Manual on Statistics of International Trade in Services

2.60. FDI reflects the objective of obtaining a lasting
interest by a resident entity in one economy (a direct
investor) in a business in another economy (a direct
investment enterprise). The lasting interest implies the
existence of a long-term relationship between the direct
investor and the direct investment enterprise, as well as a
significant degree of influence on the management of the
enterprise. Direct investment includes the initial
transaction between the two entities and all subsequent
financial transactions between them and among
affiliated enterprises, both incorporated and
unincorporated. In inward and outward direct
investment statistics, where feasible, the direct
investment enterprise should be classified by its
industrial activity in the host country and by the
industrial activity of its direct investor.
2.61. A foreign direct investor is an individual, an
incorporated or unincorporated public or private
enterprise, a government, a group of related individuals
or a group of related incorporated and/or unincorporated
enterprises that has invested in a direct investment
enterprise. A direct investment enterprise is a subsidiary,
associate or branch operating in a country other than the
direct investor’s country of residence. The conceptual
basis for compiling foreign direct investment statistics
has been defined in BPM5 and in the OECD Benchmark
Definition, involving such concepts as direct investor,
lasting interest, significant influence on management and
at least 10 per cent equity interest or equivalent voting
power. 36
2. BPM5 extensions
(a) Analysis of balance of payments transactions by
origin and destination
2.62. Balance of payments statistics by origin and
destination are needed for analytical and policy purposes
and for use in bilateral and multilateral negotiations.
Country or regional analysis of trade in services,
whether associated with balance of payments
transactions, foreign direct investment or FATS, is a
necessary complement to both product and economic
activity classification systems. To the extent feasible, an
identical geographical basis should be used for all
related sets of services statistics. The geographical
allocation of services transactions in the balance of
payments is to the country where the provider or
acquirer of the service is resident.
36
For additional detail on direct investment concepts and
definitions, see box 7.
18
(b) The Extended Balance of Payments Services
Classification
2.63. The Extended Balance of Payments Services
Classification has been devised for the <strong>Manual</strong> based on
the experience gained with the implementation of the
Joint Classification. It is a disaggregated sub-system of
the BPM5 services classification. Annex II shows the
relationship between EBOPS, the BPM5 classification
of services and the Joint Classification. Correspondence
tables are provided in annex III linking the EBOPS with
CPC Version 1.0, thus providing greater detail and a
necessary although partial statistical link between
domestic production and trade in services. The need for
a convergence of the product classifications of industry
and trade, for comparative purposes, requires further
development work to more closely align the structural
components of EBOPS and CPC. The correspondence
shown in annex III is an important first step in this
direction, which clarifies the definition of EBOPS
through the use of the detailed categories of CPC. As
described in chapter III, EBOPS contains main
categories that are identical to the 11 major BPM5
standard services components, as well as further details
that are consistent with BPM5. The harmonization is
bolstered by the standardization of the coding systems
for identification and reporting purposes.
3. Foreign affiliates trade in services statistics
2.64. Affiliates are often established abroad to deliver
services that require close contact between the supplier
and the consumer. In the present <strong>Manual</strong> and following
GATS coverage, domestic sales by foreign affiliates are
covered by the term “international trade in services”.
However, because foreign affiliates are resident entities
in their host country, their sales in these countries are not
recorded in the balance of payments accounts, which are
only concerned with transactions between residents and
non-residents.
2.65. FATS statistics have been designed to capture
such information. In addition, FATS statistics include a
range of other statistical indicators so as to assess
diverse aspects of the globalization phenomenon and to
monitor the commercial presence mode of supply in a
variety of contexts, such as those relative to trade,
domestic output and employment.
(a) FATS statistics: concepts and classification
2.66. FATS statistics measure the commercial presence
abroad of service suppliers through affiliates in foreign