trade enterprises characteristics: costa rican …

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TRADE ENTERPRISES CHARACTERISTICS: COSTA RICAN EXPERIENCE

ABSTRACT

International trade statistics are critical economic variables for any country. In order to obtain

data of companies involved in international trade, the Macroeconomic Statistics Department of

the Central Bank of Costa Rica (BCCR) design a software called “Declarations of Exports and

Imports” (DEI) that combines information from three different sources, using as a unifying

variable the enterprise’s ID. This software combines customs information from General Customs

Office (tariff heading such as connector with other classifications), Economic Variables Register

from Central Bank (economic variables by firm and establishment) and information from the D-

151 of the Ministry of Finance (sales distribution of retailers and wholesalers).

DEI contains information about international trade by different categories of enterprises such as:

economic activity, type of trader, size class, partner country, among others and also an import

matrix.

The authors wish to thank Henry Vargas for his advice and support. We also thank Cinthya

Marín for her work on the data. Ideas expressed in this document are those of the authors

and do not necessarily represent views of the Central Bank of Costa Rica.

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CONTENT

1. Context .................................................................................................................................... 4

2. Producing Trade by Enterprises Characteristics (TEC) ......................................................... 5

3. Linking data sources .............................................................................................................. 8

4. Resulting processes ............................................................................................................... 9

4.1 import-export process ....................................................................................................... 10

4.2 Import matrix process ....................................................................................................... 11

5. Main Results ......................................................................................................................... 14

6. The way ahead ...................................................................................................................... 18

7. References ............................................................................................................................ 19

8. Annexe .................................................................................................................................. 20

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ACRONYMS

AECR Standard Classification of Economic Activities for Costa Rica

BEC Broad Economic Categories

CIF Cost Insurance Freigh

CPC Central Product Classification

DEI Declarations of Exports and Imports

FOB Free on Board

GFCF Gross Fixed Capital Formation

HS Harmonized System

ITR International Trade Registers

ISIC International Standard Industrial Classification

NPCR Standard Products Classification of Costa Rica

REVEC Registry of Economic Variables

SITC Standard International Trade Classification

SPC-CR Costa Rica´s Standard Product Classification

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1. CONTEXT

Costa Rica has traditionally been an open economy with a degree of openness of 68%1. Exports

and imports of the country represent 32% and 36% of Gross Domestic Product (GDP),

respectively. A significant share of these exports and imports are driven by foreign companies

located in free zone areas. In this context, international trade statistics are critical for economic

analysis of the country.

For that reason international trade statistics are among the most widely consulted data.

However, such conventional international trade statistics do not offer information on the actors

who are actually engaged in cross-border trade.

The trade by enterprise characteristics (TEC)2 database aims to fill this gap, and contains

information about international trade by different categories of enterprises such as: economic

activity, type of trader, size class, partner country, etc.

The aim of this paper is to explain the process used by the Macroeconomic Statistics Department

of the Central Bank of Costa Rica to characterize trade by enterprises and it is based on linking

trade microdata with business register and customs information (using as unique identification

or key identification the enterprise ID), allowing a deeper analysis of the impact of trade on

employment and production3.

1 Measured as export plus import as share of the GDP.

2 Trade by enterprise characteristics data are available for 26 OECD and 6 non-OECD countries: including

27 EU member states (except Ireland) plus Canada, Norway, Israel, Turkey and the United States.

3 The production of trade by enterprises characteristics represents for the country a challenge in terms of

time, human resources and technology.

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2. PRODUCING TRADE BY ENTERPRISES CHARACTERISTICS (TEC)

The Macroeconomic Statistics Department has different databases or sources that can be linked

through the enterprise’s ID to achieve a complete characterization of trade by enterprises:

Economic Variables Register (REVEC for its acronym in Spanish). Developed and

updated by Central Bank of Costa Rica. The Economic Variables Register contains

characteristics by enterprise’s ID such as: location variables, sales, number of

establishments, employment, revenues, type of ownership, wages, Economic Activity

Classification (EACR), International standard industrial classification (ISIC rev.4). See

Diagram 1.

Diagram 1. Source: Economic Variables Register (REVEC)

Source: Own Elaboration.

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International trade registers (ITR). The Customs Office of Costa Rica provides a dataset

for exports and imports comprising tariff heading and their respective codes of

Harmonized Commodity Description and Coding System (HS) by: importer or exporter ID,

partner country, weight, CIF value (imports), FOB value (exports), freight, insurance, port

of entry or exit, regimen, mode of transportation, and others. The Macroeconomic

Statistics Department matches microdata of ITR and REVEC according to the enterprise’s

ID (key identification). This match allows us to know which products are being traded by

which enterprise, and classify the trade flows according to the economic activity and

other variables of interest.

Furthermore, the Harmonized Commodity Description and Coding System (HS 2012) has

correspondence tables with other classifications such as: Central Products Classification

(CPC 2.0), Economic Activity Classification (EACR), Classification of Broad Economic

Categories (BEC), International standard industrial classification (ISIC rev.4), and

Nomenclature of Products (NPCR). See Diagram 2.

Diagram 2. Source: Customs Database

Source: Own elaboration.

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Annual declaration of customers, suppliers, and specific expenditure (Special report

form “D-151”). All Costa Rican companies with sales or purchases by counterpart for

amounts higher than the equivalent of US$4.700 in a fiscal year must submit this

declaration to the Ministry of Finance every year. This form is a detailed administrative

record that shows the value of the transaction, as well as the identification of both the

buyer and the seller.

The firm that fills out the declaration is named “Reporter”, and has to declare the value

and name of the other firm to which it has sold or purchased from in a specific year

(called “Reported”). D-151 is matched with REVEC to obtain distribution channels and,

this allows for a classification of the wholesaler’s sales by economic activity.

For some countries it is difficult to obtain the final buyer of a product when sales come

from a wholesaler or a retailer. However, in Costa Rica the D-151 allows for the

construction of a database in which the final user of the goods imported by the

merchants is known.

Diagram 3. Source: Ministry of Finance Special Report “D-151”


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3. LINKING DATA SOURCES

Enterprise’s ID allows the combination of three data sources: Customs, Economic Variables

Register and D-151 of the Ministry of Finance, obtaining a large number of variables: trade by

economic activity, enterprise size class, partner country, concentration of trade, type of trader,

type of ownership, export and import intensity and others. The output obtained in the process is

called Datasets. See Diagram 4.

Diagram 4. Linking data sources


4. RESULTING PROCESSES

As previously mentioned, DEI software combines information of three sources: customs, REVEC

and D-151; to produce information about trade enterprises companies that users can visualize

in Excel and Qlikview4. The output of this process is called Datasets5.

The Information Technology Department of Central Bank is working on a new functionality that

allows for the exclusion of the data of goods belonging to non-residents. These have to be

excluded from the statistics of exports and imports according to the sixth Balance of Payments

Manual (BPM6), and have to be included in services instead6. See Diagram 5.

Diagram 5. Declaration of Exports and Imports Software: Data connection


4 Qlikview is a software for data visualization.

5 Corresponds to each of the reports that can be obtained from the system.

6 For more detail consult the document: Saborío. G, Torres. R, (2016). Services on Physical Inputs Owned

by Others Methodological and Practical Aspects. An Update.

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4.1 IMPORT-EXPORT PROCESS

The resulting process is the same for exports and imports, the only difference is the reports that

you can obtain. See Diagram 6.

Diagram 6. Resulting Processes: Export-Import Process


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4.2 IMPORT MATRIX PROCESS

With the information from the reports previously discussed, it is possible to compile a table for

imports that allows us to distinguish the use of imported goods and services from the use of

domestic goods and services. It is possible to separate the import matrix in two parts:

intermediate use that shows the use of imported goods and services by product and industry;

and the final demand that shows the use of imported goods and services by categories of final

use. See Figure 1.

Figure 1. Use table for imports

Source: Based on SNA2008 and Manual of Supply Use and Input-Output Table, Eurostat.

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The following steps are required to produce the import matrix for Costa Rica:

Import information is obtained from the customs database. Knowing that from these

imported goods by companies, some products can be used for intermediate consumption

or for capital formation, a threshold was defined (US$500 dollars) based on the import’s

value (under this threshold is considered intermediate consumption). Low value imports

undertaken by households and courier companies are considered as final consumption.

The customs information is matched with REVEC to obtain information by economic

activity and industry. Matching the importer’s profile and code in the Harmonized System

(HS) at the most detailed level allows for identification of users of specific imported

products, and also allows us to determine if the products are used for intermediate

consumption, final consumption or gross capital formation. Over 90% of the value of

imports is matched with specific importers in the database. The classification used for

products is consistent with the one used for domestic production.

Connecting tariff heading-establishment (connectors): The reporting unit is the

enterprise rather than the establishment. According to REVEC, some companies

undertake more than one economic activity. Depending on its intrinsic type, the imported

product is assigned to the corresponding economic activity that uses it.

For example, if one company undertakes two economic activities with two

establishments, e.g. footwear and wearing apparel, those tariff headings associated with

fabrics are allocated to wearing apparel and those associated with leather are allocated

to footwear. DEI Software keeps these links between tariff heading and economic

activities of the company. It is important to mention that DEI uses the distribution of

activities for establishments from the previous year. Therefore, new products are

assigned to the main activity when they are below to the threshold (previously

established). If they are above to the threshold it is necessary to associate with the

respective establishment.

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Trade-Distributions: Wholesalers and retailers sales are tracked using data from the D-

151 form. As mentioned previously, this database is matched with REVEC to classify

wholesalers and retailers’ sales by economic activity. Intermediate consumption is

allocated according to 136 economic activities. Also, it is possible to estimate final

consumption and gross capital formation, especially for products such as computers and

passenger vehicles.

Diagram 7. Resulting Processes: Import matrix process

GFCF: Gross Formation of Fixed Capital.

Source: Based on System of National Accounts 2008 and Manual of Supply Use and Input-Output Table,

Eurostat.

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5. MAIN RESULTS

The main findings presented in this section focus on concentration of trade value, partner

countries, intensity and two ways trader.

• Concentration trade by number of enterprises

This dataset presents the value of exports undertaken by the top 5, 10, 20, etc. exporting and

importing enterprises in the economy. The concentration of trade around the top exporting and

importing enterprises is disaggregated along three economic industries: “industry B-C-D-E”,

“trade and repair represented by G letter” and “other sectors”.

The Top 5 enterprises accounted for 17% of the total of exports in 2015, Top 10 for 27% and

the Top 50 for 56%. It shows the degree of concentration of the exports in few enterprises. See

Figure 2.

Figure 2. Concentration of exports by number of enterprises, 2015


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Partner country

This dataset shows the percentage of total of value that is exported to 1 partner country, 2

partners, 3-5 partners, 6-9 partners, 10-14 partners, 15-19 partners and more than 20 partner

countries.

Figure 3 indicates the concetration of trade by partner country; 15% of total value is exported by

enterprises that sent products to 15-19 partner countries and 26% to more than 20 partner

countries.

Figure 3. Concentration of exports by number of partner countries, 2015


Two way trader

Two way exporting enterprises acconted for at least 93% of total of export of the country. Only

7% accounted for exporters only.

Two way importer enterprises accounted for 75% of the total of import value. The rest 25% is for

importers only. Most enterprises are two way traders. See Graph 1.

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Graph 1. Costa Rica: trade share of two way trader and export/import only, 2015


Export intensity

This dataset presents data by export intensity: that is the share of exports on total turnover. It is

an indicator of degree of enterprise involvement in international trade.

In Costa Rica, for the 2013-2015 period export intensity is higer in foreign-controlled enterprises

(60% approximately) than in domestic controlled exporters (about 30%). See Graph 2.

Export intensity shows a slight increase from 2013 to 2015 for foreign controlled enterpries,

while domestic controlled enterprises presents a reduction.

93%

75%

7%

25%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Exports Imports

Two way trader Exporter/importer only

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Graph 2. Costa Rica: export intensity of domestic and foreign controlled enterprises, 2015


36%33%

31%

61%59%

62%

0%

10%

20%

30%

40%

50%

60%

70%

2013 2014 2015

Domestic Foreign

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6. THE WAY AHEAD

1. Incorporate improvements in the software in order to streamline the different processes.

2. Add exports of services by company and country of destination because services

comprise over 40% of all exports in Costa Rica, and servies industries represent around

60% of Gross Domestic Product.

3. Include value added information by company whenever it is available.

4. Add inventories and other information from Income Tax Return data (D-101 form of the

Ministry of Finance). See Annex 1.

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7. REFERENCES

European Commission, IMF, OECD, United Nations, and World Bank. 2009. System of

National Accounts 2008, New York, United Nations.

Eurostat. 2008. Manual of Supply, Use and Input-Output Tables, 2008 edition.

Lequiller, F. and D. Blades. 2014. Understanding National Accounts, (Second Edition). París,

OECD.

Saborio, G. and Ramírez, F. 2015. Costa Rica Import Matrices Compilation: Proportionality

Assumption and Tracking Imported Inputs. Rebase of National Accounts Project,

Macroeconomic Statistics Department. Central Bank of Costa Rica.

Saborio, G. and Torres R, 2016. Costa Rica: Services on Physical Inputs Owned by Others

Methodological and Practical Aspects. An Update. Rebase of National Accounts Project,

Macroeconomic Statistics Department. Central Bank of Costa Rica.

United Nations. 1999. Handbook of Input-Output Table Compilation and Analysis. Studies

in Methods Series F, No. 74, New York.

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8. ANNEXE

Annex 1. Income Tax Return data from the Ministry of Finance


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