Andrea Coveri, Elena Paglialunga (p), Antonello Zanfei

Xiaomian Dai

The geographic dispersion of production activities has led regions to increasingly specialize in specific value chain functions, giving rise to a finer spatial division of labour. In this work we use georeferenced FDI data to investigate the geography of functions in European regions. We show that the most intangible-intensive functions at the upper ends of value chains are concentrated in few advanced regions, while lower-income ones are largely and persistently specialized in production operations. Moreover, we find that regions locked-into these value chain functions are the least likely to upgrade towards more knowledge-intensive industries. By contrast, only the few regions which experienced functional upgrading have been able to diversify towards more innovative industries. These findings suggest that the geographic concentration of intangible-intensive functions might well be among the key drivers of the rising inter-regional inequality in Europe.

Luca Bettarelli, Vieri Calogero, Simona Comi, Mara Grasseni, Laura Resmini (p)

Elena Paglialunga

The aim of this paper is to analyse whether and to what extent the formation and the shape of EU-centred GPNs has been conditioned by the proliferation of investment liberalization policies, like BITs, TIPs, and other multilateral agreements (IIAs). In particular, we want to answer to the following research questions: 1) Does the geographical extension of EU-centred GPNs mirror the geography of BITs signed by the country of origin of MNEs leading the networks?; 2) Is the impact of BITs homogenous across different sectors and/or regions belonging to the same country of origin?; 3) Does the strength of the protection offered by BITs matter for the EU MNEs’ location decision process? To answer these questions we use a Pseudo Poisson Maximum Likelyhood (PPML) approach, which provides two distinct advantages over traditional OLS panel estimates and addresses relevant econometric concerns, such as heteroskedasticity and the presence of zero-investment observation. In the benchmark regressions, we treat the binary BIT indicator as exogenous, conditional on a set of covariates. Then we explore the role of the quality of the BITs as a driver of the expansion of GPNs. In the last part of the study we provide evidence of both sectoral and geographical heterogeneity.

Xiaomian Dai (p), Canfei He

Laura Resmini

In the past decades, the role of southern countries in the global investment network has become increasingly crucial, which can be attributed to China's improving core position. However, previous research on global investment focused on North-South pattern. The effects of greenfield investment on the Global South is far from satisfactory. Through multilayer networks motifs detection and a series of expanded gravity equations, this paper provides a systematic evaluation of the impact of China's outward greenfield investment on southern countries. The findings are as follows: (1) China's co-investment in Southern countries has strengthened trade ties among countries in the global South. The network effects of Chinese greenfield investments in the South are geographically long-term and heterogeneous across continents. (2) Considering industrial heterogeneity, Chinese co-investment in greenfield countries in the South promotes both intra-industry and inter-industry trade. (3) On the one hand, Chinese MNCs and SOEs' co-investments in Southern countries promote input-output linkages in trade between Southern countries. On the other hand, as Chinese greenfield investments in Southern countries are concentrated in capital-intensive and knowledge-intensive industries, greenfield investments in China to Southern countries also have knowledge spillover effects.