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

Author

Listed:
  • Charlie Joyez

    (Université Côte d'Azur, France
    GREDEG CNRS)

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.

Suggested Citation

  • Charlie Joyez, 2019. "Alignment of Multinational Firms along Global Value Chains: A Network-based Perspective," GREDEG Working Papers 2019-05, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), Université Côte d'Azur, France.
    • Handle: RePEc:gre:wpaper:2019-05
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    File URL: http://www.gredeg.cnrs.fr/working-papers/GREDEG-WP-2019-05.pdf
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    References listed on IDEAS

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    Cited by:

    1. Roberto Antonietti & Giulia De Masi & Giorgio Ricchiuti, 2020. "Linking FDI Network Topology with the Covid-19 Pandemic," Working Papers - Economics wp2020_18.rdf, Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa.
    2. Bayari, Celal, 2020. "South Korean Economy and the Free Trade Agreement with China," MPRA Paper 102938, University Library of Munich, Germany, revised 21 Jun 2020.
    3. Giulia Masi & Giorgio Ricchiuti, 2020. "From FDI network topology to macroeconomic instability," Journal of Economic Interaction and Coordination, Springer;Society for Economic Science with Heterogeneous Interacting Agents, vol. 15(1), pages 133-158, January.

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    More about this item

    Keywords

    Global Value Chains; Multinational Firms; Location Choices; Weighted Directed Networks;
    All these keywords.

    JEL classification:

    • F02 - International Economics - - General - - - International Economic Order and Integration
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • F60 - International Economics - - Economic Impacts of Globalization - - - General
    • C45 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Neural Networks and Related Topics

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