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SERVICES IN THE U.S. BALANCE OF PAYMENTS 1982-1984: DOCUMENTATION OF OT A ESTIMATES July 1986 Industry, Technology a1:d Employment Program Office of Technology Assessmeni Congress of the l!nited States Washington, D.C. 20510-8025 The views expressed in this working paper are not necessarily those of the Technology Assessment Board, the Technology Assessment Advisory Council, or of the individual members thereof.
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IftTIQDUCTIQN Thia paper docwaenta the procedure and aaaumptiona used to prepare OTA' eatimatea of the impact of aervicea trade on the Nation's balance of payment aa publiahed in the OTA Special Report Trade in Services; Export and Forei&D Reyenuu. OTA' eatimate, were compiled using the beat available data from aourcea including: o report and survey of t~e Department of Commerce i.e. the Bureau of Economic An&lyaia (BEA), the Census Bureau, the International Trade Adminiatration, the Travel and Touriam A~miniatration, and the National TelecoamNnicationa and Information Administration; o BEA'a inbound and outbound surveys of ~reign direct investment (FOi); o report and aurveya by other Government agencies i.e. the Fedoral keaerve Board, the Department of Transportation, Education, Labor, and Treaaury, the International Trade Commiaaion, the Federal Communications co-iaaion; o company armual report and 10-K data reported to the Securities and Exchange Co1111i1aion; o previous aments of the Office of Technology Assessment. o report and articles in the general and business press (e.g., i&ll Street Journal. Financial Times, The Economist, Business~. Fortune, Forbea), aa well as the specialized trade press; o other private-sector surveys and publications --e.g., by trade aaaociationa; o interviews with people having knowledge and expertise concerning the industry in question, including Commerce Department and other Government officials, private sector and trade association representatives, independent consultants, and academics. For each aector, the data judged most reliable were used to construct an estimate of the value of U.S. service ex~orts and imports, as well as sales through foreign affiliates, for the period 1982-1984. OTA relied exclusively on the official U.S. balance of payments data only for those sectors (most notably licensing and transportation) where no alternative sources of information were available. In those cases where no precise estimata was possible, OTA presents a 4ange that reflects the degree of uncertainty. The remainder of this paper is a detailed discussion of the data sources, adjustments and underlying assumptions utilized in constructing OTA's balance of payments and foreign revenue estimates for each service sector. I
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Service in the U.S. Balance of Payment 1982-1984 Page 2 ACC9JJJJTING The estimates for direct exports are based on partial data in the BEA outbound benchmark sun-ey of foreign direct inveatment (FDI)(reference 75). Six U.S. parent firms were reported in the 1982 survey, with total salda of nearly $3.4 billion. Th aix firms had service export~ of less than $200 million, including aale to foreign affiliate. Thi is uaed as the lower bound eatimate. Total U.S. aalea of the Big Eight in 1982 were roughly $5.3 billion according to Public Accountin& Report (reference 55); therefore the six parent firms accounted for about 64 percent of Big Eight sales (and most if not all of these six IIUSt therefore be Big Eight firms). If they accounted for a similar share of Big Eight export, total Big Eight service exports would be at most about $300 million. Givn the dominance of the Big Eight in the U.S. export market, it therefore seeu safe to assume that industry exports were at most $0.5 billion. The totals for foreign affiliate sales include not only those reported in the FDI surveys but also the non-U.S. sales receipts of U.S. firms' foreign networks (even though the foreign fil'IU in these networu are not "foreign affiliate" in the atrict legal aenae of the term). The lower bound represents revenue of the foreign networu of the Big Eight firma aa reported in Public Accountin& Report (reference 55). The upper bound includes not only the Big Eight but tho aecond tier U.S. firma with fo1eign networks aa indicated in International Accountin& Bulletin (reference 35). Only those fir.ma whose worldwide network earned 110re than 50 percent of total revenue in the United States are treated aa U.S. firm with foreign networu. (Those whoae net"~orks earned less than 50 percent of worldwide revenues through their U.S. operations were defined as foreign firms with U.S. networka, and are included in the totals for U.S. revenues of foreign firms as described below.) Data on direct imports are not available but all analysts conferred with agreed that the total is negligible, as most foreign accounting firms operato through their affiliations with the Big Eighc U.S. firms. For U.S. affiliates of foreign firms, the total prsented includes all major firms listed in International Accountin& Bulletin (reference 35) whose worldwide networks earned less than 50 percent of total revenues in the U.S. market. The figures pres~nted reflect the total U.S. sales of those networks. ADVERTISING For direct exports, the lo~er bound ls based on data reported by U.S. advertising parent firms in the BEA direct investment surveys (references 75 and
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Service in the U.S. Balance of Payment 1982-1984 Page 3 76) The upper bound ia baaed on the difference between the total reported for affiliate in the BEA urveya and the total foreign revenue reported in the annual urveya of Ady1rti1in1 A& (referenc~ 95, 96 and 97). The figure uaed from Adyerti1in1 A11 exclude tho aubaidiari which are double-counted in the annual aurvey. Thus, the upper bound aumption 1 that any revenue appearing in the Ady1rti1in1 611 aurvey but not in th FDI aurvey reprent direct export earning. The lover bound aaaumption 1 that none of th exceas revenues repreaent export earning (i.e. they were affiliate aalea). For direct illporta, converaationa with industry experts indicate that the total ia negligible. For both foreign firms' U.S. affiliate and U.S. firm' foreign affiliates, data are from the BEA FDI aurveya for 1982 and 1983 (references 30, 31, 75 and 76, reapectively). For foreign revenue of U.S. bank.9, 1984 data are aa reported in unpublished Federal Reerve Board data from achedule RI-D, Quarterly Report of Condition and Income (reference 56). Data on international operations in these report are tillated by the reporting bank~. The survey includes all banks for which international operatior.a account for more than 10 percent of total revenues, total aaets or net income. For 1982 and 1983, data on U.S. banks' foreign revenues are from the Federal Reerve System a preented in the Annual Statistical Digest (references 89, 90) For non-interet income, it is not posible to allocate the total between dometic and foreign offices because IBF (International Banking Facilitiea) were included in the totals for foreign offices prior to 1984. The Federal Reserve data include only those affiliates owned or controlled at the 25 percent equity level or greater. Data from the 1982 benchmark outbound direct investment survey (reference 75) include all affiliates (i.e. at the 10 percent equity level or greater). However, the data in this survey present total income, which cannot be disaggregated into interest and noninterest components. Also, net interest income cannot be reliably estimated from the total income figures (which includos gross interest income and noninterest income). For foreign banks' U.S. operations, no comprehensive revenue data are available. Tne data for net interest income booked in foreign (non-U.S.) banks are estimates based on Treasury data on U.S. liabilities to foreigners (reference 74) and assuming a typical range of yields on those liabilities as follows:
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Service in the U.S. Balance of Payments 1982-1984 Page 4 a. Year-end bank liabilities to unaffiliated foreign banks, payable in US dollar, 1981 1982 ( in millions): 26730(est) 50230 b. Bank liabilitie to foreigner, payable in foreign currencie ( in millions~ : c. US nonbank foreign financial liabilitie (in gillions): d. Swa of a-c: e. Et average balan~e for year (in millions): f. Revenue (asswaing 51 net on average balance (in billions): g. Revenue (asswaing 21 net on average balanc. (in billions): 3523 12157 42410 4844 11066 66140 54275 $'L 7 $1.1 1983 60236 5219 10441 75896 71018 $3.6 $1.4 1984 74794 7542 13951 96287 86092 $4.3 $i. 7 The above repreent U.S. interest payments on liabilities booked in foreign offices. For U.S. offices of foreign banks, data on receipts are not available. Using Federal Reserve data on asset levels and U.S. banking industry averages for yields, receipts can be ti.mated as follows: 1981 1982 1983 1984 Assets at year-end (in billions): $251. 218 301.022 333.336 378. 314 Estimated average balance assets (in billions): $276.1 317 .2 355.8 US banking industry averages: net interest income/assets: .0317 .0315 ,{'316 non-interest income/assets: .0105 .<'112 .0127 Implied net int. income (upper bound): $8.8B $10.0B $11. 28 Implied non-int. income (upper bound): $2.9B $3.68 $4.58 Estimated share of above r~preenting U.S. business: 251 251 251 Modified net interest income (upper bound): $6.6B $7.5B $8.48 Modified non-interest income (upper bound): $2.2B $2.78 $3.4B Total upper bOUlld estimate: $8.8B $10.28 $11. 8B Given the clear uncertainties of the above me~nod, particularly for noninterest income, it is probably only safe to conclude that 1) it is not possible to estimate non-interest income with great accuracy and 2) given the above, noninterest income could easily have been in the range of $2 billion annually over the study period.
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Service jn the U.S. Balance of Payment 1982-1984 Page 5 Th lover bound on foreign banka' U.S. office income wa calculated based on an examination ~f. annual report data. The largest foreign owned U.S. bank holding compani (7 among the top 100 U.S. banka in 1982 and 1983, 8 in 1984) had U.S. revenue (defined a the SWI of net interest income and non-interest inco~) of $2.6 billion in 1902, $2.9 billion in 1983, and $3.6 billion in 1984. Th figure fail to include branches, agencies, and the smaller subsidiaries and affiliate. A low profitability aaaumption for U.S. branch, agencies, etc. i that the U.S. offices of foreign banks v~r only aa profitable (in terms of income/as8et ratio) were the foreign offices of US banks. Thwa: 1982 1983 1984 (in billions) Estimated average balance aaaeta of US offices of foreign banks exclud~ng subidiarie: $193.6 222.1 252.7 U.S. earning eta (aaswaing 151 non-earning and 251 were non-US busin): 123.4 141.6 161.l Net interest pl~s non-interest income for US bank foreign offices 0.591 0.491 NA Applying this rate to US office of foreign banks: 0.7 0.7 0.8-0.9 (est) Adding in subsidiary estimates from above to yield total lower bound estimate: 3.3 3.6 4.4 Banking balance of payriiente d&ta were provided by BEA from unpublished data under the condition that they not be presented separately from other items in the "Other receipts and payments" category of the official U.S. balance of payments. These estimates could not be verified independently. CONSTRUCTION Direct exports estimates for 1982 and 1983 reflect figures from an industry-sponsored survey conducted by Price Waterhouse (reference 18). Aggregate results of this study were as follows: total direct exports: direct exports net of foreign expenses: 1982 $21.738 billion 5.606 1983 $19.572 billion 4.775
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Service, in the U.S. Bal,nce of Payment 1982-1984 Page 6 The direct ~port figure for 1984 11 a crude range estimate based on 1982 and 1983 1urvay re1ult1. For 1ale1 by foreign affiliate~ of U.S. firma, data are from the BEA's direct invaatment 1urvey1 (references 75 a.,d 76). The estimates of revenues net of 1ubcontracting are baaed on the ratio of repatriated to total revenues from the Price Watarhou.e 1tudy thua it 11 a11waed that foreign ~ffiliates of U.S. fir.u aubcontracted on foreign work at the 1ame rate aa U.S.-based firms did on foreign work. For direct import,, the firma reporting annual awards data to En1ineerin1 Neya Record (reference 69) a.:a a11W1l.d to repreaent the universe of firms active in the U.S. market. Zaro is assumed for a lower bound on direct imports of con1truction aervicea (i.e. 100 percent of foreign activity in the U.S. is assumed to occur through U.S. aff1liat8s of foreign firms, which are included in the EN1l data). For the upper bound, it is assumed that all awards generate direct imports (i.e. none of the ENR data reflects affiliate sales) and that all awards generate r,,ceipts in the year of the award. This is an upper bound assumption because awarda have been growing over time and rev~nues are genera~ed by a stream of ,warda from the past aa well the current year. It is also asaumed that subcontracting occurs at the s3ae rate as overall subcontracting in the U.S. market, as indicated in the Censul of Construction Industries (reference 91). Thia is also an upper bound assumption, as Census data is skewed by small firms and individuals which tend to subcontract less of their work on a percentage basis. 1984 direct imports are an estimate based on 1982 arad 1983 results. For sales by U.S. affiliates of foreign fims, data are from the BEA annu~l inbound direct investment surveys (refetences 30 and 31). The figure for net construction receipts assumes that the ratio of valu~ added to total receipts was .4676, as reported for the ovArall U.S. consttuction industry in the 198?. Census of Construction Industries (reference 91). Following is an expandsd version of the Construction foreign revenues table in the Special Report, sh~wing pre-subcontracting dStimates as well as final estimates: Foreign revenues in construction services (billion dollars) Foreign revenues of U.S. firms direct exports: total net of foreign expenses: affiliate sales: total majority-owned minority-owned net of foreign suocontracting: total foreign revenues 1982 1983 1984 21. 7 5.6 13.8 12. 2 1. 6 3.2-3.6 8.8-9.2 19.6 4.8 13.4 11.8 1. E, 2.9-:l.3 7.7-8.1 NA 4.0-6.0 NA NA NA NA NA
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Service in the U.S. Balance of Payment 1982-1984 Page 7 U.S. revenue of foreign finu ENR. awarda data direct impoTta (net of US aub-contr): affiliate lea: total net of US sub-contr: total U.S. revenues PAD RQC!SSIRQ 4.8 0.0-2.2 7.5 3.5 -------3.5-5.7 3.6 NA 0.0-1. 7 0.0-2.0 6.9 NA 3.2 NA ------. ------3.2-4.9 NA The 1982 Censua of Service lnduatriea (refe!:ence 94) turned up only trivial amounts of data proceaaing service export (at ~ost $280 million and probably le than $100 million some respondents indicate~ exports but did not quantify receipts). The Censu. figure is used as the lower hound for direct exports since at least that level of activity is firmly established to exist. However, non-dp industry firms are known to have a substantial amount of foreign activity as well. ADAPSO estimated in 1983 that total exports in data processing were $1.2 billion (reference 78). This tigure is used as an upper bound, as it apparently includes some activity of foreign affiliates in addition to direct sales from the Unite,r States. It was not possible to estimate a growth rate over time given the lack of data. For sales by foreign affiliates of U.S. firms, the data for 1982 and 1983 are taken from the BEA direct investment surveys (references 75 and 76). Computer and DP foreign affiliates had $1 billion in sales each year. ThPlower bound estimate for affiliate sales assumes ti.at none of this activity is data processing; the upper bound estimate assumes 80 percent of it is data processing. For the DP sales of affiliates in other industries, estimates were derived from the direct investment surveys cited above and include other comp.1ter services (e.g. software) as well as DP (DP could not be separated). The 1982 outbound FDI survey indicates that computer and DP service sales by .ndustry of sales exceeded computer and DP sales by industry of affiliate by $~.7 billion. As indicated in the SOFTWARE section below, $3.1-3.6 billion of this is assum~d to represent the software sales of hardware affiliates. This leaves $2.1-2.6 billion unaccounted for; .this is assumed to represent the level of computer service sales by non-hardware and non-software affiliates abroad. For 1983 and 1984 computer service sales by non-software and non-hardware firms are asswned to have grown as rapidly as hardware affiliates' software sales. This yields estima~es of $2.3-2.9 billion in 1983 and $2.4-3.1 in 1984. Again, it is
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Servic in the U.S. Balance of Payment 19a2-1984 Page 8 impoaaibl to aay how much of thi reprnta DP aal a oppoaed to aoftware and other computer aervicea. The entire amount 1 included in the DP section and treated aa zero in the aoftware aection to avoid double-counting. No data are available on direct import. U.S. affiliate abro-d are known to be a major aource of imported DP aervicea. Given the total level of aale aa reflected in (2) above, however, it aeeu aafe to aay that total U.S. DP imports were not in exce of $2 billion annually; therefore a range of $0-2 billion i employed. Sale of U.S. affiliate of foreign firu come from BF.A's 1983 inbound FDI aurvey (reference 30), which included computer and DP aervicea a a new category. 'nli aurvey reported $0.2 billion total aAlea, including other computer aervicea aa well u DP. EDQCATIQI Tuition payment of foreign atudents in the United State are calculated as follows:
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Service, in ch l'.S. Balance of Paymenta 1982-1984 Page 9 (mmber of foreign 1tudenta) X (percent in public or private 1chool) X (public or private average tuition) X (percent foreign 1tudent1' funding from non-US 1ource1) -(tuition payment from foreign 1ource1) Sources of data are the Digeat of Educational Statistics of the U.S. Department of Education (reference 21, for armual coats at public and private 1choul1), and Opn Door, the armual report on International Educational Exchange of th Inatitute of Internatior.al Education (reference 49). The percent of funding fro non-U.S. aourc is baaed on the breakdown of foreign atudant1 by priJl&ry source of funda (and thua aa1uae1 that all students receive 100 percent of funding from their prillary source). The figure for 1984-85 is preliainary baaed on eatiaated growth in co1ta. For other xpna of foreign atudanta in the United Statea, it is neceaaary to eatiaate the fraction already reflected in the balance of payments through the travel account, aa follova: 1982 Percent foreign trip for atudy Total over viaitora' expenditures 41(est) $10.0B plua Mexico and Canada Implied ed. $ in travel account Non-tuition$ of foreign 1tudent1 Amount miaaing from travel account Percent for~ign $ foreign 1ource1 15.7 0.40-0.63 1.74-2.33 1.11-1.93 84.71 1983 41 $9.0B 14.l 0.36-0.56 1.81-2.42 1.25-2.06 83.11 Foreign funded amount mi11ing from travel account $0.94-1.63B $1.04-1.71B 1984 41 $8.7B 13.7 0.35-0.55 1.91-2.55 1.36-2.20 82.31 $1.12-1.81B The U.S. Travel and Touriam aurvey of U.S. traveler abroad (references 53 and 54) i the source of data for the percent of foreign trips occurring for the purpose of study and for over travel expenditures; data on Canadian and Mexican travel are from BEA (reference 9). For U.S. students abroad (importing educational services), chere are no data yet available for the 1982-1984 period. The range reported for total expenditures ia baaed on 1) 1981 data reported by UNESCO on the number of U.S. students abroad and cited in Open Doors 1984/85 (reference 49); 2) the assumption that the number of U.S. students abroad did not change over 1981-1984 (thi is probably a reasonable assumption, as overall U.S. stud~nt enrollment was stable over this period); 3) living costs and tuition are assumed to be comparable to U.S. costs, a~ most U.S. students abroad in this period were studying in Canada or the large industrial countries of We1tern Europe (also, many students pay their US schools as part of an exchange program instead of paying the foreign school directly). Thus:
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Service in the U.S. Balance of Payment 1982-1984 Paa 10 Tuition: nuaber of atudent1 tuition I US funded total US-paid Other expenaea: maber of atudent1 livin& coata I US funded total US-paid LOV 20,000 $4000 801 $64 aUUon LOil 20,000 $5000 801 $80 aUUon HIGH 25,000 $5000 100, $125 aillion HIGH 25,000 $7500 100, $188 aillion Total COjt are therefore eatiaated at $144-313 aillion annually. However, fro thi1 IIUlt be aubtracted the aaount already appearing in the travel account. The Mthod uaed above for foreign atudenta in the U.S. ia not reliable for U.S. atudenta abroad, aa a high percentage of foreign trip for study alao involve tourin and leiaure travel activity. 'ftlua tM lover bound uaumption for educational iaporta uauaea tltat 100 percent of the non-tuition expenditure are already renected in the travel account, while the upper bound uauaea that 0 percent are reflected. Both uauae that tuition payaenta are .,ot refler.ted in the travel account. P9IBIPJ199 For direct exporta, the 1982 Cenaua of Service Induatriea (reference 94) revealed at leaat $1.4 billion in 1al to nonreaidenta by U.S. firaa. Firaa indicating non-zero aal to non-reaidenta (but not reporting the level of aalea to non-reaidenta) had an additional $1.7 in total aalea. Thua, aalea to nonreaidenta could have been u high aa $2.9 billion. If th non-reporting fir.a had the .... percentage of total aalea to nonreaident1 aa tho firaa reporting the level of nonreaident aalea, total nonreaident 1ale1 (export) would have been $1.7 billion. 'nl annual aurvey of U.S. deaign firma by tn11rtn1 HtYI Ricord (reference 71) reported $1.38 billion in groaa foreign receipt for th large1t U.S. fir.a in 1982, $1.26 billion in 1983, and $1.13 billion in 1984. For total receipt (domeatic plua foreign receipta), net receipt were 87.06, 90.03 and 89.90 percent of groaa receipt (net-groaa ratio broken down into domeatic and foreign aubcomponenta are not available). A11uming that net foreign billing were about 90 percent of groaa foreign billing each year, the implication ia that net foreign billing were roughly $1.2, $1.1, $1.0 billion in 1982, 1983, and 1984 reapectively. Thia 1 below the 1982 eatimate of $1.7 billion from Cenaua data derived above, even though the ENR data include aome
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Service in the U.S. Balance of Pa,-nta 1982-1984 Paa 11 l throup foreip affiliate u well aa direct export. 'ffl 1982 ENI derived tlaate la about 70 percent of the 1982 C.naua-derived eatiaate. 'fflua, an upper bound on direct export can be calculated by aaauain& that the ENI data repreaent 70 percent of the univer of total export activity each year of the 1982-1984 period. Affiliate aal data are taken froa the BEA foreign direct inveataent aurvey (reference 30, 31, 75 and 76). For dirct illporta, the lover bound eatlaat l baaed on U.S. revenue fipr of non-U.S. deaian firu over 1982-1984 aa reported in th annual ENI. lnternational deaip fina aurveya (reference 70). 'nl upper bound tillate uauaea that the f iru in the ENI aurvey had only one third of the U.S. aarke t for iaported daaip rvicea. Dtl'iBI!JIO Data on direct exporu of franchiaing rvicH are not available. 'ft\ eatiaat uaed nr derived froa data on the diatrlbutlon of foreign franchlalng operationa aa reported in frlDFblIDI ln th Ecpl)QIY 1984-198. a 1urvey by the U.S. Departaent of C0111Nrce (rfrnc 32). A crude tillat vu conatructed by aaauain& that, for eleven typ of franchiaing eatabliahllenta, per tabliahaent for a given type vere equal to 1al per eatabllahaent for that type of eatabliahllent in the U.S. aarket. Franchiling eaminp were then tiaated by uauaing that franchi f vere 2 to 5 percent of 1al (baaed on tiaat of a eo...rc Departaent indu.atry analyat, reference 39). For direct iaporta aa vell, coaprehenaive data do not exi1t. However, the Departaent of co ... rce, Office of Service lnduatrie1, indicated that forelgn franchiaing in th U.S. 1 -..ch l extenaive than U.S. franchiaing abroad (reference 39). Given the relatively low aagnitude of the timate for U.S. fee fro foreign franchi operationa, fe earned by foreign franchi1or1 ln the U.S. market can 1afely be aa1U1Nd to be negliglble. KW.TR Direct export conaiat of two component: pa)'INnta of foreigner journeying to the United Stat for dical rvic and eaminga abroad by U.S. finu (particularly hoapital management firma). Payment by foreigner include medical payment only. Aaaociated travel expenditure are aaawaed to be captured by the ~ravel and tranaportation 1ector eatiutea. Converaationa with
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Service ln th U.S. Balance of Payaenta 1912-1914 ,. 12 reprntatlve of two aajor U.S. treatment center for foreigner (reference, 47, 61) indicate that 1) only a handful of U.S. center conduct 1lgnificant buaineaa ln tbi area and 2) the total revenue generated excluding aa1ociated travel payaenta la llbly to be 1 than $100 aillion annually. Thi e1tl11ate la baaed OIi patient total and per-patient coat reported by th tvo lnatltutlOlla and the aaauaption that they account for one-third of U.S. treataent center volume. lzporta froa foreip aanag-nt activity 1 eatiaated to be at leut $1 billl011 by the Department of C-rce (reference 60). Th upper bound eatillate la baaed OIi an eatlaate by the Federation of American Hoapltala (reference 27) that 10 percent of U.S. lmraator-owned hoapltala' revenue obtalna froa foreign activity (affiliate aal u reported ln the outbound lnveatant aurveya vere aubtracted froa thll flpr, aa aoae of the eamlnp reault froa foreign affiliate operati011a). Sal of forelp affiliate are aa reported in the direct lnveataent aurveya (reference 75 and 76). Direct laporta are uauaed neali&ible, excludin& the incidental health care expenditure of Americana traveliq abroad, which are aaauaed to be captured by the travel aector tlaatea. U.S. afflllat of foreign flraa were flrat reported aeparately for health rvlc in the inbound direct inveatlNnt 1urvey1 of IIA ln 1913 (reference 30). JROIIUIQI IQJICQ 1be Jnforaation lnduatry Aaaoclatlon e1tlaated in 1913 that $2.6 bi~lion in induatry revenue nr non-US in orlain ln 1912 (reference 10, 14). Projected arovth rat for lurope aud other areaa coablned generate projected total non U.S. revenue of $2.9 billion for 1913. Ualna the projected 1913-1917 annual 1rovth rat u an ti.Mt of arovth for 1913-14 1neratea an tlaate of $3. l billion ln non-U.S. revenue ln 1914. Th flpr c&ftl\Ot be dlaa11rtd into direct export u oppoaed to affiliate 1ale1. For U.S. revenue of forelp flraa no data are available. 'th e1tl11ate utilized ($0-0.5 billion) pruae a healthy U.S. export balance, which 1101t obaerver agr 1 currently the altuatlon. Th upper bound e1tiaate va11 verified aa an abaolute upper llalt by the lnforaatlon lnduatry Aaaociatlon (reference 50). IlllJlltl'il
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Service in the U.S. Balance of Payment 1982-198~ Paa 13 Foreign revenue of U.S. firma conaiat of chr component: reinsurance pr-iuaa, life and health inau.ranca pr .. iwu, and property and caaualty inaurance praaiuaa. Th figure prntad for reinauranc are tho presented by che lu.reau of Econoaic Analyi in the balance of payment (reference 59). No ocher data aou.rc are available and th general conaenaua i that these figure are a reuona~ly accurate reflection of reinau.rance activir.y. The eatiaat for direct preaiua receipt in both life/health and property/cuualty are tho of an analyat of the U.S. Department of Commerce, Office of Service Induatri (reference 28). The life/health estimate is based on foreign revenue figure~ reported by the American Council of Life Insurance (r~rnc 11) and AIG International, the only aajor direct exporter of life inaurance not a ...,.r of the Council (reference 86). 'nl ti.mate given repreaenta the abare of foreign revenue uauaed to be balance of payments tranaacticma (with the r-inder repreaenting inco through of foreign affiliate u diacuaaed below). 1.atiaated aal of U.S. affiliate abroad are derived from the direct imreataent au.rveya of the lu.reau of Econoaic Analyi (reference 75 and 76). The urvy report total incoae (intereat inco well premiwu). Premium income 1 eatiaated u follow: For 1982, total incoM of life, accident and ~ealth inau.rance affiliates overaeu vu $6.358 billion. Total u1eta were $18.97 billion. Aaawaing 1) that gro intereat incoae vu g~nerated through an average yield on interest eaming uat of 14.5 percent and 2) that 85 to 90 percent nf t ware intereat-eaming, total lntereat lncoae of affiliate from life, accident and health lnaurance would be 2.338-2.476 billion, and thua non-intereat income vould be an eatillated $3.9-4.0 billion. For property and caau.alty affii!ates, total reported incOIN vu $10.409 billion in 1982; aaaet were $25.115 billion. Again uauaing that 85 to 90 percent of uaeta were intereat-earning and a gross yield of 14.5 percent, intereat income would be $3.095-3.278 billion and thus non-11,cereat incoM would be $7.1-7.3 billion. 'nle conclusion is that total non-in~ereat inco vaa $11.0-11.3 billion. It i aaaumed that most or all of t.hia inco rapreaented preaiua receipt. For 1983, total incoae vaa $6.749 billion for life and health affiliates and $9.737 billion for property and caaualty; aaaeta were $21.786 and $25.277 billion, reapectively. Aaauaing l) a return on aaaets of 111 and 2) that 85 tn 90 percent of aaaeta vre intereat-eaming, thi auggesta that total interest incoM vaa $2.037-2.157 billion for life and health and $l.363-2.502 billion for property and caa~alty. Thua non-intereat income (asaumeJ to be mostly premium receipt) would be $4.6-4:7 billion for life and health affiliates and $7.2-7.4 billion for property and caaualty. The concluaion i that total premium income Yaa an eatimated $11.8-12.l billion. For 1984, the total would be $12.7-13.0 billion if the same growth rates for 1983-84 applied for 1982-83.
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Services in the U.S. Balance of Payments 1982-1984 Page 14 Fro the abcve must be subtracted premium receipts from U.S. business. Insurance income from U.S. customers (both affiliated and unaffiliated customers) was 13.76 percent of total income for majority-owned insurance aff~liates in 1982 and 11.77 percent in 1983. Based on unpublished data from the 1982 benchmark survey-provided by BEA, the percentages in 1982 were 5.51 percent for life, accident and health insurance, and 19.10 percent for other insurance (property and casU<y). Assll:lling 1) that the same percentage of total income was from U.S. business for minority-owned affiliates as well and 2) that the 1982 percentages applied for the entire 1982-84 period, this would imply premium income from non-U.S. customers as follows: total pre~ium income from U.S. from non-U.S. from all customers customers customers (in billions) (in billions) (in billions) 1982 life & health $3.9-4.0 $0.0-0.2 $3.7-4.0 1982 property/casualty 7.1-7.3 0.0~1.4 5.7-7.3 1982 total 11. 0-11. 3 0.0-1.6 9.4-11.3 1983 life & health 4.6-4.7 0.0-0.3 4.3-4.7 1983 property/casualty 7.2-7.4 0.0-1.4 5.8-7.4 1983 total 11.8-12.l 0.0-1. 7 10.1-12.l 1984 life & health 5.4-5.5 0.0-0.3 5.1-5.5 1984 property/casualty 7.3-7.5 0.0-1.4 5.9-7.5 1984 total 12.7-13.0 0.0-1. 7 11.0-13.0 In 4ach case the lower bound on U.S.-customer business is zero (because it may be tha: all reported income from U.S. customers is actually interest income from investments --i.e. U.S. premiums are zero). The upper bound on U.S. earnings assumes that the ratio of US-customer income to total income equals the ratio of US-cuato3er premiums to total premiums (premium data are taken from references 84 and 83 for life/health and property/casualty, respectively). In calculating the balance of payments impact of insurance, not only premiums but also claims must be considered. For reinaurance claims paid by U.S. firms, BEA-reported data are utilized (reference 59). ~or direct life/health and property/casualty claims paid, the loss ratios (ratio of claims paid to premiums received) for r~insurancft is assumed to apply for direct insurance as well. For foreign firms operating in the U.S. market, direct insurance activity in life and health is negligible. For property and casualty, directly imported foreign insurance in the U.S. market is predominantly attributable to Lloyd's of London. Based on an estimate that Lloyd's insures 2 percent of U.S. liability (reference 43) and a,suming Lloyd's therefore had 2 percent of U.S. premiums, premium income would be $2.4 billion in 1984, $2.2 billion in 1983, and $2.l billion in 1982 (baaed on U.S. premium data reportd by the Insurance Information Institute in reference 83).
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Services in the U.S. Balance of Payments 1982-1984 Page 15 Data for the U.S. affiliates of foreign firms are estimated in simi!,r fashion to the foreign affiliates of U.S. firms as presented above. In 1983, the BEA annual survey of FDI in the U.S. (reference 30) reports total income of U.S. insurance affiliates of foreign firms to be $21.677 billion ($11.765 life, the rest non-life including health). Total assets were $51.814 billion ($31.185 life). Assuming 1) 85 to 90 percent of assets were interest-earning and 2) typical gross yield of 11.5 percent, this implies gross interest income of $3.05-3.23 billion =or life insura1.~e affiliates and $2.02-2.14 billion for other insurance affiliates. Premium income (total income net of interest income) is thus assumed to have been $8.54-8.72 billion for life affiliates ar.d $7.77-7.89 billion for other insurance affiliates, and thus $16.3-16.5 billion total. A second approach to estimating premium receipts of U.S. affil~ates was also employed. If premium-to-asset ratios of the U.S. life insurance industry in 1983 (0.182; calculated from reference 84) and the U.S. property/casualty industey (0.437; calculated from reference 83) in 1983 applied to these affiliates, premiums would be $5.68 billion (life excluding health), $9.02 billion (other including health), and $14.7 billion (total), respectively. Combining these two approaches suggests that total premium receipts of foreign firms were $14.7-16.5 billion in 1983. This assumes that 100 percent of premium income was from U.S. customers; data on geographic distribution of affiliate receipts are not available. For 1982, total U.S. affiliate income reported by BEA was $23.603 billion (reference 31); total assets were $48.089 billion. No data on the distribution between life and non-life companies is available for 1982. Assuming a premiumto-asset ratio of between 0.20 (average for all U.S. life companies in 1982; reference 84) and 0.44 (average for all U.S. property and casualty companies in 1982; reference 83) for these affiliates yields an estimated $9.6-21.2 bill.ion in premiums. Assuming a typical yield on assets of 13.5 percent and that 85 to 90 percent of as~ets were interest-earning, gross interest income would be $5.5-5.8 billion; this implies that non-interest income was $17.8-18.1 billion, of which premiums were the predominant item, or within the range of the premium-toasset ratio estimate above. Thus, U.S. premium receipts of affiliates of foreign firms in 1982 were $16.9-19.0 billion (derived by taking the midpoint of $17.8-18.1 billion and expanding the range of the estimate so that the error term is equal on a percentage basis to the error term implicit in the estimate fer 1983 above). No data are yet available for 1984. The abjve results for 1982-1983 suggest that foreign firms' market share was about 10.9 to 12.3 percent of the combined life/health and property/casualty market in 1982 ($154.8 billion; references 84 and 83) and 9.2 to 10.4 percent in 1983 ($159.2 billion; references 84 and 83). Assuming a range of 9 to 12 percent of the combined market for 1984 ($169.4 billion) would imply $15.2-20.3 bill!.on in premium receipts.
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Services in the U.S. Balanc~ of Payments 1982-1984 Page 16 INVESTMENT BANKING AND BROKERAGE SERVICES The estimate for direct exports is based on the outbound surveys of foreign direct inv~stment of the U.S. Department of Commerce (references 75 and 76). Parent firms in the non-bank financial services category exported $0.5 billion in services in 1982 and in excess of $0.9 billion in 1983. These surveys also contain data on the level of assets of these firms. An examination of the annual report and lOK information of leading investment banks in the United States indicates that the group of parent firms in the surveys represent~d about half th& assets controlled by major U.S. investment banks. Thus, the direct export estimates for 1982 and 1983 assume as a lower bound that the parent firms accounted for all service exports, and as an upper bound that these firms accounted f~r only half of all exports. The upper bound on the t982 estimate was increased further so that the range between upper and lower bound estimates was $1. 0 billion instead .of $0. 5 billion, as the former was felt to be a better indicator of the level of uncertainty. The direct export estimaLe for 1984 assumes no growth from 1983 as the lower bound, and a continuation of the estimated growth from 1982-1983 as the upper bound. A second crude estimate of the level of exports was made hy examining the data base on investment banking transactions published periodically by Euromoney. (reference 25) as well as estimates of associated fees gathered from a variety of sources (including references 19, 20, 25, and 36). While this method was not sufficiently precise to produce an independent estimate, it did indicate reasonable order-of-magnitude accuracy for the above estimates. Foreign affiliates' sales are based on the direct investment surveys (references 75, 76) and include all non-bank financial firms rather than just investment banking and brokerage. No further disaggregation of the data was possible. The estimate for direct imports by foreign firms is based on foreign firm activity in the U.S. market as reflected in the Euromoney surveys (reference 25). For U.S. affiliates of foreign firms, data are from the inbound direct investment surveys of BEA (references 30, 31). The above descriptions of trade on an ownership basis do not reflect the full impact on the U.S. balance of payments because foreign affiliates of U.S. firms sell services back to the U.S. in non-negligible amounts, and U.S. affiliates of foreign firms also export services (to their parents abroad or to other firms and individuals). The estimates for these activities as discussed in the balance of payments section of the text are based on data in the direct investment surveys (both inbound and outbound) as cited above. The outbound
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Services in the U.S. Balance of Payments 1982-1984 Page 17 surveys provide data on sales to the United States by foreign affiliates; the inbound surveys only provide data on total sales. Exports by U.S. affil1.ates were estimated by assuming that U.S. affiliates of foreign firms exported (i.e. sold to non-U.S. customers) as a percentage of their total sales roughly the same amount that foreign affilia~es of U.S. firms imported (i.e. sold to U.S. custom~rs) as a percentage of their total sales. LEASING For computer leasing, the Computer Dealers and Lessors Association (reference 7) estimated that the world computer leasing market was $1.5-2.0 billion for 1985. The U.S. share is 25 to 30 percent (i.e., $0.4-0.6 billion). If 10 percent annual growth were assumed over the 1980's this would imply roughly $0.3-0.5 billion annually over 1982-1984. For financial leasing of equipment, the Commerce Department's Competitive Assessment of the equipment leasing industry (reference 13) estimated that the United States leased $8-10 billion in 1983 (combined cross border and indirect leasing). If this were all financial leasing at a rate of 141 gross and 41 net interest, the revenue generated (net of the cost of money) would be $0.3-0.5 billion. This is an upper bound on total financial leasing estimate, as some of the $8-10 billion is operating leasing (estimated independently below). It is also an upper limit because some leases are multi-year and the volume of leasing activity has been growing over time (in other words, the share of the e~timate that will be received in future years probably exceeds the currently realized revenues from past lease agreements). An examination of annual report data for the twenty largest U.S. bank holding companies in 1984 (who are reportedly the largest actors in the cross-border leasing market) indicates that a reasonable lower bound estimate would be perhaps $0.3 billion (assuming on average 201 of leases were cross-border and typical net yield of 41). For operating leasing of equipment, the 1982 Census of Service Industries (reference 94) indicated that direct export earnings for equipment leasing were in the range of $0.2-0.3 billion (allowing for those establishments which indicated some foreign activity but did not provide a breakdown Qf receipts into domestic vs. foreign). The BEA direct investment surveys (reference 75) indicate $2.7 billion sales through foreign affiliates for leasing service in 1982 (categorized by industry of sales, not industry of affiliate, so as to capture leasing revenues of affiliates categorized in other industries). Receipts from all sources for affiliates whose primary business was leasing were $3.3 billion in 1982 and $2.8 billion in 1983; sales to the U.S. were negligible. Auto leasing and rental activity abroad is assumed to occur essentially 1001 through foreign affiliates. The BEA direct investment surveys (references
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Services in the U.S. Balance of Payments 1982-1984 Page 18 75 and 76) indicate that auto leasing affiliates had sales of $0.9 bi~lion in 1982 and 1983. Combining all the above: Foreign revenues in leasing (in billions): 1982 1983 1984 computers $0.3-0.5 0.3-0.5 0.3-0.5 equipment (finance) 0.3-0.4 0.3-0.4 0.3-0.4 equipment (operating) 2.9-3.6 3.0-3.7 3.1-3.8 auto 0.9-1.0 0.9-1.0 0.9-1.0 ---------------------t.otal 4.4-5.5 4.5-5.6 4.6-5.7 cross-borde.r subtotal 0.2-1.2 0.2-1.2 0.2-1.2 indirect subtotal $3.6-5.3 3.7-5.4 3.8-5.5 For foreign firms operating in the United States, U.S. equipment leasing affiliates in the BEA direct investment survey (reference 30) indicated $200 million in 1983 excluding autos and computers. Autos were zero and computers negligible. This was a new category in the 1983 survey, so an equal amount is assumed for 1982. Based on an examination of annual report data for the largest foreign-owned U.S. banks, it seems likely that all foreign-owned banks combined did not account for more than $0 .1 billion annually in leasing rece_;_pts (net of the cost of money on financial leasing). Therefore, total foreign leasing through affiliates in the United States is estimated at $200-300 million annually. It is not possible to estimate growth over time. Data on foreign direct leasing to the United States do not exist. Given the level of outbound direct leasing activity and the level of foreign leasing occurring in the United States through affiliates, it is almost certainly safe to say that total direct ~mports of leasing services do not exceed $1 billion annually (again net of the cost of money on financial leases), but there is no basis for further refining the estimate or estimating growth over time. LEGAL Data for direct exports are not available. An analyst with the U.S. Depart~ent of Commerce's Office of Service Industries (reference 42) estimated that less than 5 percent of industry receipts are generated from foreign activity. This suggests $2 billion llnnually as a reasonable upper limit on legal service exports. This figure was somewhat higher than that implied by a working draft on trade in legal services prepared for the American Bar Association (reference 17). It was not possible to estimate a lower bound or growth rates over time; therefore a range of $0-2 billion annually is assumed.
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Services in the U.S. Bal~~c@ of Payments 1982-1984 Page 19 For foreign affiliate sales, data are as reported in che 1982 and 1983 outbound FDI surveys (references 75 and 76). For direct imports, no data are available. The range presented is an OTA estimate based on the general consensus that the United States is a substantial net exporter of legal services. For sales by U.S. affiliates of foreign firms, data are as r?portad in the 1982 and 1983 i~bound FDI surveys (references 30 and 31). LICENSING All data on licensing are BEA figures (references 59 and 75). The affiliated outbound receipts figures for 1983 and 1984 are actually net figures (recoipts from foreign affiliates net of payments to affiliates). However, the 1982 benchmark survey of U.S. direct foreign investment (reference 75) showed that the difference between net and gross licensing receipts for affiliated outbound activity is negligible (i.e. payments to foreign affiliates by U.S. parents were quite small relative to receipts by U.S. parents from foreign affiliates). This is assumed to be true for 1983 and 1984 as well (gross figures were not available from BEA at the time these estimates were prepared). MANAGEMENT. CONSULTING AND PUBLIC RELATIONS For direct e1tports, the 1982 Census of Service Industries (reference 94) reported $0.5 billion in service exports by management, consulting and PR establishments which reported separately their nonresident sales. This is an absolute lower bound on direct exports for two reasons: some firms did not report sales to nonresidents separately, and firms catP.gorized in other industries were not required to respond. If establishments not reporting dollar levels but indicating that they had nonresident sales had realized all their revenues from nonresidents, nonresident sales would have been an additional $0.6 billion. $1.1 billion is an absolute upper bound since some of the sales of the latter group were to domestic customers. Thus, a range of $0.5-1.1 billion is assumed for 1982 direct exports. Domestic growth in the industry was 20 percent from 1982 to 1983 and 12 percent from 1983 to 1984. The direct export estimates for 1983 and 1984 assume growth rates of 25 and 15 percent respectively from the 1982 mid-range estimate (i.e. more rapid than domestic growth) for the upper bound and 15 and 10 percent respectively (i.e. less rapid than domestic growth) for the lower bound.
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Services in the U.S. Balance of Paynients 1982-1984 Page 20 For sales by the for~ign affiliates of U.S. f inns, BEA di rec~ i!lvestmeut survey data are used for 1982 and 1983 (references 75 anJ 76). Sales to the U.S. of $0. 6 billion in 1982 and 1983 were netted out of .:~1.,:l sales of $1. '3 billion each year. Sale& by minorit:y-owned affiliates were negligible ~J.rh year. i,~or direct imports, no data are available. A range of ~O. 0-0. 5 :: 'i, 1 ; ... n 4nnuall) is assumed, base
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Services in the U.S. l\alance of Payments 1982-1984 Page 21 SOFTWARE Direct exports are th9 sum of three independent estimates: software exports of U.S. software firms; software exports of U.S. hardware firms; and software content of exports by U.S. systems integration firms: For hardware and software firms, ADA!'SO data reported by NTIA indicated that total software e~ports were $2.2 billion in 1983 out of total sales of $9.7 billion (both figures exclude systems integration software) -thus about 23 percent of sales were exports (reference 78). Using the same 23 percent figure and INPUT esti~ates of the U.S. market in 1982 ($5.9 billion; reference 34) and 1984 ($10.4 billion; reference 34), this would yield estimated direct exports of $1.4 billion in 1982, and $2.4 billion in 1984. For turnkej systems, INPUT estimated that total sales (domestic and foreign) were $3.6, 4.5, and 5.9 billion over 1982-1984 (reference 34). ADAPSO as reported by NTIA in 1983 estimated that for turnkey systems 15 percent of sales were direct exports (reference 78). Applying this percentage over 19821984 and assuming that fi.O to 60 percent of system value represented software, this yields estimated software content of turnkey exports of $0.2-0.3 billion in 1982, $0.3-0.4 billion in 1983 and $0.4-0.5 billion in 1984. Separate estimates were derived for software sales of software firms and software sales of hardware firms for sales of foreign affiliates. Software sales of non-software firms other than hardware firms are included in the DATA PROCESSING section above, as they could not be isolated from DP and other computer service sales in the estimates. Affiliates in computer and DP services (including software but also DP, facilities management, etc.) had sales of $1 billion in both 1982 and 1983 according to the outbound FDI surveys (references 75 and 76). Sales to the U.S. were negligible each year (5 percent of total services). The estimate used here assumes for a lower bound that only 20 percent of this total represented software. The upper bound assumption is that 100 percent represented software. For hardware affiliates, the 1982 BEA outbound FDI survey (reference 75) indicated that office equipment sales by industry of affiliate exceeded total sales of office equipment by $3.1 billion. Most of this can safely be assumed to represent software. For all affiliates in the category of non-electric machinery (including hardware affiliates), service sales (including software) were $3.6 billion. Thus a reasonable range est;1.mate is $3.1-3.6 billion for hardware affiliates' software sales. Subtracting an assumed 8.2 p~rcent for sales to the U.S. (based on sales to the U.S. by majority-owned office equipment affiliates in the 1982 FDI survey) the estimate for hardware affiliates' non-US software sales is $2.8-3.3 billion.
PAGE 23
Services in the U.S. Balance of Payments 1982-1984 PabG 22 For 1983, the detail necessary to calculate a similar estimate is not a. 4ilable. However, non-electric machinery affiliates had sales exceeding total Sdl~s of non-electric machinery by $3.6 billion according to the BEA FDI annual sur.ey (reference 76). Assuming again that 8.2 percent were sales to the U.S. and allowing an error margin of plus-or-minus 10 percent generates an escimate for 1983 of $3.0-3.6 billion. Assuming the same growth rate for 1984 as for ~Q83 on both the lower aad upper bounds generates an estimate of $3.2-3.9 u1llior. in 1984 fer hardware affiliates' non-U.S. software sales. No data are available for direct imports. It is generally agreed that the U.S. runs a strong surplus in software trade among unaffiliated parties It is also agreed that the prime source for U.S. software imports are U.S. affiliates abroad, which manufacture a substantial portion of the software ultimately sold in the U.S. domestic market. Foreign affiliates in computer and DP services (including software affiliates) had negligible sales to the U.S. in 1982 and 1983, according to BEA's fDI surveys. Hardware affiliates (office and computing equipment firms) had sales to the U.S. of $1. 7 billion in 1982 and $2. 2 billion in 1983. There was no basis for further narrowing the estimate, so a range of $0-1.7 billion in 1982 and 0-2.2 billion in 1983 was utilized for direct software imports. Applying the same growth rate to 1984 generated an upper bound of $2.7 billion. For the U.S. software affiliates of foreign firms, no separate category available in the BEA surveys of inbound direct investment. A separate category for computer and DP service affiliates was added to the inbound FDI survey in 1983 and reported $0.2 billion in total sales (reference 30). TELECOMMUNICATIONS For both foreign affiliates in the United States and U.S. affiliates abroad, data are from the 1982 and 1983 FDI surveys of BEA (references 30, 31, 75 and 76). The direct import and export figures are as appear in the BEA balanc~ of payments data (reference 59). These compare favorably with separate data of the Federal Communications Commission on common carriers (reference 64). The BEA import data also includes payments to INTELSAT for leasing of satellite channels. TRANSPORT
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Services in the U.S. Balance of Payments 1982-1984 Page 23 The data on direct imports and exports are as reported by BEA in various issues of the Survey of Current Business (referen~e 79). All data are as they appear in the official BEA current account with two ~xceptions: 1) inland freight receipts and payments between the United Scaa:ces and Canada have been added (the current account includes this item in the Merchandise portion); 2) passenger fares are included in the transportation totals (the current account treats passenger fares as a separate item). All passenger fares data are as reported in the Survey of Current Business quarterly summaries cited above. Affiliate sales data are from the BEA direct investment surveys (references 30,31, 75 and 76). Outbound affiliate sales data (U.S. affiliates abroad) are by industry of sales, and thus include transportation service receipts of nontransportation affiliates. Inbound data reprPsent receipts of transportation affiliates. TRAVEL Estimates for Canada and Mexico (both receipts and payments) are BEA data (reference 9). Canadian {iata are estimates of Statistics Canada as cited by BEA. Overseas estimates for 1983 and 1984 (both receipts and payments) were derived as follows: Average expenditure per visitor ($/visit): 1982 1983 1984 U.S. travelers overseas NA 989 862 Foreign travelers to the U.S. NA 1143 1155 Number of overseas visitors (thousand persons): U.S. travelers overseas 8510 10179 12062 Foreign travelers to the U.S. 8761 7873 7535 Estimated total expenditures (million dollars): U.S. travelers overseas NA 10067 10397 Foreign travelers to the U.S. NA 8999 8703 Average expenditures data are from the annual U.S. Travel and Tourism Administration surveys of air travelers (references 51, 52, 53 and 54). Data on the number of travelers annually are from BEA (reference 9). The overseas estimates for 1982 (both payments and receipts) are based on the average 1983 expenditures reported by USTTA (the USTTA survey began in 1983). No adjustment was made for inflation. The geographic distribution of travel payments and receipts for overseas travel is based on the following distribution of travelers as reported in the USTTA surveys. U.S. travelers' data represents primary destination of trip in the case of multi-area trips:
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Service in th U.S. Balance of Payment 1982-1984 Page 24 Residence of Destination of US foreign visitors travelers overseas 1983 1984 1983 1984 Europe 381 391 461 so, Caribbean 6 9 15 25 South America 14 11 10 6 Central America 4 4 3 3 Africa 1 2 2 2 Oceania 5 5 5 3 Far East 27 26 21 15 (Japan) (21) (18) (11) (7) Middle East 5 5 5 5 total 1001 100, 1071 1091 No geographic distribution is available available for 1982 (the USTTA surveys began in 1983). In all cases average expenditures by visitors from each region and U.S. travelers to each region were assumed to be equal to the average for all visitorR as reported by USTI'A. The destinations of US travelers sum to over 100 percent in both 1983 and 1984 due to multi-region travel. In allocating imports among regions the percentage breakdown for US travelers overseas was pro-rated to 100 percent. MISCELLANEOUS SERVICES The direct export and import figures cited for miscellaneous services include all items in the BEA data (reference 59) not included elsewhere in this study. The export total includes affiliated and unaffiliated fees (excluding royalties and license fees included in LICENSING), U.S. expenditures of foreign governments and international organizations, receipts from Canadian affiliate trade unions, miscellaneous commissions, wages of U.S. residents abroad, expenditures of temporary resident aliens, and other private miscellaneous services. The total for direct imports includes fees (excluding royalties and liceruie fees), payments to Canadian affiliate trade unions, wages of temporary resident aliens, expenditures of U.S. residents abroad, and other private miscellaneous services. The figures for affiliate sales are from the BEA FDI surveys (references JO, 31, 75, and 76) and include several miscellaneous service categories: lodging; agricultural services; metal mining services; research and development and testing laboratories; employment agencies and temporary help supply services; and other services provided on a commercial basis.
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Service in the U.S. Balance of Payment 1982-1984 Page 25 REFERENCES: 1. Air Tramport 1985: The Annual Report of the U.S. Scheduled Airline lnduatry, Air Tranaport Aaaociation of America, June 1985. 2. Annual aurvey of the world' largeat banka, American Banker, July 30, 1985. 3. ADAPSO' Second Expenae and Operating Ratio Summary Dat, Association of Data Proceaaing Service Organizationa, September 1983. 4. Fritz E. Attaway, Motion Picture Aaaociation of America, Inc., personal communication. 5. Balance of Payments Manual (Waahington, DC: International Monetary Fund, 1977). 6. Bank for International Settlements; Fifty-fifth Annual Report (Basel, Switzerland: Banlt for International Settlements, June 1985. 7. James Benton, Computor Dealers and Lessors Association, personal communication. 8. David L. Bickelhaupt and Ran Bar-Niv, International Insurance; Mana1in1 Risk in the World (New York: Insurance Information Institute, 1983). 9. Joan E. Bolyard, tnternat~onal Travel and Passenger Fares, Survey of current Business, Kay 1985. 10. The Buainess of Information, 1983, Volume 11; TI>, Outlook for the Information Industry (Washington, DC: Information Induatry Association, 1983). 11. Nathaniel B. Cabanilla, American Council of Life Insurance, personal communication. 12. A Competitive Assessment of the u,s, Data Processin1 services Industry (Washington, DC: Department of Commerce, International Trade Administration, December 1984). 13. A Competitive Aaseaament of the u,s, Equipment Leasinc Industry (Washington, DC: DepartJDent of Commerce, International Trade Administration, March 1985). 14. A Competitive Assesament of the u,s, Infonnation services Industry (Washington, DC: Department of Commerce, International Trade Administration, May 1984). 15. A competitive Assessment of the u,s, International construction Industry (Washington, DC: Department of Commerce, International Trade Administration, February 1985).
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Service in the U.S. Balance of Payment 1982-1984 Page 26 16. Uomp1titiy1 AlNnt of th U.S. Software lndutry (Washington, DC: Department of co ... rce, International Trac:t. Adlliniatration, December 1984). 17. Sidney K. Cone III, covenment Trade Policy and the Profeaaional Regula:ion of Foreign Lavyera (unpubliahed aanuacript dated 2/8/86). 18. Th Contribution of Architectural, Kngineering and Conatruction exports to th U.S. Econoay, Price Waterhouae, Inc., 1985. 19. o.ala of the Year, Forcun1. January 21, 1985. 20. o.ala of the Year, Forcun1. January 23, 1984. 21. Qi111t of Educational Statitic (Waahington, DC: Depart11ent of Education, National Center for Educational Statiatica, annual). 22. Anthony J. Diwllo, service Traa-wactiona in the U.S. International Account, 1970-1980, Surx1y of Current Buain-November 1981). 23. Econoaic Conaulting Service, Inc., DI International Operations of u,s, s,ros Induftri; Current Data Collection and Analyst,. (Yaahington, DC: prepared for the U.S. Department of State and Comerce and the Office of the u.S Trade Reprntative, June 1981). 24. Employpnt and Eamin11 Department of Labor, Bureau of Labor Statistics, varioua iaauea. 25. Gunter Dufey and Adrian Tachoegl, international competition in the services induatriea: inatitutional and atructural characteriatica of financial services, with apecific reference to banking. OTA contractor report, February 1986. Original aourcn: Eurogoney (varioua iaauea). 26. Federal B11ery1 Bullttin varioua iaauea). 27. Federation of American Hospitals, personal communication, May 1986. 28. Thoma Fenwick, U.S. Departllent of Comaerce, International Trade Adlliniatration, Office of Service lnduatriea, peraonal communication, December 1985. 29. For1im Qir1ct Inv11ta1nt in the Unitd State, 1980 (Waahington, DC: Department of Co11111erce, Bureau of Economic Analyais, October 1983) . 30. Foreim Qir1ct Inv11ta1nt in tb Unitd Stat1s; Operations of u,s, affiliate of forim companit, preliminary 1983 11timates (Waahington, DC: Department of Coerce, Bureau of Economic Analyaia, December 1985).
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Service in the U.S. Balance of Payment 1982-1984 Page 27 31. Foreim Direct JDY11t;ment in che United States; Operations of u,s, affiliate of foreim companies, revised 1982 estimates (Washington, DC: Department ef Commerce, Bureau of Economic Analysis, December 1985). 32. Franchiain1 in the Economy 1984-86 (Washington, DC: Department of Commerce, International Trade Adainiatration, January 1986). 33. pact of Foreign Visitors on State Economies, 1983, U.S. Travel Data Center, April 1985. 34. Information Seryic11 Industry Annual survey and Analysis (INPUT, Inc., 1985). 35. International Accounting Bulletin (London: Lafferty Publications, November 1984, December 1984, January 1986). 36. Intamational Bapkin1 Handbyok (Howood, lllinoi: Dow Jones-Irwin, 1983). 37. Intamational cooparation and competition in Civilian Space Activities (Wahington, DC: Office of Technology Assessment, July 1985). 38. international Software Survey, Aasociation of Data Processing Service Organizations, July 1984. 39. Andrew Kostecka, Office of Service Industries, International Trade Adainitration, U.S. Department of Commerce, personal communication, April 1986. 40. Evelyn Parrih Lederer, Walther Lederer and Robert L. Sammons, International service tran11ction1 of the United State; Proposals for Improvement in Data Collection (prepared for the U.S. Department of State and Commerce and the Office of the U.S. Trade Repreentative, January 1982). 41. t.egilative Structure for Equipment Leasing, International Finance Corporation, Second World Leaing Convention July 1984. 42. M. Bruce McAdam, Office of Service Indutriea, International Trade Adminitration, U.$. Department of Commerce, personal communication, April 1986. 43. John Moore, u.s. Industry Under Consumer Fire, Financial Times. section Ill p. V., April 16, 1986. 44. Robert Mulligan, Office of Service lndutries, International Trade Adminitration, U.S. Departaent of Commerce, personal communication. 45. Brian Murphy, consultant, Volunteer Hopital Aaociation, personal collll\ll\ication, Kay 1986. 46. National Tran1portation Statistic; Annual Report (Washington, DC: Department of !ranaportation, Reearch and Special Programs Administration, June 1985).
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Services in the U.S. Balance of Payments 1982-1984 Page 28 47. Daniel Nicholson: Washington liaison, Cleveland Clinic, personal communication, May 1986. 48. "Non-Admitted Insurers Quarterly Listing Supplement," National Association of Insurance Commissioners, Non-admitted Insurers Information Office, January 1, 1986. 49. Open Doors; 1984/85 (New York: Institute of International Education, 1985). 50. David Peyton, Information Industry Association, personal communication, June 1986. 51. "Profile of Overseas Visitors to the U.S.A.: January-December 1984," Depdrtment of Commerce, Travel and Tourism Administration, undated. 52. "Profile of Overseas Visitors to the U.S.A. : Jauuary-December 1983," Department of Commerce, Travel and Tcurism Administration, undated. 53. "Profile of U.S. Residents Traveling to Overseas Destinations: JanuaryDecember 1984," Department of Commerce, Travel and Tourism Administration, undated. 54. "Profile of U.S. Residents Traveling to Overseas Destinations: JanuaryDecember 1983," Department of Commerce, Travel and Tourism Administration, undated. 55. Public Accounting Report (Atlanta: Professional Publications, Inc., March 1984, April 1984, April 1985, Karch 1986). 56. "Quarterly Report of Condition and Income 12/31/84," Federal Reserve Board, Karch 13, 1986. 57. The Relationship of Exports in Selected u,s, service Industries to u,s, Merchandise Exports (Washington, DC: International Trade Commission, September 1982). 58. Review and forecast; The software and services Marketplace; A Research Report Prepared for ADAPSQ's Members by International Dat6 corporation's Software and Seryices Information Program (Framingham, MA: International Data Corporation, March 1985). 59. service Transactions in the u,s, International Accounts, 1977-1984 (Washington, DC: Department of Commerce, Bureau of Economic Analysis, no date). 60. Simon Francis, Department of Commerce, International Trade Administration, Office of Service Industries, personal communication, April 1986. 61. Nan.,Skarins, Mayo Clinic, personal communication, April 1986.
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Services in the U.S. Balance of Payments 1982-1984 Page 29 62. Software; An Emerging Industry (Paris: Organization for Economic Cooperation and Development, 1)85). 63. Standard Industrial Classification Manual (Yashington, DC: Office of Management and Budget, 1972). 64. Statistics of Common Carriers; year ended December 31, 1983 (Washington, DC: Federal Communications Commission, undated). 65. "Structure Data for U.S. Offices of Foreign Banks by Type of Institution," Federal Reserve Board, unpublished quarterly data for 1980-1984. 66. Sungnary and Analysis of Inter;rational Travel to the United States: December 1984 and year-to-date (Washington, DC: Department of Commerce, Travel and Tourism Administration, undated). 67. SummAry and Analysis of International Travel to the United States; December 1983 and year-to -date (Yashington, DC: Department of Commerce, Travel and Tourism Administration, undated). 68. "Taking Stock of the Brokerage Industry." Financial World. January 9-22, 1985. 69. "Top international contractors," Engineering News Record (annual). 70. "Top international design firms," Engineering News Record (annual). 71. "Top 500 design firms," Engineering News Record (annual). 72. "Top 400 contractors," Engineering News Record (annual). 73. Transnational Corporations in Advertising (New York: United Nations, Centre on Transnational Corporations, 1979). 74. Treasury Bulletin; First quarter Fiscal 1986 (Washington, DC: Department of Treasury, Office of the Secretary, 1986). 75. u,s, Direct Investment Abroad; 1982 Benchmark Survey data (Washington, DC: Department of Commerce, Bureau of Economic Analysis, December 1985). 76. u,s, Direct Investment Abroad; Operations of u,s, parent companies and their foreign affiliates, preliminary 1983 estimates (Washington, DC: Department of Commerce, Bureauof Economic Analysts, December 1985). 77. u,s, International Air Travel Statistics; Calendar year 1984 (Washington, DC: Department of Transportation, Research and Special Programs Administration, no date).
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Services in the U.S. Balance of Payments 1982-1984 Page 30 78. U,S, International Information Services (Washington, DC: Department of Commerce, National Telecommunications and Information Administrar.ion, March 1985). 79. "U.S. International Transactions," Survey of Current Business (Washington, DC: Department of Commerce, Bureau of Economic Analysis, March, June, September, and December issues). 80. Obie Wichard, U,S, International T,ade and Investment in Services: Data Needs and Availability (Washington, DC: Department of Commerce, Bureau of Economic Analysis, Staff Paper 41, September 1984). 80a. Martha E. Williams, Information Market Indicators: Information Center/Library Market (Monticello, IL: Information Market Indicators, Inc., issues 1-11). 81. World Leasing Yearbook 1985 (London: Hawkins Publishers Ltd., 1985). 82. 1986 U,S, Industrial Outlook (Washingtou, DC: Department of Commerce, International Trade Administration, January 1986). 83. 1985-86 Property/Casualty Fact Book (New York: Insurance Information Institute, 1985). 84. 1985 Life Insurance Fact Book Update (Washington, DC: American Council of Life Insurance, no date). 85. 1985 U,S, Industrial Outlook (Washington, DC: Department of Commerce, International Trade Administration, January 1985). 86. 1984 Annual Report. American International Group. 87. 1984 Annual Statistical Digest (Washington, DC: Federal Reserve System, 1985). 88. 12.filt Service Annual Survey (Washington, DC: Department of Commerce, Bureau of the Census, August 1985). 89. 1983 Annuai Statistical Digest (Washington, DC: Federal Reserve System, 1984). 90. 1982 Annual Statistical Digest (Washington, DC: Federal Reserve System, 1983). 91. 1982 Census of Construction Industries, U,S, Summary: Establishments with and without payroll (Washington, DC: Department of Commerce, Bureau of the Census, December 1984).
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Services in the U.S. Balance of Payments 1982-1984 Page 31 92. 1982 Census of Construction Industries Special Report: Legal Form of Organization and Iype of Operation (Washington, DC: Department of Commerce, Bureau of the Census, August 1985). 93. 1982 Census of Service Industries: Establishment and Firm Size (including Legal form of organization) (Washington, DC: Department of Commerce, Bureau of the Census, May 1985). 94. 1982 Census of Service Industries; Miscellaneous Subjects {including Census of Transportation Establishment Statistics} (Washington, DC: Department of Commerce, Bureau of the Census, December 1985). 95. "39th report.on U.S. agencies," Advertising Age (Chicago: Crain CommuTiications, Inc., March 16, 1983). 96. "40th report on U.S. agencies," Advertising Age (Chicago: Crain Communications, Inc., March 28, 1984). 97. "41st report on U.S. agencies," Advertising Age (Chicago: Crain Communications, Inc., March 28, 1985).
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