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For several years now, a number of international bodies such as the World Trade Organization, the OECD and Eurostat have turned their attention to the increasing internationalization of companies through the establishment of foreign affiliates, including in the service sector. In December 1993, the General Agreement on Trade in Services (GATS) gave a strong impetus to the liberalization of international service transactions, which includes establishing direct affiliates abroad. Foreign Affiliates Trade Statistics (FATS) were developed in response to the need for more effective tools for measuring this phenomenon. These statistics measure the activity of subsidiaries of foreign firms on domestic territory (inward) as well as that of subsidiaries of domestic firms located abroad (outward). The objective of these indicators is to track the various ways in which an economy becomes more international given that an increasing share of trade is carried out via affiliates established abroad. Although they cover all sectors of the economy, FATS tend to focus on internationalization in the service sector, in which it is also essential to establish a presence abroad. The compilation of these statistics gives rise to a number of theoretical and practical problems, in particular regarding the principle for the geographical allocation of control (immediate country of control rather than ultimate country of control), and the sectoral classification, which in both cases is based on the principle of resident firms: subsidiaries in inward FATS and parent companies in outward FATS (see methodological note). Moreover, the use of this data is somewhat limited, since there is still no relatively consistent basis for international wide comparisons. In any event, information is more comprehensive for inward (four variables: turnover, value-added, employment, imports and exports of goods and services) than outward data (one variable: turnover). On the whole FATS are becoming more and more valuable indicators This primarily descriptive study focuses on foreign affiliates broader sense, i.e. including trade. I

Year: 1999
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