Survey of Current Business
January 2020
Volume 100, Number 1

An Ownership-Based Framework of the U.S. Current Account, 2018

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This report updates the ownership-based framework of the current account of the U.S. international transactions accounts (ITAs) prepared by the Bureau of Economic Analysis (BEA).1 The ownership-based framework presentation is similar to the standard current-account presentation in some fundamental ways. It includes the major aggregates of international trade in goods and services, primary and secondary income, and some key balances, which are also included in the ITAs.

In addition, the basic principle of residency is used to define international transactions. That is, transactions are defined as international when they occur between a U.S. resident and a nonresident. The residency of an affiliate of a multinational enterprise (MNE) depends on the country where the affiliate’s operations are located, not on the country of its owner. For example, sales by foreign affiliates of U.S. MNEs to local customers abroad are not included in U.S. exports of goods and services, because these are transactions between foreign residents. Instead, the U.S. parent’s share of earnings on those sales is included in U.S. income receipts. The framework presented here is “ownership-based” in that it adds detail from BEA’s activities of MNEs data to provide additional insight into the owners of direct investments and their affiliates’ activities behind the statistics.2

The ownership-based framework highlights the important role that MNEs play in international transactions. For example, in 2017, intra-MNE trade accounted for 32 percent of U.S. exports of goods and services and for 37 percent of U.S. imports of goods and services. The ownership-based framework recognizes that direct investment income results from the MNE’s active role in decisions about the production of goods and services by its affiliates. Under the ownership-based framework, direct investment income is renamed “net receipts or payments of direct investment income resulting from sales by affiliates” to distinguish this income from the other, more passive types of investment income included in the current account, such as dividends and interest on foreign stocks and bonds. This framework also shows that direct investment income receipts and payments are the result of substantial sales of goods and services and purchases of labor and other inputs. It also disaggregates trade in goods and services to show trade with affiliated foreigners separately from trade with unaffiliated foreigners.

This report includes new summary statistics on the major current-account aggregates for 2018, revised and more detailed statistics for 2017, and revised statistics for earlier years.3 The updated statistics through 2018 in this report reflect the 2019 annual update of the ITAs, which incorporated newly available and revised source data and other improvements.4 In addition, the updated statistics reflect preliminary results from both the 2017 Annual Survey of U.S. Direct Investment Abroad (“outward” direct investment) and the 2017 Benchmark Survey of Foreign Direct Investment in the United States (“inward” direct investment) as well as revised results from the 2016 annual surveys of outward and inward direct investment.5

A technical note that presents information on the conceptual basis of the ownership-based framework is available on BEA’s website.6 In addition, table A presents updated statistics for the most recent years.7

 


  1. For more information and statistics on the U.S. ITAs, see the BEA website.
  2. The major elements in the standard current account are trade in goods and services as well as receipts and payments of both primary income and secondary income. Primary income generally represents income that results from the production of goods and services or the provision of financial assets; it includes investment income such as interest, dividends, and reinvested earnings and compensation of employees. Secondary income represents all other income (also known as current transfers); it includes, for example, foreign aid and remittances.
  3. The statistics for 1982–2018 are available on BEA’s website. For a technical note and for details about data sources for the statistics, see “Supplemental Statistics” to the international accounts on BEA’s website.
  4. For more information about the 2019 annual update, see Eric Bryda, C. Omar Kebbeh, and Ted Peck, “Annual Update of the U.S. International Transactions Accounts,” Survey of Current Business 99 (July 2019).
  5. For more information about the U.S. direct investment abroad survey results, see the BEA website and Kassu Hossiso, “Activities of U.S. Multinational Enterprises in 2017,” Survey 99 (September 2019). For more information about foreign direct investment in the United States survey results, see the BEA website.
  6. For additional information about the sources and methods used to prepare the ownership-based framework estimates, see Obie G. Whichard and Jeffrey H. Lowe, “An Ownership-Based Disaggregation of the U.S. Current Account, 1982–93,” Survey 75 (October 1995): 52–61. For a general review of the issues relating to ownership relationships in international transactions, see J. Steven Landefeld, Obie G. Whichard, and Jeffrey H. Lowe, “Alternative Frameworks for U.S. International Transactions,” Survey 73 (December 1993): 50–61.
  7. For the statistics in table A, see the “Ownership-Based Framework of the U.S. Current Account, 1982–2018” under “Ownership-Based Framework Statistics” on the international accounts on BEA’s website. The statistics in table 2 for 1999–2018 reflect the June 2014 comprehensive restructuring of the ITAs. Table 1, which presents statistics for 1982–1998, reflects methodologies before the comprehensive restructuring. For the details, see Maria Borga and Kristy L. Howell, “The Comprehensive Restructuring of the International Economic Accounts,” Survey 94 (March 2014) and Thomas Anderson, “An Ownership-Based Framework of the U.S. Current Account, 2002–2013,” Survey 95 (January 2015).