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International Sourcing

International Sourcing. Explaining effects on employment, performance and international trade by micro data linking. COST Expert Meeting Leuven 28-29 April 2011 René Bongard Statistics Netherlands. Contents. Introduction The 2007 International Sourcing Survey

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International Sourcing

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  1. International Sourcing Explaining effects on employment, performance and international trade by micro data linking COST Expert Meeting Leuven 28-29 April 2011 René Bongard Statistics Netherlands

  2. Contents • Introduction • The 2007 International Sourcing Survey • Methodology – micro data linking • The linked micro dataset • Results • Conclusions • Future research International Sourcing - micro data linking

  3. Introduction • Globalising economy caused by: • Developments in information and communication technology & logistics • Disappearance of borders & trade barriers • … • Consequences: • More international trade • More foreign direct investment • More International Sourcing • More people cross borders for working • More difficulties for national statistical institutes and policy makers • … International Sourcing - micro data linking

  4. What is International Sourcing? • The total or partial movement of (core or support) business functions currently performed in-house or currently domestically sourced by the resident enterprise to either non-affiliated (external suppliers) or affiliated enterprises located abroad. • Enterprises may have different motivations for locating activities abroad, for example: • Access to new markets, raw materials, cheap labour or high-educated labour (knowledge & technologies) • Regulatory advantages (taxes / environmental rules) International Sourcing - micro data linking

  5. What is International Sourcing? International Sourcing - micro data linking

  6. Why measuring International Sourcing? • Important for policy makers • National accounts do not fully cover the growing international aspects of the economy • Dynamic behaviour of multinational enterprises • Lack of appropriate existing statistics • Foreign Affiliate Trade Statistics • International Trade Statistics (goods and services) • Foreign Direct Investment • Input-Output tables • Balance of Payment • Structural Business Statistics International Sourcing - micro data linking

  7. Policy relevance • What are the consequences of international sourcing in the Netherlands (in Europe)? • On employment? • On performance of enterprises? • On imports and exports of goods? International Sourcing - micro data linking

  8. Research question 1 • What are the consequences of international sourcing on employment in the Netherlands (in Europe)? • Number and types of jobs created / lost • Wages • Per industry / sector / activity International Sourcing - micro data linking

  9. Research question 2 • What are the consequences of international sourcing on enterprises’ performance in the Netherlands (in Europe)? • On added value creation, turnover, gross operating surplus • Per industry / sector / activity • Per enterprise profile (size class, group member) International Sourcing - micro data linking

  10. Research question 3 • What are the consequences of international sourcing on imports and exports of goods in the Netherlands (in Europe)? • Increase / decrease export-intensity to destination • Increase / decrease import-intensity from origin International Sourcing - micro data linking

  11. The 2007 International Sourcing Survey • International Sourcing Survey 2007 • Data collected by 13 European countries (DE, CZ, NL, DK, ES, IE, PT, FI, SI, SE, GB, NO) • Focus on relocation of domestic production of goods and services to producers located abroad • Enterprises in non-financial markets with more than 100 persons employed • Data covers the period 2001-2006 • 1500 enterprises in Dutch sample • 1000 enterprises responded (voluntary survey) International Sourcing - micro data linking

  12. The 2007 International Sourcing Survey • Business function approach • Core business function • Production of final goods or services for the market • Support business function • Carried out in order to permit or facilitate core business • Distribution and logistics • Marketing, sales and after sales services • ICT services • Administrative and management functions • Engineering and related technical services • R & D • Other International Sourcing - micro data linking

  13. The 2007 International Sourcing Survey • Module 1: General information • Module 2: Sourcing activity of the enterprise • Module 3: Sourcing activity of the enterprise carried out internationally during 2001-2006 • Module 4: Plans for international sourcing 2007-2009 • Module 5: Future impact on employment • Module 6: Barriers on international sourcing International Sourcing - micro data linking

  14. Methodology - micro data linking • Linking International Sourcing data on enterprise level with: • Structural Business Statistics • business economical data • International Trade (in goods) Statistics • export and import of goods to destination / origin • Backbone: General Business Register • Business structures and general data (size, sector) • Social Statistical Register • persons, jobs, wages International Sourcing - micro data linking

  15. Methodology - micro data linking • Define research and control group • Research group: enterprises sourcing internationally in 2001-2006 • Control group: enterprises NOT sourcing internationally in 2001-2006 • Make sure groups are comparable by controlling for: • Sector / Industry • Export • Member of enterprise group • One dataset containing: • 156 sourcing enterprises and 156 non-sourcing enterprises • 50+ variables for 2000 - 2008 International Sourcing - micro data linking

  16. Methodology - micro data linking International Sourcing - micro data linking

  17. Methodology - limitations • Linking issues: not always 100 % match • No direct causal evidence due to linking of different sources (but control variables reduce this issue) • 156 enterprises in each group • Outlier effects because of few very large enterprises • Median figures more robust than mean figures International Sourcing - micro data linking

  18. The linked micro dataset • General business information • Size class (persons employed) • Activity (NACE classification) • Reference year is 2007 • International Sourcing Survey 2007 • Enterprise group status • Group head / subsidiary / not part of group • International sourcing in 2001-2006 (yes/no) • International sourcing to destination country / region • International sourcing of core / support business function • Motivation factors for international sourcing • Barriers for international sourcing International Sourcing - micro data linking

  19. The linked micro dataset • Structural Business Statistics (2000 – 2008) • Employment (number of employees) • Personnel costs per employee • Value added at factor costs per employee • Gross operating surplus per employee • Purchases of goods and services per employee International Sourcing - micro data linking

  20. The linked micro dataset • Foreigntrade in goodsstatistics (2002 - 2008) • Total importsfromorigin • Total exports to destination • Total imports as % of turnover • Total exports as % of turnover • Social Statistical Register • Number of jobs • Average annual wage • Number of employed persons • Gender, high-/lowpaid, age, ethnic origin, fulltime/parttime, municipality International Sourcing - micro data linking

  21. Results – international sourcing & effects on employment International Sourcing - micro data linking

  22. Results – international sourcing & effects on employment (Denmark & Finland) International Sourcing - micro data linking

  23. Results – international sourcing & effects on employment International Sourcing - micro data linking

  24. Results – International sourcing & effects on added value creation International Sourcing - micro data linking

  25. Results – International sourcing & effects on added value creation (Denmark) International Sourcing - micro data linking

  26. Results – International sourcing & effects on gross operating surplus International Sourcing - micro data linking

  27. Results – International sourcing & effects on import intensity International Sourcing - micro data linking

  28. Results – International sourcing & effects on export intensity International Sourcing - micro data linking

  29. Conclusions • Employment effects • International sourcing leads to reduction of number of employees • Wages increase after sourcing internationally, suggesting that relatively many low-skilled jobs disappear • Enterprise performance effects • Added value per employee increases after international sourcing: activities generating higher added value remain in the enterprise (domestic), while lower added value activities are located abroad • Gross operating surplus per employee increases International Sourcing - micro data linking

  30. Conclusions • International trade effects • Data is less robust and only available for 2002 – 2008 • Lower import intensity after international sourcing • Higher export intensity after international sourcing • No explanation, more research necessary International Sourcing - micro data linking

  31. Conclusions • Methodological conclusions: • First project with effective micro data linking by several European National Statistical Institutes • Data comparable between European countries due to joint questionnaire design and synchronised micro data linking • Micro data linking is efficient and effective method for analysing effects of international sourcing International Sourcing - micro data linking

  32. Challenges & futures research • Currently upgrading 2007-IS-survey to measure Global Value Chains & International Sourcing (together with Statistics Denmark, Finland, Portugal, Rumania) • Plan to implement new survey in 2012 • New joint European data-linking project after 2012 • ESSNET on Globalisation starting in summer 2011 International Sourcing - micro data linking

  33. Challenges & futures research • Globalisation research has high priority at Statistics Netherlands • Internationalisation Monitor • Research program • Micro-macro integration (feeding National Accounts) • Globalisation has no borders: statistical researchers from different countries and different fields have to cooperate (international trade, transport & traffic, structural business statistics, financial statistics, social statistics, environmental statistics) International Sourcing - micro data linking

  34. Questions / Comments / Suggestions If you have any questions after this conference, you are welcome to contact me on r.bongard@cbs.nl International Sourcing - micro data linking

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