In this paper, we introduce the Input Rank as a measure to study URLanization of global supply networks at the firm level. We model the case of a firm that needs assessing the technological relevance of each direct and indirect supplier on a network-like production function with labor and intermediate inputs. In our framework, an input is technologically more relevant if a shock on that upstream market can hit harder the marginal costs of a downstream buyer , considering the topology of the supply structure. A higher labor intensity at each stage buffers the transmission of upstream shocks in the network. In addition, we provide for the possibility that producers have limited knowledge of inputs in the supply network, hence they can underestimate the relevance of more distant inputs. After applications, the Input Rank returns a matrix of technological centralities that order any direct or indirect input for a representative firm in any output industry. We compute the Input Rank on U.S. and world input-output tables . Finally, we test how it correlates with choices of vertical integration  made by 20,489 U.S. parent companies controlling 154,836 affiliates worldwide. We find that a higher Input Rank is positively associated with higher odds that that input is vertically integrated, relatively more when final demand is elastic. A supplier's Input Rank remains a significant predictor of a firm's decision to integrate even after controlling for the relative positions on upstreamness(downstreamness) segments .
We introduce the Input Rank as a measure of relevance of direct and indirect suppliers in Global Value Chains. We conceive an intermediate input to be more relevant for a downstream buyer if a decrease in that input's productivity affects that buyer more. In particular, in our framework, the relevance of any input depends: i) on the network position of the supplier relative to the buyer, ii) the patterns of intermediate inputs vs labor intensities connecting the buyer and the supplier, iii) and the competitive pressures along supply chains. After we compute the Input Rank from both U.S. and world Input-Output tables, we provide useful insights on the crucial role of services inputs as well as on the relatively higher relevance of domestic suppliers and suppliers coming from regionally integrated partners . Finally, we test that the Input Rank is a good predictor of vertical integration choices made by 20,489 U.S. parent companies controlling 154,836 subsidiaries worldwide .
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In this paper, we
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to study URLanization of global supply networks at the firm level. We model the case of a firm that needs assessing the technological relevance of each
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supplier on a network-like production function with labor and intermediate inputs. In our framework, an input is technologically more relevant if a shock on that upstream market can hit harder the marginal costs of a downstream buyer , considering the topology of
suppliers in Global Value Chains. We conceive an intermediate input to be more relevant for a downstream buyer if a decrease in that input's productivity affects that buyer more. In particular, in our framework, the relevance of any input depends: i) on the network position of
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supply structure. A higher labor intensity at each stage buffers the transmission of upstream shocks in the network. In addition, we provide for the possibility that producers have limited knowledge of inputs in the supply network, hence they can underestimate the relevance of more distant inputs. After applications, the Input Rank returns a matrix of technological centralities that order any direct or indirect input for a representative firm in any output industry. We
supplier relative to the buyer, ii) the patterns of intermediate inputs vs labor intensities connecting the buyer and the supplier, iii) and the competitive pressures along supply chains. After we
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from both
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input-output tables
Input-Output tables, we provide useful insights on the crucial role of services inputs as well as on the relatively higher relevance of domestic suppliers and suppliers coming from regionally integrated partners
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how it correlates with choices
that the Input Rank is a good predictor
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choices
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affiliates worldwide. We find that a higher Input Rank is positively associated with higher odds that that input is vertically integrated, relatively more when final demand is elastic. A supplier's Input Rank remains a significant predictor of a firm's decision to integrate even after controlling for the relative positions on upstreamness(downstreamness) segments
subsidiaries worldwide