Statistics Explained

Archive:Economic globalisation indicators by main trading partners

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Data extracted in January 2016. Most recent data: Further Eurostat information, Main tables and Database.

Authors: Pekka Alajääskö and Anton Roodhuijzen (Eurostat, Structural business statistics and global value chains)

This article is the third in a series on economic globalisation indicators. The first article gave an overview of the main indicators. The second article looked at the results for these indicators when broken down by main economic activity. In this third article, a breakdown by trade partner is presented.The ten main trade partners, for which results are shown individually, were chosen on the basis of the value of their trade in goods with the EU. The analysis of the other indicators presented in this article — trade in services, foreign direct investment and foreign affiliate turnover and employment — also looks at the same ten countries. It may therefore be the case that countries that are among the top ten partners for any particular one of these other indicators do not feature in the analysis, as they are not one of the top ten partners for trade in goods with the EU.

Table 1: Imports and exports of goods for main partners and aggregates, 2008 to 2014 (million EUR)
Source: Eurostat Easy Comext – Table DS-057555 - EU Trade Since 1988 by BEC
Figure 1: International trade in goods, import and export shares of GDP, 2008 to 2014
Source: Eurostat Easy Comext – Table DS-057555 - EU Trade Since 1988 by BEC
Figure 2: International trade in goods, imports and exports shares of GDP for ten main trading partners, 2008 and 2014
Source: Eurostat Easy Comext – Table DS-057555 - EU Trade Since 1988 by BEC
Table 2: Imports and exports of services for main partners and aggregates, 2010 to 2014
Source: Eurostat (bop_its6_tot)
Figure 3: International trade in services, import and export shares of GDP, 2010 to 2014
Source: Eurostat (bop_its6_tot)
Figure 4: International trade in services, imports and exports shares of GDP for ten main trading partners, 2010 and 2014
Source: Eurostat (bop_its6_tot)
Table 3: Inward and outward FDI for main partners and aggregates, 2008 to 2012
Source: Eurostat (bop_fdi_pos_r2)
Figure 5: Inward and outward FDI divided by GDP, 2008 to 2012
Source: Eurostat (bop_fdi_pos_r2)
Figure 6: Inward and outward FDI divided by GDP for 10 main trading partners, 2008 and 2012
Source: Eurostat (bop_fdi_pos_r2)
Table 4: Turnover, employment and productivity of foreign affiliates (oFATS) and foreign controlled enterprises (iFATS), 2011 and 2012
Source: Eurostat (fats_g1b_08) and (fats_out2_r2)
Figure 7: Foreign affiliates (oFATS) and foreign controlled (iFATS) turnover as a percentage of EU turnover, 2011 and 2012
Source: Eurostat (fats_g1b_08) and (fats_out2_r2)
Figure 8: Foreign affiliates (oFATS) and foreign controlled (iFATS) employment as a percentage of EU employment, 2011 and 2012
Source: Eurostat (fats_g1b_08) and (fats_out2_r2)
Figure 9: Ratio of foreign affiliates (oFATS) and foreign controlled (iFATS) turnover to employment (1 000 EUR), 2011 and 2012
Source: Eurostat (fats_g1b_08) and (fats_out2_r2)

Main statistical findings

  • Since 2008, the EU has turned its trade in goods deficit into a trade surplus due to a strong growth in exports, both to the rest of the world and to its ten main trading partners, with the exception of Russia.
  • In trade in services, extra-EU exports grew more strongly than extra-EU imports, thereby increasing the trade surplus between 2010 and 2014 by 50 %.
  • EU foreign direct investment in the USA and US foreign direct investment in the EU are both higher than the equivalent figures for the other nine countries considered in this article combined.
  • The ratio of turnover to employment (in thousand euros per person employed) in foreign affiliates varies greatly between countries. For foreign affiliates (outward FATS), it was highest for Switzerland (1 202) and lowest for India (74) and China (174) in 2012. For foreign-controlled enterprises (inward FATS) in the same year, it was highest for enterprises controlled by Russia (1 853) and lowest for those controlled by Turkey (146).
  • The USA, by virtue of the size of its economy, leads on all the globalisation indicators with the exception of imports of goods, with China being the EU’s biggest source of goods imports.
  • In exports of goods, China follows the USA as the EU’s second largest partner, while in all other indicators, with the exception of outward affiliate employment, it is Switzerland that is placed second among the countries discussed in this article.
  • It should, however, be noted that for many of the indicators discussed in this article, China has seen high growth rates over the period in question (2008-2014).

Trade in goods

The EU’s exports and imports dropped quite dramatically between 2008 and 2009, at the beginning of the financial crisis. Extra-EU trade recovered faster than intra-EU trade with extra-EU exports returning to their pre-crisis levels as early as 2010, and continuing to increase rapidly until 2012, after which they remained fairly steady. Extra-EU imports, meanwhile, returned to their pre-crisis levels in 2011, and increased further in 2012, since when they have fallen back slightly and remained at around their 2011 level. Intra-EU trade reached its pre-crisis level in 2011, and has shown moderate growth again in 2014. Between 2008 and 2014, intra-EU imports and exports and extra-EU imports grew at rates comparable to the growth rate of EU GDP, which stood at +7 % for this period. Extra-EU exports grew much more strongly, however, with a growth rate of +30 %, resulting in an overall trade surplus in 2013 and 2014.

When the crisis hit, it was international trade in goods that fell sharply, not only in absolute terms but also as a proportion of GDP, as can be seen in Figure 1. After a period of significant recovery between 2009 and 2012, both GDP and intra- and extra-EU exports and imports have since clearly suffered from sluggish growth. It is interesting to note that in 2013 the EU turned its trade deficit into a trade surplus by simultaneously lowering its trade deficit with its ten main trade partners and creating a trade surplus with the rest of the world.

As can be seen in Figure 2, of the EU’s ten main trade partners, imports to and, in particular, exports from China increased the most significantly as a percentage of GDP. Exports to the USA, Switzerland, Turkey and Brazil also increased as a percentage of GDP. As indicated by the improving trade balances, imports from five of the ten main trading partners fell as a percentage of GDP. This was the case in particular for imports from Japan, Norway and Russia.

In the remainder of this article, we will continue to consider the ten countries that are the EU’s main partners in trade of goods, although they may not necessarily be the main partners in trade in services, foreign direct investment or foreign affiliate turnover and employment.

Trade in services

Statistics on the EU’s international trade in services are only available from 2010 onwards, meaning that it is not possible to analyse the early effects of the crisis. Both intra- and extra-EU trade have shown a clear increasing trend since 2010, however, as can be seen in Table 2. Unlike for trade in goods, there has been no sluggishness in the growth of trade in services during this period.

The value of intra-EU trade in services in terms of share of GDP is slightly above that of extra-EU trade in services, while intra-EU trade in goods is worth almost double extra-EU goods trade, as shown by Figures 1 and 3. In trade in services, the EU’s trade surplus with its ten main trading partners has increased significantly since 2010. Over the same period, its trade deficit in trade in goods has decreased markedly. The percentage of the EU’s total extra-EU imports and exports of services accounted for by trade with its ten main trade partners was around 60 % between 2010 and 2014. This is similar for imports of goods while exports of goods was slightly higher at almost two thirds. The EU had a smaller but stable trade surplus for trade in services with its other extra-EU partners (rest of the world excluding its ten main trading partners) during the same period.

As can be seen in Figure 4, of the EU’s ten main trade partners, imports to and, in particular, exports from the USA increased the most significantly as a percentage of GDP. International trade in services with the USA is at a much higher level than is trade in services with any other partner, as can be seen in Table 2 and Figure 4. Exports to Switzerland, Norway and China also increased as a percentage of GDP. As indicated by the stable or improving trade balances, imports remained stable as a percentage of GDP (the only considerable increase being imports from the USA). Imports from four of the ten main trading partners increased as a percentage of GDP, while those to the other main trade partners remained stable.

Foreign direct investment (FDI)

Both intra- and extra-EU inward and outward stocks increased overall between 2008 and 2012 seemingly with no negative effects from the crisis. This is also true for most of the ten main partners individually, as can be seen in Table 3. The fastest growth, both in inward and outward FDI, was with China, although the total value of these investment stocks was, in 2012, still very small, and well below the value of stocks with Switzerland, Brazil, Russia and Japan, as well as with many other countries not shown here such as Canada, Australia, Singapore and a number of offshore financial centres. More information on FDI can be found in this article.

In general, the EU's outward FDI stocks are larger than stocks held by the rest of the world in the EU, thus making it a net investor. This is also true vis-a-vis its ten main partners (see Figure 5). This was already the case in 2008 but the gap between outward and inward FDI stocks then grew steadily over the period to 2012.

The dominant position of the USA in trade of services is replicated even more strongly in foreign direct investment (see Figure 6). Both inward and outward FDI stocks with the USA have grown by almost a third and are higher in value than those of the other nine countries shown in Figure 6 combined.

Foreign affiliate statistics

Table 4 shows the turnover, employment and ratio of turnover to employment, as a measure of labour productivity, for foreign controlled enterprises (inward FATS) and foreign affiliates (outward FATS). Turnover has been used for this indicator rather than value added, which is more often used, as the latter is not available in the statistics on outward foreign affiliates.

Foreign-controlled enterprises (inward FATS) that are controlled by the ten main partners have a turnover to employment ratio of 439 thousand (euros per person employed) that is more than twice the average for all EU enterprises. This is thought to be to a large extent due to economies of scale, as these enterprises benefit from being large themselves and/or being part of large Multinational enterprises (MNEs), whereas close to 99 % of EU enterprises are small and medium-sized (see the Statistics Explained article Entrepreneurship statistical indicators). This argument also explains the turnover to employment ratio of foreign affiliates (outward FATS) controlled by the EU in its ten main partners, which, at 329 thousand, is likewise higher than that of EU enterprises, although by a smaller margin.

As seen for FDI, foreign-controlled enterprises’ and foreign affiliates’ employment and turnover are also very much dominated by the USA. Switzerland is the next most important of these ten partners in respect of foreign-controlled enterprises’ employment and turnover, while China and Brazil follow the USA for foreign affiliates’ employment and turnover, as can be seen in Figures 7 and 8. Employment and turnover in the EU controlled by the USA, Switzerland, Norway and Japan are higher than the equivalent figures in these countries controlled by the EU. The reverse is true for China, Russia, Turkey, Korea, India and Brazil. In general, the EU's foreign affiliate employment and turnover are higher than its foreign controlled employment and turnover, thus making it a "net investor". This was also the case for FDI.

The highest ratio of turnover to employment for foreign-controlled enterprises is for Russia, where it jumped from an already high 794 thousand in 2011 to 1.9 million in 2012, and in Korea where it rose to 950 thousand in 2012. Figures 7 and 8 show that both these countries have fairly low turnover and employment levels.

For foreign affiliates, the highest ratio of turnover to employment is recorded for Switzerland (1.2 million) which is more than twice the second highest ratio, 578 thousand for Japan. These countries appear to be able to offer EU enterprises valuable skills that are not available in the EU. The lowest ratios of turnover to employment for foreign affiliates are recorded for India, China, Turkey and Brazil. These are the countries (of the ten main trade partners considered in this article) that account for the highest proportion of foreign affiliates’ employment after the USA.

The turnover to employment ratios recorded for the USA, Japan, Norway and Turkey do not differ significantly between foreign-controlled enterprises and foreign affiliates. For Switzerland, the ratio is higher in foreign affiliates than in foreign-controlled enterprises, while for Brazil, China, India, Korea and Russia the opposite is true. The data seems to suggest that for further-away countries (the USA, Japan, Brazil, China, India and Korea), this reflects wage differences between them and the EU as a whole, while for countries near the EU (Norway, Russia, Switzerland and Turkey), the data seems to suggest wage differences between these countries and their nearest EU neighbours. At the same time, there are many other aspects influencing enterprises' investment decisions, such as history, culture, infrastructure, human capital, tax rules and business climate, but these fall outside the scope of this article.

Data sources and availability

The set of indicators of economic globalisation

One of the objectives of the ESSnet project on measuring global value chains was to develop a coherent and consistent set of indicators of economic globalisation. The results of this work has substantially increased the system’s capacity to analyse globalised business and to produce statistical evidence in this area, as is often requested by those involved in developing future policies. Data for these indicators could be collected and published within the European statistical system (ESS).

The proposed framework of indicators contains a set of indicators grouped in five concepts covering various aspects of economic globalisation:

  • International trade
  • Foreign direct investment
  • Employment
  • Value added or turnover
  • Research and development

Indicators are available by country and broken down by economic activity and main partner (intra-EU and extra-EU). Eurostat plans to provide a further breakdown of its main extra-EU partners (USA, China, India, Japan, Russia and Brazil). A further development of experimental indicators based on micro-data linking is also foreseen.

Depending on data availability not all EU Member States are shown in all tables and graphs.

Context

One of the seven flagship initiatives of the Europe 2020 strategy is its industrial policy: ‘”an industrial policy for the globalisation era” to improve the business environment, notably for SMEs, and to support the development of a strong and sustainable industrial base able to compete globally.’ Reliable indicators of economic globalisation and its impact on the EU economy are essential for the effective implementation of this policy.

Economic globalisation is the process of internationalisation caused by or experienced by economic actors in the business economy. In practice, the main indicators of economic globalisation are defined based on the variables and breakdowns the European Statistical System (ESS) is obliged to provide, in accordance with regulations such as those applying to structural business statistics, foreign affiliate statistics, national accounts and international trade in goods.

See also

Further Eurostat information

Publications

Dedicated section

This dedicated section has more information on economic globalisation. There are also links to the tables with globalisation indicators in the Eurostat database.

Methodology / metadata

Source data for tables, figures and maps (MS Excel)

Excel.jpg Figures for statistics explained on globalisation by main partners

Other information

External links



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