centres.

Old register

• Separate registers for legal entities where only high level “enterprises” were kept – ownership and control variables only related to domestic legal context – not for BoP statistics

• Second register with Statistical Structure to articulate units for production surveys

• Problems of coherence between production data and income and investment flow data as links between the two registers were not up-to-date

Advantages of new BR

• Keeping the full legal structure and ownership and control links allows us to identify the “enterprise groups” which are the global transactors

Advantages of new register

• Measurement of Production– Measurement of production within national

boundaries in a vertically integrated multi-territory enterprise means keeping track of production establishments and ancillary units and their relationship to “parents” or “children” in order to allocate value added properly

Advantages of new Register

• Monitoring of operating structure in relation to legal structure allows us to analyse the stripping away or addition of activities as the global enterprise evolves addresses issues of “outsourcing”

Advantages of new Register

• Maintenance of control variables– Ultimate country of control maintained for

highest Canadian enterprise helps monitor Inward foreign direct investment

– Full family of children of legal entities abroad maintained to monitor outward foreign direct investment

Advantages of new register

• Coherence between production statistics (which use operating structure to collect data for calculation of value-added statistics by industry) and investment flow statistics collected at the enterprise level using the legal structure to measure primary and secondary distribution of income, savings and investment

Conclusion

• The first step in keeping SNA statistics on track is maintenance of a business register which articulates both the ownership and control structure AND the operating structure so that changing industrial structure of the economy is coherent with data on international income and investment flows.