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Deep Trade Agreements and Firm Ownership in GVCs

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  • Peter H Egger
  • Gerard Masllorens

Abstract

This paper focuses on the effect of preferential trade agreements and their depth on firm-to-firm ownership, in particular, along global value chains. It measures shareholder–affiliate ownership links at the country-sector-pair level to distinguish between vertical and horizontal links. The findings show that preferential trade agreements boost vertical international investment links (both backward and forward) while reducing horizontal investment. Deep preferential trade agreements stimulate investment particularly for sector pairs, where a high input specificity prevails.

Suggested Citation

  • Peter H Egger & Gerard Masllorens, 2024. "Deep Trade Agreements and Firm Ownership in GVCs," The World Bank Economic Review, World Bank, vol. 38(4), pages 691-707.
    • Handle: RePEc:oup:wbecrv:v:38:y:2024:i:4:p:691-707.
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    File URL: http://hdl.handle.net/10.1093/wber/lhae003
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    References listed on IDEAS

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    1. James R. Markusen, 2004. "Multinational Firms and the Theory of International Trade," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262633078, December.
    2. Gene M. Grossman & Phillip McCalman & Robert W. Staiger, 2021. "The “New” Economics of Trade Agreements: From Trade Liberalization to Regulatory Convergence?," Econometrica, Econometric Society, vol. 89(1), pages 215-249, January.
    3. Aaditya Mattoo & Nadia Rocha & Michele Ruta, 2020. "Handbook of Deep Trade Agreements," World Bank Publications - Books, The World Bank Group, number 34055.
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