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Alignment of Multinational Firms along Global Value Chains: A Network-based Perspective

Charlie Joyez ()

No 2019-05, GREDEG Working Papers from Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), University of Nice Sophia Antipolis

Abstract: The multiple location choices of firms respond to a complex design of simultaneous and related goals. This paper reveals how the geographic coverage of French multinational firms is increasingly determined by Global Value Chains (GVCs) since the mid-1990s. I study the network structure of French multinationals using firm-level data, and of the Global Value Chains using the bilateral value added (VA) content of exports (from international Input-Output tables). The comparison of the two networks reveals an alignment of firms' plants along global value chains, supported by several econometric estimations including a multiple regression Quadratic Assignment Procedure and a panel OLS defined at the country-pair level. Multinationals have modified their foreign affiliates' locations to settle in countries engaged in sequential production, and this result holds when controlling for gravity-like location's determinants and raw international trade flows. Specifically, I report how MNEs are moving up the value chain, as their new locations turned to be more driven by an upstream alignment on GVCs (toward the VA source) rather than a downstream one (toward VA destination). Eventually, the GVCs' attraction increased after the 2008 crisis, even though GVCs were experiencing a slowdown. Therefore, firm's vulnerability to the dismantling of GVCs similarly increased.

Keywords: Global Value Chains; Multinational Firms; Location Choices; Weighted Directed Networks (search for similar items in EconPapers)
JEL-codes: F02 F23 F60 C45 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec, nep-geo and nep-int
Date: 2019-02
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Persistent link: https://EconPapers.repec.org/RePEc:gre:wpaper:2019-05

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