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Mergers along the Global Supply Chain: Information Technologies and Routineness

  • Basco, Sergi
  • Mestieri, Marti

This paper empirically analyzes how the adoption of Information Technologies (IT) has changed the organization of global supply chains. We focus on international mergers, which are a growing and important component of foreign direct investment. We use data on North-South vertical mergers and acquisitions for all manufacturing industries. We show that the effect of IT adoption on the number of vertical mergers and acquisitions is decreasing with the “routineness” of the industry. Our interpretation is that the IT revolution has enabled new monitoring mechanisms. This has allowed Northern headquarters to better monitor suppliers, specially those in less routine-intensive industries –which were harder to monitor prior to the IT revolution.

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Paper provided by Toulouse School of Economics (TSE) in its series TSE Working Papers with number 13-428.

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Date of creation: Jul 2013
Date of revision: Nov 2013
Handle: RePEc:tse:wpaper:27548
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  1. David Autor & Frank Levy & Richard Murnane, 2003. "The skill content of recent technological change: an empirical exploration," Proceedings, Federal Reserve Bank of San Francisco, issue Nov.
  2. Robert E. Hall & Charles I. Jones, 1999. "Why Do Some Countries Produce So Much More Output Per Worker Than Others?," The Quarterly Journal of Economics, MIT Press, vol. 114(1), pages 83-116, February.
  3. Antras, Pol, 2003. "Firms, Contracts, and Trade Structure," Scholarly Articles 3196328, Harvard University Department of Economics.
  4. Holger Breinlich, 2006. "Trade Liberalization and Industrial Restructuring through Mergers and Acquisitions," Economics Discussion Papers 619, University of Essex, Department of Economics.
  5. Carluccio, J. & Fally, T., 2011. "Global Sourcing under Imperfect Capital Markets," Working papers 312, Banque de France.
  6. Lindsay Oldenski, 2012. "The Task Composition of Offshoring by U.S. Multinationals," Economie Internationale, CEPII research center, issue 131, pages 5-21.
  7. Basco, Sergi & Mestieri, Martí, 2013. "Heterogeneous trade costs and wage inequality: A model of two globalizations," Journal of International Economics, Elsevier, vol. 89(2), pages 393-406.
  8. Arnaud Costinot & Lindsay Oldenski & James Rauch, 2011. "Adaptation and the Boundary of Multinational Firms," The Review of Economics and Statistics, MIT Press, vol. 93(1), pages 298-308, February.
  9. Diego A. Comin & Martí Mestieri, 2010. "An Intensive Exploration of Technology Diffusion," NBER Working Papers 16379, National Bureau of Economic Research, Inc.
  10. Daron Acemoglu & Simon Johnson, 2005. "Unbundling Institutions," Journal of Political Economy, University of Chicago Press, vol. 113(5), pages 949-995, October.
  11. Enghin Atalay & Ali Hortacsu & Chad Syverson, 2012. "Why Do Firms Own Production Chains?," NBER Working Papers 18020, National Bureau of Economic Research, Inc.
  12. Basco, Sergi, 2013. "Financial development and the product cycle," Journal of Economic Behavior & Organization, Elsevier, vol. 94(C), pages 295-313.
  13. Arnaud Costinot, 2009. "An Elementary Theory of Comparative Advantage," NBER Working Papers 14645, National Bureau of Economic Research, Inc.
  14. Natalia Ramondo & Veronica Rappoport & Kim J. Ruhl, 2011. "Horizontal Vs. Vertical FDI : Revisiting Evidence from U.S. Multinationals," Working Papers 11-12, New York University, Leonard N. Stern School of Business, Department of Economics.
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