Improving the SNA Treatment of Multinational Enterprises

Abstract

Core measures in the System of National Accounts (SNA) may reflect distortions based on the treatment of multinational enterprises (MNEs) under the residence concept, which is effectively a legal concept rather than an economic concept for special purpose entities that lack production. This paper suggests an improvement to the SNA treatment of MNEs by proposing an SNA framework that offers a dual presentation of measures on operating entities and measures on special purpose entities. A dual presentation adds information to better understand the role of MNEs and special purpose entities in national accounts. Nevertheless, the proposal also yields a meaningful departure from current SNA recommendations and current practice by statistical compilers, which requires careful consideration of practical matters before implementation is feasible.