International business classification schemes
Jinfo Blog

21st August 2008

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Towards a world-wide economic classification scheme – Operation 2007 is starting to deliver International trade and investment have been recognised as key drivers - indeed many economists would argue the principal ones - behind the growth of the world economy and rise in living standards since 1945. The ease with which cross-border commerce or investing can be conducted is thus of massive importance for any organisation looking to sell abroad, seeking sources of goods and services or maintaining a watch on foreign competitors. Unfortunately research in this field is made more difficult by a lack of an uniform global classification scheme for economic activities. A major project to harmonise the existing ones, Operation 2007, is thus of considerable interest to those researching international business. Two widely-used schemes are the ‘International Standard Industrial Classification’ (ISIC) created by the United Nations in 1989 and the European Union’s ‘NACE’ established the following year. In addition there are separate world-wide and European ones relating to products and goods. There are also important regional nomenclatures. So for the free trade zone consisting of Canada, Mexico and the United States there is the North American industry scheme ‘NAICS’ (pronounced ‘Nakes’), the ‘JSIC’ for Japan and ‘ANZSIC’ for Australia/New Zealand. Operation 2007 is a co-ordinated programme of modifying all these being implemented by international and national statistical offices. It has two leading strands: • updating them to reflect economic and technological change since they were initiated or last revised, particularly the growing role of services compared to manufacturing and the rapid adoption of new information and communication technologies. A big step towards this goals was the approval of the new version (Rev 4) of the ISIC by the UN Statistical Commission in 2006 • harmonising nomenclature by removing the inconsistent treatment of specific activities or products appearing in the various schemes. This is being achieved by work on the convergence between NACE and NAICS and by adjusting NACE to base it directly on ISIC Rev 4 The harmonised version of NACE (Rev 2) took effect on 1 January this year, but the results of Operation 2007 compel many consequential changes in their databases, surveys and so on to be made by the individual national statistical offices. The scale and complexity of the time-consuming work this entails means that full implementation of the project will take several more years. Several valuable resources are available to help researchers cope with this complicated and somewhat daunting area of business research: • Eurostat ( http://digbig.com/4xhjb) the EU statistical office, provides information about the new NACE Rev.2 and progress with Operation 2007 at http://digbig.com/4xhjf. They also offer links to a huge range of classifications worldwide http://digbig.com/4xhjg • meanwhile National Statistics (www.statistics.gov) have compiled a ‘Guide to Classifications’ and links to various schemes on their website http://digbig.com/4xhjh

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