Understanding Business Dynamics of Globally Engaged Firms

This study delves into the data challenges faced by globally engaged firms, exploring aspects such as job creation, establishment births and deaths, and the characteristics of multinational enterprises. It highlights the significant role these firms play in the U.S. economy, showcasing their outsized impact on trade, productivity, and innovation.

• Business dynamics
• Globally engaged firms
• Data challenges
• Multinational enterprises
• U.S. economy

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1. Business Dynamics of Globally Engaged Firms: Data Challenges J. Bradford Jensen Fariha Kamal U.S. Census Bureau Georgetown University and U.S. Census Bureau FESAC December 11, 2020 Disclaimer Any opinions and conclusions expressed herein are those of the authors and do not necessarily represent the views of the U.S. Census Bureau. All results have been reviewed to ensure that no confidential information is disclosed. 1

2. Business Dynamics Statistics: Background BDS (https://www.census.gov/programs-surveys/bds.html) Provides annual measures of business dynamics (such as job creation and destruction, establishment births and deaths, and firm startups and shutdowns) for the economy and aggregated by establishment and firm characteristics. Joint project between Research & Methodology and Economic Directorates Currently available: 1978-2018 2

3. Broad Motivating Questions Outsized role of globally engaged firms in the U.S. economy The top 1 percent of traders account for over 80 percent of total U.S. goods trade (Bernard, Jensen, Redding, Schott, 2018) Multinationals are larger, more productive, more R&D intensive, and more export oriented than domestic firms (Helpman, Melitz, Yeaple, 2004; Antras & Yeaple, 2014) 3

4. Business Dynamics Statistics of Globally Engaged Firms BDS-Exporting Firms Merchandise exporters (Census and Customs) Services traders (Census and BEA surveys) BDS-Importing Firms Merchandise importers (Census and Customs) Services traders (Census and BEA surveys) BDS-Multinational Firms Multinational enterprises (Census and BEA surveys) 4

5. Trade in Services: Collaborative Efforts Joint BEA-Census project to investigate feasibility of combining various measures of services trade in: BDS-Exporting Firms BDS-Importing Firms

6. Trade in Services: Collection System BEA Trade in Services Surveys Firm level imports and exports by services product, destination, & affiliation Census Bureau Economic Census Establishment level, select industries, exports Services Annual Survey Firm level, select industries, exports Company Organization Survey (2006) Firm level imports

7. Trade in Services vs. Goods: Coverage Administrative system (transaction) vs. survey collection (firm) 10,000 Harmonized System codes vs. <100 services categories Services product definitions follow international guidelines (e.g. IMF Balance of Payments and International Investment Position Manual, 6th edition) Higher exemption levels Goods: >=$2,500 for exports; >=$2,000 for imports Services: >$2 million for receipts; >$1 million for payments

8. Trade in Selected Services: BEA Surveys (in million USD) Source: Bruner and Grimm, 2019

9. Trade in Services: 2012 Economic Census Exports (million USD) 52,079 21,593 2,424 45,362 1,248 6,679 523 1,052 130,960 Sector Information Finance and Insurance Real Estate Professional, Scientific, Technical Services Management of Companies Administrative Support Arts, Entertainment, Recreation Other Services Total

10. Trade in Services: 2012 SAS Exports (million USD) 41,721 11,030 63,180 550 1,602 118,083 Sector Information Finance and Insurance Professional, Scientific, Technical Services Administrative Support Arts, Entertainment, Recreation Total

11. Trade in Services: Comparison Census collections Incomplete sectoral coverage No information on imports Establishment/firm BEA collections High exemption levels Firm Main takeaway: Challenging to identify universe of services exporters and importers to augment BDS-GEF.

12. Trade in Services: Proposals Explore collecting services imports and exports across in-scope industries (e.g. annuals or EC) In-scope industries: services, manufacturing, retail, wholesale Explore tax data (Forms 5471, 5472, 8993) Explore expanded coordination between BEA and Census on trade in services collection

13. Trade in Services: Unit of Collection? Establishment: permit detailed distribution by industry and geography EIN: tax unit Firm: comprehensive information at headquarters Trade-offs: respondent burden and publication detail

14. Trade in Services: IRS Forms Form 8993 (Services exports, 1b, 1c) Form 5472 (Services imports, 2, 5a, 6, 7) Form 5471 (Services imports, 3, 6, 8)