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Corporate networks of international investment and trade

Corporate networks of international investment and trade

Smith, Matthew Paul (2016) Corporate networks of international investment and trade. PhD thesis, University of Greenwich.

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Abstract

This thesis consists of three distinct papers, that each address the globalisation of industries in past decades, specifically the reorganisation of the production process. The structure of production has changed in recent decades; goods are no longer produced completely in one country, rather production is fragmented into several geographically segmented business functions. This thesis argues the need for both alternative methods and data to better explain complex trade and investment, (and therefore production patterns), in the modern global economy.

The first paper advocates the use of network analysis to address the central research themes in the area of international business and economics (IBE). The particular focus is on changes in trade and FDI in light of the fragmentation of the production process. This paper discusses the potential contributions of empirical network analysis to IBE, along with providing a review of the literature that applies network analysis to international trade and investment (such as De Benedictis & Tajoli, 2011). This paper concludes that there is significant potential for the application of advanced network models to address research questions in IBE, especially relating to topics of international trade, investment and production.

The second paper aims at explaining features characterising international trade and investment, (and therefore production), in a high tech sector (the medical and precision instruments industry). The reorganisation of production has resulted in an increase in the importance and level of intra-firm trade (trade amongst affiliated firms), highlighting the need to account for the fact that it is firms – and not countries – that actually trade. This paper applies a multilevel exponential random graph model (as developed by Wang et al, 2013) to investigate the international fragmentation of production by combining both country-level and firm-level networks to capture the interdependencies between international trade and firm level activity. The research question the second paper seeks to answer is: how do the ownership patterns at the firm level contribute in explaining trade amongst countries? The results highlight that the activity of firms and the ties that link them together into business groups significantly shapes trade and investment patterns. In this high tech sector, the analysis reveals that production is characterised by a hierarchical division of labour, with trade concentrated in a handful of nations. Furthermore, investment motives in this industry are found to be market seeking and strategic asset seeking.

The third paper examines the interplay between the competitiveness of nations and their position in the international trade network in the automotive sector. The reorganisation of the production process has led to increased competition at the international level, with many firms from industrialised nations increasing their level of outsourcing and offshoring of lower value activities to developing countries. Along with the increase in outsourcing activities, many industrialised nations are also now facing increasing competition from emerging economies, who are steadily developing capabilities, in which industrialised nations once held a firm competitive advantage. The third paper makes use of network analysis of the international trade network to analyse the competitive level of countries in the automotive industry, and to answer the research question of to what extent is the competitiveness level of a country determined by its position within the international trade network? The results of the analysis point towards a need for nations to develop the capabilities of domestic suppliers in the automotive sector in order to improve national competitiveness, along with the importance of developing efficient trade ties with competitive nations.

Item Type: Thesis (PhD)
Uncontrolled Keywords: Globalisation; production process; international business and economics (IBE); international trade and investment; intra-firm trade; international trade network;
Subjects: H Social Sciences > HD Industries. Land use. Labor
Faculty / Department / Research Group: Faculty of Business
Faculty of Business > Department of Accounting & Finance
Last Modified: 30 May 2019 11:05
Selected for GREAT 2016: None
Selected for GREAT 2017: None
Selected for GREAT 2018: None
Selected for GREAT 2019: None
URI: http://gala.gre.ac.uk/id/eprint/24523

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