Beside large capital flows, euro area financial centres feature important and growing trade surpluses. We investigate the composition of their gross trade flows and disentangle (i) domestic and foreign production content that is (ii) directly traded with final absorbing economies or embedded in intermediates that are carried to final destination by partner countries. This accounting exercise uncovers that foreign production transiting through their borders accounts for most of the surpluses of financial centres but also that the net surplus in domestic value added traded directly with final consumers is twice as large as in other euro area economies. MNEs allocate the value created globally to financial centres. They do so through transfer pricing practices which undermine the correct representation of the external position of these countries with a bearing also on the external position of the euro area. Their participation in production chains also appears oddly large. When we replace the official trade statistics with predictions based on the gravity law of trade, the surpluses of main euro area financial centres disappear.
Understanding the role of foreign direct investment (FDI) is of utmost importance in a world economy of increasingly interdependent economies. However, the lack of an unified data source of FDI covering a long time frame has posed serious challenges to its analysis. In this article we apply methods of network analysis to build a representation of the global FDI relationships. We show how the network representation of the global FDI can be used to identify patterns, identify preferential paths for investment, establish trends and describe the relations between countries over time. We present the results by using specific visualisation tools that graphically illustrate the interlinkages between the economies, and that can be a valuable instrument for the design and deployment of regulating instruments.
As digitalisation progresses, a variety of digital goods and services such as app purchases, streaming subscriptions and online games have become more and more important for international trade. These direct micro-transactions between businesses and consumers (B2C) have to date found little recognition in official statistics. As costs for them typically fall below national reporting thresholds, data gaps occur both in the national accounts and in the balance of payments statistics. To the best of our knowledge, this paper is the first to illustrate a step-by-step procedure to compile digital micro-transactions from a balance of payments point of view under the change of ownership principle using freely available internet data. Following the definitions of digital trade provided by the OECD, WTO and IMF handbook on ''Measuring Digital Trade'', we use freely available internet data to establish a bottom-up approach and break down the market of digitally traded services into five market segments in order to identify and quantify imports of German private households. The chosen approach turns out to be an appropriate and flexible procedure not only for closing the data gaps in external statistics, but also for taking into account novel market trends and changing user needs in a timely manner. The final results show that digital purchases certainly contribute € 7.4 billion to service imports in 2019 in the balance of payments in Germany.
Globalisation is posing important challenges to external statistics, which have been reinforced in recent decades by rapid digital innovation, the complexity and limited transparency of multinational corporate structures, and the increased importance of global financial centres. Examples of such challenges include the fragmentation of global production chains and the changing nature of foreign direct investment. One fundamental question is whether the multipurpose analytical tool provided by external statistics should be simply adapted or radically transformed to address these issues. The experience of central banks shows that a number of alternative ways can be effectively developed in the medium term to adapt the current external statistics framework, especially by: collecting supplementary data; enhancing the infrastructure supporting compilation; focusing the analysis on large and global corporate groups; presenting more granular data for the aggregates currently compiled; and revisiting the concept of foreign direct investment.
