Table 7.
Open in new tab

Ownership Propensity: Vertical Integration in GVCs and Input Specificity

|${1}$|(number of firm-to-firm connections (⁠|$\mathrm{CF}^{rs}_{ij,t}$|⁠))PTATotal depthCore depthWTO-X depth
|$\mathrm{Backward}^{rs}_{j}$|0.022***0.025***0.023***0.026***
(0.006)(0.006)(0.006)(0.006)
|$\mathrm{Forward}^{rs}_{j}$|−0.006−0.003−0.003−0.005
(0.007)(0.007)(0.007)(0.007)
|$\mathrm{Input \,\, specificity \,\, affiliate}^{r} \times \mathrm{Backward}^{rs}_{j}$|−0.058***−0.086***−0.078***−0.081***
(0.011)(0.011)(0.011)(0.011)
|$\mathrm{Input \,\, specificity \,\, parent}^{s} \times \mathrm{Forward}^{rs}_{j}$|0.079***0.064***0.066***0.073***
(0.013)(0.013)(0.013)(0.013)
|$\mathrm{PTA\textnormal {-}measures}_{ij,t}$|−0.018***−0.043***−0.027***−0.052***
(0.000)(0.001)(0.000)(0.001)
|$\mathrm{PTA\textnormal {-}measures}_{ij,t} \times \mathrm{Backward}^{rs}_{j}$|−0.0020.0260.0100.035*
(0.008)(0.016)(0.011)(0.020)
|$\mathrm{PTA\textnormal {-}measures}_{ij,t} \times \mathrm{Forward}^{rs}_{j}$|−0.022**−0.084***−0.058***−0.091***
(0.009)(0.018)(0.012)(0.022)
|$\mathrm{PTA\textnormal {-}measures}_{ij,t} \times \mathrm{Input \,\, specificity \,\, affiliate}^{r}$|0.008***0.021***0.012***0.027***
(0.000)(0.001)(0.000)(0.001)
|$\mathrm{PTA\textnormal {-}measures}_{ij,t} \times \mathrm{Input \,\, specificity \,\, parent}^{s}$|0.017***0.040***0.026***0.048***
(0.000)(0.001)(0.001)(0.001)
|$\mathrm{PTA\textnormal {-}measures}_{ij,t} \times \mathrm{Input \,\, specificity \,\, affiliate}^{r} \times \mathrm{Backward}^{rs}_{j}$|0.232***0.489***0.338***0.574***
(0.016)(0.033)(0.022)(0.040)
|$\mathrm{PTA\textnormal {-}measures}_{ij,t} \times \mathrm{Input \,\, specificity \,\, parent}^{s} \times \mathrm{Forward}^{rs}_{j}$|0.205***0.556***0.369***0.651***
(0.018)(0.037)(0.024)(0.045)
BITij, t−0.001***−0.001***−0.001***−0.001***
(0.000)(0.000)(0.000)(0.000)
Country-pair FE✓✓✓✓
Industry-pair FE✓✓✓✓
Shareholder-country-industry-year FE✓✓✓✓
Subsidiary-country-industry-year FE✓✓✓✓
Domestic-year FE✓✓✓✓
Obs.111,505,680111,505,680111,505,680111,505,680
R20.1940.1950.1950.195
|${1}$|(number of firm-to-firm connections (⁠|$\mathrm{CF}^{rs}_{ij,t}$|⁠))PTATotal depthCore depthWTO-X depth
|$\mathrm{Backward}^{rs}_{j}$|0.022***0.025***0.023***0.026***
(0.006)(0.006)(0.006)(0.006)
|$\mathrm{Forward}^{rs}_{j}$|−0.006−0.003−0.003−0.005
(0.007)(0.007)(0.007)(0.007)
|$\mathrm{Input \,\, specificity \,\, affiliate}^{r} \times \mathrm{Backward}^{rs}_{j}$|−0.058***−0.086***−0.078***−0.081***
(0.011)(0.011)(0.011)(0.011)
|$\mathrm{Input \,\, specificity \,\, parent}^{s} \times \mathrm{Forward}^{rs}_{j}$|0.079***0.064***0.066***0.073***
(0.013)(0.013)(0.013)(0.013)
|$\mathrm{PTA\textnormal {-}measures}_{ij,t}$|−0.018***−0.043***−0.027***−0.052***
(0.000)(0.001)(0.000)(0.001)
|$\mathrm{PTA\textnormal {-}measures}_{ij,t} \times \mathrm{Backward}^{rs}_{j}$|−0.0020.0260.0100.035*
(0.008)(0.016)(0.011)(0.020)
|$\mathrm{PTA\textnormal {-}measures}_{ij,t} \times \mathrm{Forward}^{rs}_{j}$|−0.022**−0.084***−0.058***−0.091***
(0.009)(0.018)(0.012)(0.022)
|$\mathrm{PTA\textnormal {-}measures}_{ij,t} \times \mathrm{Input \,\, specificity \,\, affiliate}^{r}$|0.008***0.021***0.012***0.027***
(0.000)(0.001)(0.000)(0.001)
|$\mathrm{PTA\textnormal {-}measures}_{ij,t} \times \mathrm{Input \,\, specificity \,\, parent}^{s}$|0.017***0.040***0.026***0.048***
(0.000)(0.001)(0.001)(0.001)
|$\mathrm{PTA\textnormal {-}measures}_{ij,t} \times \mathrm{Input \,\, specificity \,\, affiliate}^{r} \times \mathrm{Backward}^{rs}_{j}$|0.232***0.489***0.338***0.574***
(0.016)(0.033)(0.022)(0.040)
|$\mathrm{PTA\textnormal {-}measures}_{ij,t} \times \mathrm{Input \,\, specificity \,\, parent}^{s} \times \mathrm{Forward}^{rs}_{j}$|0.205***0.556***0.369***0.651***
(0.018)(0.037)(0.024)(0.045)
BITij, t−0.001***−0.001***−0.001***−0.001***
(0.000)(0.000)(0.000)(0.000)
Country-pair FE✓✓✓✓
Industry-pair FE✓✓✓✓
Shareholder-country-industry-year FE✓✓✓✓
Subsidiary-country-industry-year FE✓✓✓✓
Domestic-year FE✓✓✓✓
Obs.111,505,680111,505,680111,505,680111,505,680
R20.1940.1950.1950.195

Source: Authors’ calculations using the World Bank's Deep Trade Agreement, the WIOD, the UNCTAD IIA mapping and the ORBIS dataset.

Note: The table shows OLS regressions with high-dimensional fixed effects. In all columns, the dependent variable is binary, indicating the existence or not of any ownership link. The explanatory variables are Backward and Forward, PTA measures, Input specificity of the affiliate/parent, their interaction terms and BIT. PTA measures change by column: in column (1) PTA is a dummy variable, in column (2) we use PTAs' total depth, in column (3) we employ PTAs' core depth and in column (4) we use PTAs' WTO-X depth. Standard errors are clustered at country-industry-pair level and reported in parentheses. *p < 0.1, **p < 0.05, ***p < 0.01.

Table 7.
Open in new tab

Ownership Propensity: Vertical Integration in GVCs and Input Specificity

|${1}$|(number of firm-to-firm connections (⁠|$\mathrm{CF}^{rs}_{ij,t}$|⁠))PTATotal depthCore depthWTO-X depth
|$\mathrm{Backward}^{rs}_{j}$|0.022***0.025***0.023***0.026***
(0.006)(0.006)(0.006)(0.006)
|$\mathrm{Forward}^{rs}_{j}$|−0.006−0.003−0.003−0.005
(0.007)(0.007)(0.007)(0.007)
|$\mathrm{Input \,\, specificity \,\, affiliate}^{r} \times \mathrm{Backward}^{rs}_{j}$|−0.058***−0.086***−0.078***−0.081***
(0.011)(0.011)(0.011)(0.011)
|$\mathrm{Input \,\, specificity \,\, parent}^{s} \times \mathrm{Forward}^{rs}_{j}$|0.079***0.064***0.066***0.073***
(0.013)(0.013)(0.013)(0.013)
|$\mathrm{PTA\textnormal {-}measures}_{ij,t}$|−0.018***−0.043***−0.027***−0.052***
(0.000)(0.001)(0.000)(0.001)
|$\mathrm{PTA\textnormal {-}measures}_{ij,t} \times \mathrm{Backward}^{rs}_{j}$|−0.0020.0260.0100.035*
(0.008)(0.016)(0.011)(0.020)
|$\mathrm{PTA\textnormal {-}measures}_{ij,t} \times \mathrm{Forward}^{rs}_{j}$|−0.022**−0.084***−0.058***−0.091***
(0.009)(0.018)(0.012)(0.022)
|$\mathrm{PTA\textnormal {-}measures}_{ij,t} \times \mathrm{Input \,\, specificity \,\, affiliate}^{r}$|0.008***0.021***0.012***0.027***
(0.000)(0.001)(0.000)(0.001)
|$\mathrm{PTA\textnormal {-}measures}_{ij,t} \times \mathrm{Input \,\, specificity \,\, parent}^{s}$|0.017***0.040***0.026***0.048***
(0.000)(0.001)(0.001)(0.001)
|$\mathrm{PTA\textnormal {-}measures}_{ij,t} \times \mathrm{Input \,\, specificity \,\, affiliate}^{r} \times \mathrm{Backward}^{rs}_{j}$|0.232***0.489***0.338***0.574***
(0.016)(0.033)(0.022)(0.040)
|$\mathrm{PTA\textnormal {-}measures}_{ij,t} \times \mathrm{Input \,\, specificity \,\, parent}^{s} \times \mathrm{Forward}^{rs}_{j}$|0.205***0.556***0.369***0.651***
(0.018)(0.037)(0.024)(0.045)
BITij, t−0.001***−0.001***−0.001***−0.001***
(0.000)(0.000)(0.000)(0.000)
Country-pair FE✓✓✓✓
Industry-pair FE✓✓✓✓
Shareholder-country-industry-year FE✓✓✓✓
Subsidiary-country-industry-year FE✓✓✓✓
Domestic-year FE✓✓✓✓
Obs.111,505,680111,505,680111,505,680111,505,680
R20.1940.1950.1950.195
|${1}$|(number of firm-to-firm connections (⁠|$\mathrm{CF}^{rs}_{ij,t}$|⁠))PTATotal depthCore depthWTO-X depth
|$\mathrm{Backward}^{rs}_{j}$|0.022***0.025***0.023***0.026***
(0.006)(0.006)(0.006)(0.006)
|$\mathrm{Forward}^{rs}_{j}$|−0.006−0.003−0.003−0.005
(0.007)(0.007)(0.007)(0.007)
|$\mathrm{Input \,\, specificity \,\, affiliate}^{r} \times \mathrm{Backward}^{rs}_{j}$|−0.058***−0.086***−0.078***−0.081***
(0.011)(0.011)(0.011)(0.011)
|$\mathrm{Input \,\, specificity \,\, parent}^{s} \times \mathrm{Forward}^{rs}_{j}$|0.079***0.064***0.066***0.073***
(0.013)(0.013)(0.013)(0.013)
|$\mathrm{PTA\textnormal {-}measures}_{ij,t}$|−0.018***−0.043***−0.027***−0.052***
(0.000)(0.001)(0.000)(0.001)
|$\mathrm{PTA\textnormal {-}measures}_{ij,t} \times \mathrm{Backward}^{rs}_{j}$|−0.0020.0260.0100.035*
(0.008)(0.016)(0.011)(0.020)
|$\mathrm{PTA\textnormal {-}measures}_{ij,t} \times \mathrm{Forward}^{rs}_{j}$|−0.022**−0.084***−0.058***−0.091***
(0.009)(0.018)(0.012)(0.022)
|$\mathrm{PTA\textnormal {-}measures}_{ij,t} \times \mathrm{Input \,\, specificity \,\, affiliate}^{r}$|0.008***0.021***0.012***0.027***
(0.000)(0.001)(0.000)(0.001)
|$\mathrm{PTA\textnormal {-}measures}_{ij,t} \times \mathrm{Input \,\, specificity \,\, parent}^{s}$|0.017***0.040***0.026***0.048***
(0.000)(0.001)(0.001)(0.001)
|$\mathrm{PTA\textnormal {-}measures}_{ij,t} \times \mathrm{Input \,\, specificity \,\, affiliate}^{r} \times \mathrm{Backward}^{rs}_{j}$|0.232***0.489***0.338***0.574***
(0.016)(0.033)(0.022)(0.040)
|$\mathrm{PTA\textnormal {-}measures}_{ij,t} \times \mathrm{Input \,\, specificity \,\, parent}^{s} \times \mathrm{Forward}^{rs}_{j}$|0.205***0.556***0.369***0.651***
(0.018)(0.037)(0.024)(0.045)
BITij, t−0.001***−0.001***−0.001***−0.001***
(0.000)(0.000)(0.000)(0.000)
Country-pair FE✓✓✓✓
Industry-pair FE✓✓✓✓
Shareholder-country-industry-year FE✓✓✓✓
Subsidiary-country-industry-year FE✓✓✓✓
Domestic-year FE✓✓✓✓
Obs.111,505,680111,505,680111,505,680111,505,680
R20.1940.1950.1950.195

Source: Authors’ calculations using the World Bank's Deep Trade Agreement, the WIOD, the UNCTAD IIA mapping and the ORBIS dataset.

Note: The table shows OLS regressions with high-dimensional fixed effects. In all columns, the dependent variable is binary, indicating the existence or not of any ownership link. The explanatory variables are Backward and Forward, PTA measures, Input specificity of the affiliate/parent, their interaction terms and BIT. PTA measures change by column: in column (1) PTA is a dummy variable, in column (2) we use PTAs' total depth, in column (3) we employ PTAs' core depth and in column (4) we use PTAs' WTO-X depth. Standard errors are clustered at country-industry-pair level and reported in parentheses. *p < 0.1, **p < 0.05, ***p < 0.01.

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