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The statistics corner: statistics and 1992 in Europe.

The Statistics Corner: Statistics and 1992 in Europe

GROWING ATTENTION is being paid to the market unification in Europe that has been labeled "1992" because of the target of removing trade barriers and administrative restrictions by the end of 1992 for commerce within the European Community. The removal of administrative procedures is likely to have important implications for the collection of statistics by the member countries, and these implications have not received adequate attention. While some of the issues have been identified, no clear procedure has been established for addressing the difficult choices that lie ahead. Given the time required to put new statistical procedures in place, not much time is available for the design and implementation of the necessary new programs.

STATISTICS AND MARKET UNIFICATION

In many ways the market unification that is the objective of the new legislation associated with 1992 is designed to create a market equivalent to that of the United States - although the total population involved is somewhat larger, standing presently at 320 million persons. It is equivalent to transforming fifty independent states into a loose confederation, with each of the states having individually controlled (and even individually designed) statistical programs. How will coordination occur? How will standards be developed and adopted? How will administrative records be linked and compared? How will privacy be protected? These issues were not important in the development of the United States because a strong central government took the lead in developing statistical programs. No conflict existed between the individual states and the federal government. In the case of the European community, the central government is currently relatively weak and the member states are relatively strong with long historical experience and strong traditions.

At the present time the European Community has a Statistical Office, which is responsible for developing common statistics about the community. During the past decade the Community has established a number of statistical standards, although often these standards have been different from standards promulgated by the world-level statistical office of the United Nations. However, these conflicts in standards have generally not created any serious problems for statistical comparability because the source agencies - the national statistical agencies - have been able to provide information that meets both standards.

However, the rapid emergence of the "unified market" with its deadline of December, 1992, for enabling legislation has changed the dynamics of the role of statistics in the Community. A stated objective is to remove administrative barriers to free movement of goods and services within the community. As barriers are removed, the associated paperwork will be eliminated and consequently it will be impossible to calculate trade flows among the member countries. Suddenly Europe will resemble the United States in the sense that no information is available about trade flows between Michigan and New York. In the case of the U.S. it is not possible to create State Gross Product Accounts except by making heroic assumptions. Likewise it will be difficult to calculate Gross Domestic Product for individual member nations of the Community. Data will be available for the Community as an entity - data that may serve as the basis for developing protectionist regulations.

THE WORK PROGRAM

At the end of 1988 the EC adopted a work program entitled, "Statistical Program of the European Communities 1989-92." This document addresses the issues that have just been identified. On the topic of intercountry flows, the report notes:

"The implementation of the Internal Market implies that administrative and customs controls at the Community's internal borders will be abolished. The current system of intra-Community trade statistics, however, relies on the existence of customs controls. An alternative will have to be put in place because intra-Community trade statistics are important not only for the Community and Member States but also for the business community. Several alternatives are being considered, most notably the use of administrative records and direct surveys." (page 16)

Meeting these needs will be difficult because it requires a considerable amount of planning and coordination in order to design and test new programs. Further, the member countries must agree to the new system, because they will be responsible for supplying the required information. Finally, an explicit objective has been set to reduce the reporting burden on firms within the Community. Thus, firms faced with the removal of barriers are likely to oppose the imposition of statistical reports that simply reintroduce forms to be completed in order to provide details on the trade transactions.

Several further problems can be anticipated. The Statistical Office of the Community is seeking to develop standard concepts and classifications to improve the comparability of the statistics that are developed. This procedure will require some changes in concepts used by individual countries, and it will require the retraining of suppliers of information. Currently the statistical office compiles aggregate data supplied by the national statistical offices who retain control over the individual responses. Some concern has been expressed that the Community may seek to collect data directly from enterprises and that some aspects of confidentiality will be compromised. However, if valid samples are to be developed in order to replace the regulatory data now associated with border transactions, it will be necessary to develop registers of enterprises to serve as the sampling frame - a problem comparable to the U.S. effort to develop a standard statistical establishment list.

The Community Statistical Office believes it can assist business by providing useful information to the businesses, information that will serve as an incentive for businesses to provide input to the Community's statistical efforts. The Community Statistical Office has a very optimistic view about its ability to deal with these important issues. A few paragraphs from the official work program illustrate this optimism:

"Compiling statistical information at Community level means that the value of the data is greatly increased, since they acquire greater importance for the national governments, businesses and all those involved in Community affairs. Comparisons with other Member States and with the Community as a whole become increasingly important as both the public and governments seek to assess their position and their progress in the social and economics field. Putting statistics on a Community footing produces added value as a result of the aggregation and harmonization of national data. This added value is extremely high and often underestimated. It is the result of the introduction of Community standards (common nomenclatures, classifications and methods) which enables the flow of comparable statistical information to be improved. The application of standards will be guaranteed through Community legal bases. The prospect of the Single Market has given fresh impetus to work in this field.

"At the same time businesses must be encouraged to participate in producing the information necessary for their market analyses and their management. . . (page 7)

"An efficient system of enterprise statistics depends on the quality (accuracy, completeness, timeliness) of statistical returns from enterprises. This is much improved if there is an information feedback to professional associations and to firms so that the information collected is meaningful to enterprises and returned to them in an attractive way. Such a feedback can finally contribute to an efficient collection process that does not impose too much of a burden on enterprises. Finally such contacts will help to clarify the statistical information needs of enterprises operating in the Internal Market." (page 17)

THE NEAR-TERM OUTLOOK

Progress toward the unification of the common market in Europe is proceeding swiftly, especially at the business level. Many firms are actively involved in building new facilities, making acquisitions and joint ventures, and developing pan-European products and brand identities. The political integration is proceeding more slowly, e.g., the move toward a common currency, a European Central Bank, or a common telecommunications policy. The removal of restrictions to trade is likely to move forward in coming months. In fact, it is possible that the elimination of border controls and paperwork will proceed more quickly than the Community Statistical Office can work out programs with the national statistical offices to replace border documents with other surveys or administrative records for building the required statistics explicity required by the Community and its member states.

U.S. business economists will need to follow these developments as they seek to provide economic analysis and advice to their managements and as U.S. firms develop strategies to participate in the market opportunities represented by the unified market.
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Author:Duncan, Joseph W.
Publication:Business Economics
Date:Jul 1, 1989
Words:1389
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