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

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.