Table 8: Positive Ownership Counts: Vertical Integration in GVCs and Input Specificity

|log(Number of Firm-to-Firm Connections (_CF _<sup>_rs_</sup><br>_ij,t_<sup>))</sup>|PTA|Total depth|Core depth|WTO-X depth|
|---|---|---|---|---|
|Backward<sup>_rs_</sup><br>_j_ <sup>(</sup><sup>_ars_</sup><br>_j,t_|1_._035<sup>_∗∗∗_</sup>|0_._962<sup>_∗∗∗_</sup>|1_._014<sup>_∗∗∗_</sup>|0_._944<sup>_∗∗∗_</sup>|
||(0_._362)|(0_._355)|(0_._358)|(0_._352)|
|Forward<sup>_rs_</sup><br>_j_ <sup>(</sup><sup>_brs_</sup><br>_j,t_<sup>)</sup>|_−_0_._293|_−_0_._461|_−_0_._408|_−_0_._531|
||(0_._381)|(0_._376)|(0_._379)|(0_._373)|
|Specifcity afliate _×_ intput coefcient|1_._093<sup>_∗_</sup>|1_._317<sup>_∗∗_</sup>|1_._249<sup>_∗∗_</sup>|1_._435<sup>_∗∗_</sup>|
||(0_._631)|(0_._621)|(0_._626)|(0_._613)|
|Specifcity parent _×_ output coefcient|_−_1_._464<sup>_∗∗_</sup><br>(0_._61)|_−_1_._449<sup>_∗∗_</sup><br>(0_._598)|_−_1_._495<sup>_∗∗_</sup><br>(0_._603)|_−_1_._459<sup>_∗∗_</sup><br>(0_._590)|
|PTA-Measures_ij,t_|0_._532<sup>_∗∗∗_</sup>|0_._744<sup>_∗∗∗_</sup>|0_._540<sup>_∗∗∗_</sup>|0_._856<sup>_∗∗∗_</sup>|
||(0_._036)|(0_._055)|(0_._039)|(0_._067)|
|PTA-Measures_ij,t ×_ Backward<sup>_rs_</sup><br>_j_|0_._528|0_._982<sup>_∗∗_</sup>|0_._617<sup>_∗_</sup>|1_._259<sup>_∗∗_</sup>|
||(0_._346)|(0_._476)|(0_._369)|(0_._544)|
|PTA-Measures_ij,t ×_ Forward<sup>_rs_</sup><br>_j_|_−_1_._566<sup>_∗∗∗_</sup>|_−_1_._974<sup>_∗∗∗_</sup>|_−_1_._485<sup>_∗∗∗_</sup>|_−_2_._249<sup>_∗∗∗_</sup>|
||(0_._34)|(0_._471)|(0_._361)|(0_._541)|
|PTA-Measures_ij,t ×_ Input specifcity afliate<sup>_r_</sup>|_−_0_._218<sup>_∗∗∗_</sup>|_−_0_._354<sup>_∗∗∗_</sup>|_−_0_._249<sup>_∗∗∗_</sup>|_−_0_._416<sup>_∗∗∗_</sup>|
||(0_._039)|(0_._058)|(0_._043)|(0_._068)|
|PTA-Measures_ij,t ×_ Inputspecifcity parent<sup>_s_</sup>|_−_0_._583<sup>_∗∗∗_</sup><br>(0_._038)|_−_0_._753<sup>_∗∗∗_</sup><br>(0_._055)|_−_0_._571<sup>_∗∗∗_</sup><br>(0_._041)|_−_0_._843<sup>_∗∗∗_</sup><br>(0_._065)|
|PTA-Measures_ij,t ×_ Input specifcity afliate<sup>_r _</sup>_×_ Backward<sup>_rs_</sup><br>_j_|_−_1_._474<sup>_∗∗_</sup>|_−_2_._197<sup>_∗∗∗_</sup>|_−_1_._532<sup>_∗∗_</sup>|_−_2_._649<sup>_∗∗∗_</sup>|
||(0_._614)|(0_._839)|(0_._651)|(0_._955)|
|PTA-Measures_ij,t ×_ Input specifcity parent<sup>_s _</sup>_×_ Forward<sup>_rs_</sup><br>_j_|3_._020<sup>_∗∗∗_</sup>|4_._054<sup>_∗∗∗_</sup>|3_._004<sup>_∗∗∗_</sup>|4_._682<sup>_∗∗∗_</sup>|
||(0_._62)|(0_._859)|(0_._658)|(0_._983)|
|BIT_ij,t_|0_._013|0_._013|0_._013|0_._012|
||(0_._011)|(0_._011)|(0_._011)|(0_._011)|
|Country-pair FE|✓|✓|✓|✓|
|Industry-pair FE|✓|✓|✓|✓|
|Shareholder-country-industry-year FE|✓|✓|✓|✓|
|Subsidiary-country-industry-year FE|✓|✓|✓|✓|
|Domestic-year FE|✓|✓|✓|✓|
|Obs.|990,033|990,033|990,033|990,033|
|R<sup>2</sup>|0.565|0.565|0.565|0.565|

Standard errors are clustered at country-industry pairs level and reported in parentheses. * _p <_ 0 _._ 1, ** _p <_ 0 _._ 05, *** _p <_ 0 _._ 01 Table 9 indicates that a higher input specificity raises the marginal effect of any PTA membership and of PTA depth for the propensity of there being any ownership links. The effect tends to be generally bigger in the forward than in the backward integration direction.

– – Hence, overall, PTAs and particularly deep ones raise the propensity of any firm integration, specifically in the forward integration direction, and even more so when the inputs supplied by the parent to the affiliate are more specific and customized than otherwise.

# **4 Conclusion**

In this paper, we investigate the effects of PTAs (and their depth) on firm ownership. Thanks to a unique and novel data set that measures counts of ownership links at a country and sector pair level, we can uncover interesting heterogeneities arising when a PTA comes into force. In particular, given the structure of our data, we are the first to look at sector-specific characteristics when it comes to ownership along 15