Federico Carril‐Caccia, Elena Pavlova | The World Economy
The present article deals with how the insertion in international trade and Global Value Chains (GVCs) of countries affect their capacity of attracting foreign Mergers and Acquisitions (M&As). To this end, we combine data for bilateral M&As and trade in value added for the period 2001‐2015 and estimate an augmented gravity equation. Results indicate that trade openness per se does not favour M&As. Nevertheless, bilateral free trade agreements, heterogeneity of destinations (sources) for exports (imports) of intermediate and final goods, and position and participation in global value chains are relevant for explaining bilateral M&As. Moreover, their role is significantly different depending on the level of development of the home and host countries.