Manual on Statistics of International Trade in Services

partial information on presence of natural persons may 
also be available from this source, if employment by 
foreign affiliates is among the variables collected and if 
their foreign employees, who have moved temporarily to 
the country of location of the foreign affiliate, can be 
separately identified.  
4.11.  A second source of interest in FATS statistics has 
been the growing integration or globalization of the 

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world economy.  For a variety of motivations––such as 
to achieve benefits from geographic diversification, 
circumvent trade barriers, increase proximity to markets, 
or reduce costs of labour, transportation, or other inputs–
–an increasing number of firms have expanded their 
operations beyond the countries of their owners.  The 
need to understand this phenomenon of international 
operations, and to monitor the performance of the 
foreign affiliates through which they are conducted, 
exists quite separately and apart from any trade 
agreements, and in this regard FATS statistics are an 
important analytical tool.  
4.12.  For both of these purposes, FATS statistics are of 
interest in their own right, but it will often be possible to 
discern their full significance only when they are viewed 
in conjunction with other information, such as 
comparable information on total home- or host-country 
economic activity or on services supplied through modes 
other than commercial presence.  For example, while the 
number of employees of foreign-owned affiliates in the 
domestic economy is useful information in and of itself, 
a fuller understanding of its significance could be 
obtained if the percentage of domestic employment 
accounted for by these affiliates could be computed.  For 
such computations to be possible, compilers will have to 
devote attention to issues of comparability between 
FATS variables and statistics on the domestic economy 
covering the same items. 
4.13.  To promote such comparability, the present 
Manual’s  recommendations for FATS statistics draw to 
a very considerable extent on concepts and definitions 
found in the 1993 SNA––in terms of both the entities to 
be covered and the selection and definition of variables 
for measuring their operations and performance.  This 
approach also allows FATS statistics to be related to or 
integrated with not only statistics for the domestic 
economy but also similar statistics on the activities of 
foreign affiliates in the production and distribution of 
goods.  Concerning the latter, the concepts, definitions 
and recommendations of the present Manual are also, to 
the extent possible and appropriate, harmonized with 
those expected, at the time of writing, to be used in the 
forthcoming OECD manual of economic globalization 
indicators, which will deal with foreign affiliates as 
suppliers of both goods and services.  
4.14. The present Manual’s recommendations for 
FATS statistics centre around the answers to four 
questions. (a) What is the universe of firms to be 
covered? (b) How are the data to be grouped: by 
country, by industrial activity, or by product? (c) What 
variables should be covered? (d) How might the 
statistics be developed? 
Outline of recommendations 
4.15.  The four questions raised above are addressed in 
detail below.  However, it will be helpful to outline the 
key statistical recommendations. As to firms covered, 
the  Manual recommends that FATS statistics cover all 
firms that are majority-owned by a foreign direct 
investor.  Data on such firms in the compiling economy 
should be grouped geographically, primarily on the basis 
of the country of ultimate beneficial owner but, if 
possible, with some data also being provided on the 
basis of the country of the immediate investor (first 
foreign parent).  Data on foreign affiliates of the 
compiling economy should be grouped according to the 
country of location of the firm whose operations are 
being described. As to grouping by industry or product, 
the first priority is for a grouping by industry into 
categories - termed ISIC Categories for Foreign 
Affiliates - drawn from the ISIC, Rev. 3.  Not all FATS 
variables lend themselves to a product breakdown, but 
for those that do the breakdown for services should be 
on a basis compatible with EBOPS.  Several specific 
variables are suggested for collection, to include at least 
the following basic measures of foreign affiliate activity:  
(a) sales (turnover) and/or output, (b) employment, (c) 
value added, (d) exports and imports of goods and 
services, and (e) number of enterprises.