of any ownership links from one country-sector pair to another one. Table 5 suggests that firms located up the stream of the chain tend to integrate more likely when a PTA comes into force. The opposite appears to be true for firms down the stream of the value chain. Both of these results appear to be intensified by the depth of the PTA, i.e., a deeper PTA increases more integration up the stream and decreases more integration down the stream of the chain vis-a-vis a shallower PTA.

Table 5: Ownership Propensity: Upstreamness and Downstreamness within GVCs

|1(Number of Firm-to-Firm Connections (_CF _<sup>_rs_</sup><br>_ij,t_<sup>))</sup>|PTA|Total depth|Core depth|WTO-X depth|
|---|---|---|---|---|
|PTA-Measures_ij,t_|0_._007<sup>_∗∗∗_</sup>|0_._019<sup>_∗∗∗_</sup>|0_._012<sup>_∗∗∗_</sup>|0_._023<sup>_∗∗∗_</sup>|
||(0_._000)|(0_._001)|(0_._000)|(0_._001)|
|PTA-Measures_ij,t ×_ upstreamness afliate<sup>_r_</sup><br>_i_|0_._002<sup>_∗∗∗_</sup>|0_._005<sup>_∗∗∗_</sup>|0_._003<sup>_∗∗∗_</sup>|0_._007<sup>_∗∗∗_</sup>|
||(0_._000)|(0_._000)|(0_._000)|(0_._000)|
|PTA-Measures_ij,t ×_ upstreamness parent<sup>_s_</sup><br>_j_|0_._003<sup>_∗∗∗_</sup>|0_._008<sup>_∗∗∗_</sup>|0_._005<sup>_∗∗∗_</sup>|0_._009<sup>_∗∗∗_</sup>|
||(0_._000)|(0_._000)|(0_._000)|(0_._000)|
|PTA-Measures_ij,t ×_ downstreamness afliate<sup>_r_</sup><br>_i_|_−_0_._003<sup>_∗∗∗_</sup>|_−_0_._009<sup>_∗∗∗_</sup>|_−_0_._005<sup>_∗∗∗_</sup>|_−_0_._011<sup>_∗∗∗_</sup>|
||(0_._000)|(0_._000)|(0_._000)|(0_._000)|
|PTA-Measures_ij,t ×_ downstreamness parent<sup>_s_</sup><br>_j_|_−_0_._005<sup>_∗∗∗_</sup>|_−_0_._013<sup>_∗∗∗_</sup>|_−_0_._008<sup>_∗∗∗_</sup>|_−_0_._015<sup>_∗∗∗_</sup>|
||(0_._000)|(0_._000)|(0_._000)|(0_._000)|
|BIT_ij,t_|_−_0_._001<sup>_∗∗∗_</sup><br>(0_._000)|_−_0_._001<sup>_∗∗∗_</sup><br>(0_._000)|_−_0_._001<sup>_∗∗∗_</sup><br>(0_._000)|_−_0_._001<sup>_∗∗∗_</sup><br>(0_._000)|
|Country-pair FE|✓|✓|✓|✓|
|Industry-pair FE|✓|✓|✓|✓|
|Shareholder-country-industry-year FE|✓|✓|✓|✓|
|Subsidiary-country-industry-year FE|✓|✓|✓|✓|
|Domestic-year FE|✓|✓|✓|✓|
|Obs.|102,828,240|102,828,240|102,828,240|102,828,240|
|R<sup>2</sup>|0.200|0.200|0.200|0.200|

Standard errors are clustered at country-industry pairs level and reported in parentheses. Downstreamness have been scaled by 10<sup>_−_6</sup> * _p <_ 0 _._ 1, ** _p <_ 0 _._ 05, *** _p <_ 0 _._ 01

# **3.2 PTAs and Vertical Integration Effects on Ownership in GVCs**

In this subsection, we employ the variation in input and output coefficients for each country pair and sector. Hence, in contrast to the country-sector-variant measures of upstreamness and downstreamness above, we utilize country-sector-to-sector data on the relative input and output dependence in this subsection. Recall that a higher input coefficient indicates a larger degree of backward integration (as the affiliate is a bigger supplier to the parent), while a higher output coefficient indicates a larger degree of forward integration (the affiliate is a bigger user of the parent). We can identify the main effect on the respective input and output coefficients apart from their interaction effects with PTA-Measures _ij,t_ .

Again, we will present effects on the positive counts and the propensity of any firm-to-firm ownership in separate tables.

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