Eleventh Global Studies Conference

Abstract

Since the beginning of the present century, the landscape of capital exporters has drastically changed. Traditionally, developed countries have been the source of more than 80% of the World’s Foreign Direct Investment (FDI), while between 2012 and 2015 their share has been below 60%. At the same time, from 1996 to 2016, the weight of FDI outflows from developing countries increased from 8.6% to 23.6%, reaching its maximum in 2014 (33.4%). This trend is particularly driven by emerging countries. During the last decade BRICS investment outflows increased from 4.3% to 11.5% reaching their maximum in 2014 (15.8%). Similarly, since the beginnings of the nineties tax haven became increasingly relevant, on average during the last decade they were responsible for 20% of the World’s outward FDI. This paper analyses the effects of merger and acquisitions (M&As) on targets’ on total factor productivity (TFP), export intensity, employment, and average wages. Importantly we do not only consider M&As as homogeneous, but analyse their impact depending on the origin of investment. We distinguish among takeovers from European and other developed, developing, and tax haven countries. To this end, we construct a unique firm-level dataset of foreign direct investment in the French manufacturing sector and apply the methodology proposed by Imbens (2000) and Lechner (2001) named generalised propensity score matching. Results show that the effects of takeovers differ strongly depending on the origin. M&As made by European multinationals have the largest positive impact in terms of total-factor productivity (TFP) and employment. Acquisitions from other developed and developing countries increase targets’ export intensity. In contrast, M&As made by multinationals headquartered in tax haven countries have a negative impact on TFP and wages.