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Do cross‐border mergers and acquisitions reflect participations into global value chains?

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  • Maria Cipollina
  • Filomena Pietrovito
  • Alberto Franco Pozzolo

Abstract

Global value chains (GVCs) are a major feature of globalisation, with a strong impact on the patterns of international trade. In this paper, we study the link between GVCs and cross‐border mergers and acquisitions (M&As), testing the two symmetric hypotheses that a higher degree of participation in GVCs increases the probability that a firm acquires: (i) the producers of their imported inputs or (ii) the users of their exported products. Our analysis is based on a unique data set covering 12 supplier and user sectors, for over 22 investor countries and 47 target countries between 1995 and 2010. Estimating an augmented gravity equation model of cross‐border M&As, inflated with a large number of bilateral sector and country‐fixed effects, we find strong evidence of a positive and statistically significant impact of GVC participation on the total value of cross‐border M&As, although the economic impact is substantial only in the case of few sectors.

Suggested Citation

  • Maria Cipollina & Filomena Pietrovito & Alberto Franco Pozzolo, 2021. "Do cross‐border mergers and acquisitions reflect participations into global value chains?," The World Economy, Wiley Blackwell, vol. 44(11), pages 3168-3201, November.
    • Handle: RePEc:bla:worlde:v:44:y:2021:i:11:p:3168-3201
    DOI: 10.1111/twec.13135
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