Production and Distribution Planning : Strategic, Global, and Integrated

Production and Distribution Planning : Strategic, Global, and Integrated

 

Multiple Perspectives on production and distribution planning

  • Plant and Distribution Center Location problem – Strategic – Structural and Design
  • Procurement problem – where to source from – Tactical – Allocation, Assignment
  • Production and Distribution Scheduling – Operational  – Managing Flows
  • Multi Echelon Inventory Management- Operational – Managing Stocks
  • Supply Chain Integration, Collaboration, Coordination – Hierarchical Planning

Normally, production and distribution planning are handled separately in firms.  Integrated planning of production and distribution can add significant value to a company, particularly, in strategic decisions.

 

From Facility Location and Supply Chain Management – A comprehensive review

Since, in the literature, model objectives change as a function of the planning horizon length, we consider it opportune to define the features of each horizon in order to contextualize the parameters chosen for the models’ comparison. According to [14], the planning horizons of the supply chain can be clustered as follows:
Strategic planning: this level refers to a long-term horizon (3-5 years) and has the objective of identifying strategic decisions for a production network and defining the optimal configuration of a supply chain. The decisions involved in this kind of
planning include vertical integration policies, capacity sizing, technology selection, sourcing, facility location, production allocation and transfer pricing policies.
Tactical planning: this level refers to a mid-term horizon (1-2 years) and has the objective of fulfilling demand and managing material flows, with a strong focus on the trade-off between the service level and cost reduction. The main aspects considered in tactical planning include production allocation, supply chain coordination, transportation policies, inventory policies, safety stock sizing and supply chain lead time reduction.
Operational planning: this level refers to a short term period (1 day to 1 year) and has the objective of determining material/logistic requirement planning. The decisions involved in programming include the allocation of customer demands, vehicle routing, and plant and warehouse scheduling.

 

From

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From  Integrated Location-Production-Distribution Planning in a
Multi products Supply Chain Network Design Model

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Key words:

  • ‘supply chain strategic design’,
  • ‘supply chain planning’,
  • ‘supply chain optimization’,
  • ‘supply chain network design’,
  • ‘supply chain production planning’,
  • ‘supply chain delocalization’,
  • ‘logistic network design’,
  • ‘facility location’,
  • ‘distribution network design’,
  • ‘production-distribution systems’,
  • ‘location-allocation problem’,
  • ‘supply chain linear programming’
  • ‘supply chain mixed-integer programming’.

From  From Manufacturing to Distribution: The Evolution of ERP in Our New Global Economy

Over the past fifty years, manufacturing has changed from individual companies producing and distributing their own products, to a global network of suppliers, manufacturers, and distributors. Efficiency, price, and quality are being scrutinized in the production of each product. Because of this global network, manufacturers are competing on a worldwide scale, and they have moved their production to countries where the costs of labor and capital are low in order to gain the advantages they need to compete.

Today, the complex manufacturing environment faces many challenges. Many products are manufactured in environments where supplies come from different parts of the world. The components to be used in supply chain manufacturing are transported across the globe to different manufacturers, distributors, and third party logistics (3PL) providers. The challenges for many manufacturers have become how to track supply chain costs and how to deal with manufacturing costs throughout the production of goods. Software vendors, however, are now addressing these manufacturing challenges by developing new applications.

Global competition has played a key role in industrialized countries shifting from being production-oriented economies to service-based economies. Manufacturers in North America, Western Europe, and other industrialized nations have adapted to the shift by redesigning their manufacturing production into a distribution and logistics industry, and the skills of the labor force have changed to reflect this transition. Developing countries have similarly changed their manufacturing production environments to reflect current demands; they are accommodating the production of goods in industries where manufacturers have chosen to move their production offshore–the textile industry being a prime example of this move.

A report from the US Census Bureau titled Statistics for Industry Groups and Industries: 2005 and another from Statistics Canada titled Wholesale Trade: The Year 2006 in Review indicate that wholesalers are changing their business models to become distributors as opposed to manufacturers. Between 2002 and 2005, overall labor and capital in the manufacturing sectors decreased substantially. US industry data (from about 10 years ago) indicates that the North American manufacturing industry was engaged in 80 percent manufacturing processes and only 20 percent distribution activities. Today, however, these percentages have changed dramatically; the current trend is in the opposite direction. Manufacturing processes account for around 30 percent of the industry processes, and wholesale and distribution activities, approximately 70 percent.

In addition, a report from the National Association of Manufacturers indicates that the US economy imports $1.3 trillion (USD) worth of manufactured goods, but exports only $806 billion (USD) worth of goods manufactured in the US. This negative trade balance is a clear indication of the changing economic trend toward the manufacturing of goods in low-cost labor nations.

The main reason for this huge manufacturing shift is the increasing operating costs of production in industrialized countries. These rising costs are forcing manufacturers to move their production to developing nations because of the low cost of labor in these countries. This includes Asian countries (such as China and Indonesia) as well as Eastern European countries (such as the Czech Republic and Slovakia).

The number of workers (in percentages) in specified industries in G7 countries, and uses 1980 as the base year with 100 percent full employment in each industry. The industries with relatively constant rates of employment are the food and drink and the tobacco industries. Since 1995, all other industries have been maintaining less and less manufacturing employees, as indicated by the declining slopes in the graph. The shift in the textiles and leather, metals, and other manufacturing industries is moving toward production of goods in low-wage, developing countries.

Manufacturing is a global industry, and although a manufacturing company may be based in an industrialized country, it may have the bulk of its manufacturing facilities in a developing country. Producing goods in such a country reduces wage and capital costs for the manufacturer; however, some manufacturing control is lost in offshore production. Shipping, distribution, and rental costs, for example, are often difficult to track and manage, and quality control can be compromised in a production environment that is not local.

Two main outcomes can be seen within the manufacturing industry because of this manufacturing shift: manufacturers have a sense of having relinquished control of their production to low-cost labor nations, and supply chain management (SCM) has now become the answer to manufacturing within industrialized nations.

Suppliers that provide components to manufacturers often have issues with quality. Being part of a large network of suppliers, each supplier tries to offer the lowest prices for its products when bidding to manufacturers. Although a supplier may win the bid, its products may not be up to standard, and this can lead to the production of faulty goods. Therefore, when using offshore suppliers, quality issues, product auditing, and supplier auditing become extremely important.

Because the manufacturing model is changing, manufacturing has become more of a service-based industry than a pure manufacturing industry. Even though the physical process of manufacturing hasn’t changed, the actual locations of where the goods are being produced have. This fact is now compelling industrialized countries to engage in more assembly driven activities–a service-based model. The manufacturing process has transformed into obtaining parts and reassembling them into the final product. The final product is then redistributed throughout the appropriate channel or to the consumer. SCM methods are now reacting to this change as well; they are taking into account final assembly needs, and they are distributing particular products to consumers or manufacturers.

SCM is becoming the norm for manufacturers in the industrialized world. Offshoring is now standard practice, and methods such as SCM have been set up to deal with these economic and logistical business realities.

The economic shift happening in both industrialized and developing countries is dramatic. As the level of management knowledge increases, better methods of constructing offshore products are available in SCM solutions. In both types of economies, the changes in the labor force skill sets and manufacturing environments have consequently led to new software solutions being developed in order to manage this dramatic change.

Within the software industry, many SCM and enterprise resource-planning (ERP) vendors are following the economic shift. They are developing new functionality–ERP-distribution software–to meet the recent demands and needs of the changing manufacturing and distribution industries.

SCM and ERP software are converging to better address these new demands in the manufacturing industry. In the enterprise software market, ERP software vendors have reached a point of saturation; their installs are slowing down and they are seeing a reduction in sales. Therefore, ERP providers are developing new functionality in order to remain competitive with other ERP vendors, in addition to looking for new opportunities. ERP vendors are trying to adapt to the changing market in order to increase their revenues. They are integrating SCM functionality into their ERP offerings, creating ERP-distribution software that can span the entire production process across many continents (if necessary), and that is able to track final goods, components, and materials.

Traditional ERP solutions included some SCM functionality, which was needed to distribute the companies’ produced goods. These systems also allowed components and parts to be imported in order to assemble these goods. But offshore manufacturing and expansion into new markets has required SCM functionality in ERP software to be extended. Some larger vendors have acquired other companies in order to meet these changing demands. For example, Oracle acquired G-Log, a transportation management systems (TMS) vendor, and Agile, a product lifecycle management (PLM) vendor; and Activant acquired Intuit Eclipse.

SCM software vendors, in contrast, have felt encroached upon by ERP vendors. The situation has posed a real threat to SCM providers in the market, forcing them to extend their ERP functionality to compete with ERP vendors and to try to gain new clients in the distribution and logistics industry.

ERP-distribution software has integrated SCM functionality into its existing functionality to navigate through the complex global manufacturing environment. SCM software maps five processes into one solution: planning, sourcing (obtaining materials), producing, delivering, and returning final products if defective. These processes help to track and manage the goods throughout their entire life cycles. In addition, ERP solutions are used to manage the entire operations of an organization, not only a product’s life cycle. This gives users the broad capability to manage operations and use the SCM functionality to manage the movement of goods, whether components or finished product.

With the ability to gain accurate inventory visibility and SCM production, ERP-distribution software is able to see the whole chain of manufacturing and distribution events, from supplier to manufacturer, all the way to the final consumer.

There are three business models.

  • The first is the SCM model, which includes the manufacturing process.
  • The second is the retail model, which is the distribution of final products to the consumer, business, or retailer.
  • The third model is a combination of the first two business models, joined by the ERP-distribution software solution into one seamless process.

Within the SCM process, goods can either be brought in (imported) through foreign manufacturers, or acquired locally. The goods are then given to a distributor, 3PL provider, or wholesaler in order to reach the final client.

Within the retail model, the products are taken from a distributor, 3PL provider, or wholesaler, and are distributed to the appropriate person. Note that there is a “shift” for the consumer. This is to indicate that through the Internet or other forms of technology, consumers are now able to buy directly from distributors. The power of the consumer has changed; where manufacturers once provided products to consumers, consumers are now creating demand, and manufacturers have to meet that demand.

SCM solutions focus on the relationship between the supplier and manufacturer. However, ERP- distribution software has taken functionality from SCM software and combined it with retail software (such as point-of-sale and e-commerce solutions); it is now able to span across the entire supply chain and to track goods along the complete manufacturing process.

This is a simplified view of the complexities of today’s manufacturing processes. These complexities have made it crucial for trading partners to unite with manufacturers in order to help alleviate the frustrations that can occur within this global network. Specifically, trading partners are coming together with manufacturers to unite services, products, and customer experience so that business processes (such as manufacturing and distribution) become more efficient and that goods can move through these processes with minimal problems.

SCM can be thought of as the management of “warehousing processes,” in which the movement of goods occurs through multiple warehouses or manufacturing facilities. Tracking the costs of moving products and components through the maze of warehousing and manufacturing facilities is a tricky process, and many organizations lose money at each warehousing step.

Within the flow of goods in the manufacturing sector, the warehouse is a crucial part of the supply chain. Traditionally, the warehouse has been a source of frustration because the manufacturer or supplier pays for the use of the warehouse (whether owned or rented by the company). This leads to two possible scenarios: 1) the costs of the warehouse are incurred by a 3PL or manufacturing company, or 2) the costs are passed from one warehouse to another warehouse, and the original warehouse charges for these costs.

The typical warehouse process includes the following steps: receiving, put away, picking, kitting, packing, repacking, cross-docking, and shipping. ERP-distribution software is able to track costs across the entire organization and to aid companies in reducing costs that were previously tough to track.

ERP-distribution system encompasses the entire production of the final good. The ERP- distribution system is able to include inventory visibility from points “A to Z” (start to finish) and to track each warehouse cost from supplier to manufacturer to user, whether consumer, business, or retailer.

The Final Word: ERP-distribution software has been developed to meet the growing needs of the manufacturing and distribution industries. The capabilities incorporated into the software work across entire organizations, and even across continents.

Because of the economic shift in the manufacturing industry, the emergence of new software has been vital for businesses to stay competitive, meet the industry demands and emerging shift, and to keep business processes efficient to gain better profit margins.

ERP-distribution software is able to track the processes of manufacturing goods and distributing components, even if the manufacturer has facilities in North America and the Far East. With the SCM component in ERP software, manufacturing and tracking goods becomes manageable. Distributors and manufacturers can now work together in order to better meet customer requirements.

In addition of factors for domestic location selection analysis, other factors in international location selection are:

  • Exchange Rates
  • Taxes and Tariffs
  • Transfer Prices

How do companies in Computers, Automotive, Apparel, Electronics, Consumer Goods, Machinery manage their supply chain planning functions?  What software do they use for forecasting, planning, and scheduling?

I know of these software solutions for Network Design and Optimization:

Key Sources of Research:

 

Combined Strategic and Operational Planning – An MILP Success Story in Chemical Industry

Josef Kallrath

http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.506.4194&rep=rep1&type=pdf

 

 

Planning in the Process Industry

Josef Kallrath

Click to access kallrath2008d.pdf

 

Solving Planning and Design Problems in the Process Industry Using Mixed Integer and Global Optimization

Josef Kallrath

Click to access kallr05a.pdf

 

 

Mathematical Programming Models and Formulations for Deterministic Production
Planning Problems

Yves Pochet

Click to access Pochet.pdf

 

Supply Network Planning and Plant Scheduling in the Chemical-Pharmaceutical Industry – A Case Study Investigation

Gang Yang, Martin Grunow and Hans-Otto Guenther

Click to access SNPandPSinCPI2003.pdf

 

 

Advanced Planning and Scheduling Solutions in Process Industry

Editors: Günther, Hans-Otto, van Beek, Paul (Eds.)

http://www.springer.com/la/book/9783540002222

 

Advanced Planning and Scheduling in Manufacturing and Supply Chains

Authors: Mauergauz, Yuri

http://www.springer.com/la/book/9783319275215

 

 

Centralised supply chain master planning employing advanced planning systems

Martin Rudberga* and Jim Thulin

http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.177.7313&rep=rep1&type=pdf

 

 

Planning and Scheduling in Supply Chains: An Overview of Issues in Practice

Stephan Kreipl • Michael Pinedo

Click to access 2004-01-Kreipl.pdf

 

 

Sales and operations planning in the process industry

Sayeh Noroozi

Joakim Wikner

Click to access Salesandoperationsplanningintheprocessindustry.pdf

 

 

Optimal planning in large multi-site production networks

Christian H. Timpe, Josef Kallrath

http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.565.6621&rep=rep1&type=pdf

 

 

Mixed Integer Optimization in the Chemical Process Industry –
Experience, Potential and Future Perspectives

Josef Kallrath

Click to access kall00c.pdf

 

Planning and scheduling in the process industry

Josef Kallrath

2002

https://pdfs.semanticscholar.org/79f2/bba952f67315ccfd639ce874f966b02d1c18.pdf?_ga=2.18515577.1763587969.1506656275-754417939.1465928807

 

Modeling and design of global logistics systems: A review of integrated strategic and tactical models and design algorithms

Marc Goetschalckx  Carlos J.Vidal, Koray Dogan

Click to access 09e4150b3dc45e40ef000000.pdf

 

 

Strategic Analysis of Integrated Production- Distribution Systems: Models and Methods

Morris Cohen and H Lee

1988

Click to access 554578ab0cf23ff71686afbc.pdf

 

 

Integrated production/distribution planning in supply chains: An invited review

Sß. Selcßuk Erengucß a, N.C. Simpson b, Asoo J. Vakharia

1999

Click to access 1999_EJOR.pdf

 

 

A Review of Integrated Analysis of Production-Distribution Systems

Ana Maria Sarmiento, Rakesh Nagi

1999

Click to access ana.pdf

 

Managing Perishability in Production-Distribution Planning: a discussion and review

P. Amorim H. Meyr C. Almeder
B. Almada-Lobo

http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.475.3138&rep=rep1&type=pdf

 

 

Input-Output Analysis For Multi-location Supply Chain Management Control:
A Theoretic Model

Wang Lu, Tong Rencheng

Click to access Wang-274.pdf

 

 

Using Operational Research for Supply Chain Planning in the Forest
Products Industry

Sophie D’Amours

Mikael Ro¨nnqvist

Andres Weintraub

http://repositorio.uchile.cl/bitstream/handle/2250/125029/DâAmours_Sophie.pdf?sequence=1

 

 

Mathematical programming models for supply chain production and
transport planning

Josefa Mula *, David Peidro, Manuel Díaz-Madroñero, Eduardo Vicens

2010

Click to access 83f7e2405a9539c86dd593f5bb064f2695d5.pdf

 

 

Formation of a strategic manufacturing and distribution network
with transfer prices

Renato de Mattaa, Tan Millerb

Click to access 28a955be33b7a19b2077402d5b3b9cca1151.pdf

 

 

MEASURING THE IMPACT OF TRANSFER PRICING ON THE CONFIGURATION
AND PROFIT OF AN INTERNATIONAL SUPPLY CHAIN: PERSPECTIVES FROM
TWO REAL CASES

Marc Goetschalckx, Carlos J. Vidal and Javier I. Hernández

Click to access arq0310.pdf

 

 

Integrated Strategic Planning of Global Production Networks and Financial Hedging
under Uncertain Demands and Exchange Rates

Achim Koberstein,
Elmar Lukas,
Marc Naumann

Click to access 10.1007%2FBF03342750.pdf

 

 

 

The Design of Robust Value Creating Supply Chain Networks:  A Critical Review

Click to access CIRRELT-2008-36.pdf

 

 

 

 

Global supply chain design: A literature review and critique.

Meixell, M. J. and Gargeya, V. B.

(2005).

Transportation Research Part E: Logistics and Transportation Review, 41(6): 531-550.

Click to access V_Gargeya_Global_2005.pdf

 

 

 

A strategic model for exact supply chain network design and its application to a global manufacturer

C. Arampantzi, I. Minis, G. Dikas

Click to access DeOPSys_Lab_Report_SSCND_2016-5.pdf

 

 

Sequential Vs Integrated Optimization:  Production, Location, Inventory Control and Distribution

July 2017

Click to access CIRRELT-2017-39.pdf

 

 

Measuring Cost Efficiency in an Integrated Model of Production
and Distribution: A Nonparametric Approach

Subhash C. Ray

2011

Click to access 2011-04.pdf

 

 

Optimization/simulation modeling of the integrated production- distribution plan: an innovative survey

BEHNAM FAHIMNIA, LEE LUONG, ROMEO MARIAN

2008

 

Click to access 30-587.pdf

Click to access Optimization-simulation-modeling-of-the-integrated-production-distribution-plan-An-innovative-survey.pdf

 

 

Strategic Planning and Design of Supply Chains: a Literature Review

Alessandro Lambiase, Ernesto Mastrocinque, Salvatore Miranda and Alfredo Lambiase

2013

http://journals.sagepub.com/doi/pdf/10.5772/56858

 

 

The design of production-distribution networks: A mathematical programming approach

Alain Martel

https://www.researchgate.net/publication/226891333_The_Design_of_Production-Distribution_Networks_A_Mathematical_Programming_Approach

 

 

Process industry supply chains: Advances and challenges

Nilay Shah

http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.114.4553&rep=rep1&type=pdf

 

 

Strategic, Tactical and Operational Decisions in Multi-national Logistics Networks:
A Review and Discussion of Modeling Issues

Gunter Schmidt
and
Wilbert E. Wilhelm

http://citeseerx.ist.psu.edu/viewdoc/download;jsessionid=5BA6B353BBCA48D0859B902AC3F2610D?doi=10.1.1.25.4951&rep=rep1&type=pdf

Strategic production-distribution models: A critical review with emphasis on global supply chain models

 

 

Dynamics of Global Supply Chain Supernetworks

A. NAGURNEY, J. CRUZ AND D. MATSYPURA

(Received and accepted November 2002)

 

https://ac.els-cdn.com/S0895717703001122/1-s2.0-S0895717703001122-main.pdf?_tid=f781c478-a79f-11e7-b471-00000aab0f6c&acdnat=1506969295_6d30c9e8a854b9cc1ec23a57d00143d0

 

 

Integrated production/distribution planning in the supply chain: the Febal case study

Fabio Nonino

 

 

Integrated supply chain planning under uncertainty using an improved stochastic approach

Hadi Mohammadi Bidhandi a,⇑, Rosnah Mohd Yusuff

 

https://ac.els-cdn.com/S0307904X1000452X/1-s2.0-S0307904X1000452X-main.pdf?_tid=49ede574-a7a1-11e7-87fa-00000aacb360&acdnat=1506969863_699a0bd5cc6d414ed2f1caebcdda820f

 

 

Optimizing the Supply Chain of a Petrochemical Company under Uncertain Operating and Economic Conditions

Haitham M. S. Lababidi,*,† Mohamed A. Ahmed,‡ Imad M. Alatiqi,† and Adel F. Al-Enzi§

Click to access 5620c42208ae93a5c9244ea5.pdf

 

 

A strategic model for exact supply chain network design and its application to a global manufacturer

C. Arampantzi, I. Minis, G. Dikas

Click to access DeOPSys_Lab_Report_SSCND_2016-5.pdf

 

 

Sequential versus Integrated Optimization: Lot Sizing, Inventory Control and Distribution

Maryam Darvish*, Leandro C. Coelho

Click to access CIRRELT-2017-39.pdf

 

 

A MANUFACTURING ENGINEERING PERSPECTIVE ON SUPPLY CHAIN INTEGRATION

Samuel H. Huang, Ge Wang

John P. Dismukes

http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.41.1852&rep=rep1&type=pdf

 

 

A review and critique on integrated production–distribution planning models and techniques

Trends in Intra Firm Trade of USA

Trends in Intra Firm Trade of USA

 

 

Intra Firm Trade

Intra-firm trade consist of trade between parent companies of a compiling country with their affiliates abroad and trade of affiliates under foreign control in this compiling country with their foreign parent group.

Intra Industry Trade

Different types of trade are captured in measurements of intra-industry trade:

a) Trade in similar products (“horizontal trade”) with differentiated varieties (e.g. cars of a similar class and price range).

b) Trade in “vertically differentiated” products distinguished by quality and price (e.g. exports of high-quality clothing and imports of lower-quality clothing).

 

From GLOBALISATION AND INTRA-FIRM TRADE: AN EMPIRICAL NOTE

 

Products which are traded internationally, but which stay within the ambit of a multinational enterprise (MNE), represent a significant portion of foreign trade for several OECD countries. This type of trade is called intra-firm trade as opposed to international trade among unrelated parties, also called arm’s length trade. Intra-firm trade is an important part of the process of globalisation, by which is meant the increasing interdependence of markets and production in different countries through trade in goods and services, cross-border flows of capital, and exchanges of technology.

The phenomenon of intra-firm trade is of interest to trade policy makers, as well as to competition and tax authorities. The use of transfer pricing in intra-firm trade may introduce an element of uncertainty into the value of a fairly large part of international trade and into customs valuation needed for the application of tariffs or similar measures. Competition and tax issues may also arise from intra-firm trade to the extent that the latter may facilitate the dissimulation of real transaction prices between the parent company and its affiliates.

A surge in foreign direct investment (FDI) during the 1980s’ has been cited as evidence in favour of globalisation; it is argued that MNEs have played a central role in globalisation by extending their corporate networks beyond national boundaries through the establishment of foreign branches and subsidiaries. It is often assumed that intra-firm trade reflects these foreign production activities by MNEs, as they trans- fer their factors of production from one country to another.

Little attention has been paid so far to the phenomenon of intra-firm trade. The literature on the subject is still relatively limited and recent. This is partly because most international trade statistics do not distinguish between intra-firm trade and arm’s length trade.

 

From GLOBALISATION AND INTRA-FIRM TRADE: AN EMPIRICAL NOTE

In considering the interrelationship between globalisation and international trade, it is conceptually useful to distinguish between four types of international trade:

(A) intra industry, intra-firm trade;

(B) intra-industry, arm’s-length trade;

(C) inter-industry, intra firm trade;

(D) inter-industry, arm’s-length trade.

Intra-industry trade is defined as the mutual exchange of similar goods within the same product category (Grubel and Lloyd, 1975, and Greenaway and Milner, 1986).

Intra-industry trade is generally a function of product differentiation and may or may not involve intra-firm trade. If motor vehicles produced in France are exported to the United States and U.S.-built motor vehicles are exported to France, the two countries are said to be involved in intra-industry trade even though such trade is not necessarily intra-firm trade. Intra-industry trade can be readily calculated for any given product category, as only the traditional bilateral trade statistics for that product category are needed.

Intra firm trade is harder to quantify, since knowledge of the relationship between the firms involved in the transactions is necessary. Data on intra-firm trade are available only. through firm surveys, involving the preparation of questionnaires by national authorities.

Most trade in manufactured goods among OECD countries is of the intra-industry type.  Intra-industry trade is particularly important within Europe, and to a lesser extent, in North America, accounting for roughly 60 to 70 per cent of total trade in manufacture.  This trade generally concerns differentiated products exchanged between countries that are similar in terms of per capita income and relative factor endowments. It has also been argued that economies of scale play an important role in explaining the industry pattern of intra-industry trade.

On the other hand, trade between developed and developing countries (“North-South”) is mostly of the inter-industry type, reflecting large differences in relative factor endowments between the two groups of countries. Inter-industry trade among unrelated parties (type D) – e.g. international exchange of cotton cloth produced by northern manufacturers for wine produced by southern farmers .- is the type of trade which international trade textbooks traditionally deal with.

Trade in manufactured goods between developed countries is predominantly of the intra-industry type and often takes the form of intra-firm trade. An important example of intra-industry, intra-firm trade (Type A) is United States-Canada-Mexico automobile trade. Intra-firm trade is also the dominant pattern of U.S. exports to Canada and Europe in the case of non-electrical machinery and chemicals. Another example is trade in manufactured goods between Pacific Asian economies. These economies have seen a rapid increase in intra-industry trade as a proportion of their total trade over the last decade. Such increase in intra-industry trade in Pacific Asian economies can be primarily attributed to the globalisation of corporate activities by U.S. and Japanese firms and, more recently, by other Asian firms. This involves assembly-line production based on imported parts and components in different countries in East and South East Asia (Fukasaku, 1992; Gross, 1986).

 

 

IFT

 

From An Overview of U.S. Intrafirm-trade Data Sources

 

ift2

There are large differences in BEA data and Census data particularly for Imports.  There are some measurement issues.  Import data from Mexico and China show big errors.

 

From An Overview of U.S. Intrafirm-trade Data Sources

IFT3

 

From An Overview of U.S. Intrafirm-trade Data Sources

IFT4

 

Data sources of Intra Firm Trade

  • BEA (Intra Firm Trade Data)
  • US Census Bureau (Related party trade data)

 

From Intrafirm Trade and Vertical Fragmentation in U.S. Multinational Corporations

First, we show that, although intra-MNC trade represents an important fraction of aggregate U.S. exports and imports, the median manufacturing foreign affiliate ships nothing to — and receives nothing from — its parent in the United States. Intra-MNC trade is concentrated in a small group of large affiliates and large corporations: The largest five percent of affiliates accounts for around half of the total trade to and from the parent, while the largest five percent of corporations accounts for almost two thirds of total intra- MNC trade. This skewness is also observed within the corporation: Intra-MNC trade tends to be concentrated in a small number of an MNC’s largest foreign affiliates.

The lack of intra-MNC cross-border trade that we find for foreign affiliates of U.S. multinationals is more surprising than the similar finding in Atalay et al. (2014) for intrafirm trade within the United States. Factor price differences — the theoretical motivation for vertical fragmentation and the intrafirm trade that accompanies it — are much larger across countries than across U.S. cities. In this regard, Brainard (1993) first documented the weak relationship between factor endowments and intra-MNC trade across borders.

The skewness of intra-MNC trade towards large affiliates and corporations in our first finding is reminiscent of the skewness in the distributions of other international activities. Manufacturing exports are concentrated in large firms (Bernard and Jensen, 1995), and even larger firms own foreign affiliates (Helpman et al., 2004). These patterns are consistent with theories of the firm that are based on economies of scale in production. In Grossman et al. (2006), for example, the production of inputs for the entire multinational corporation is concentrated into a few large affiliates, which exploit the strong economies of scale in production. Affiliates created to supply a foreign market — as an alternative to exporting, in order to avoid transportation costs — are relatively small. The model predicts that a small number of large affiliates ship goods within the corporation, while numerous smaller affiliates serve local markets. The concentration of intra-MNC trade in the largest firms is also consistent with the contract theory of the multinational firm proposed by Antras and Helpman (2004): In their framework with heterogeneous firms, only the largest firms choose to integrate offshore activities.

Our second set of facts relates intra-MNC trade to the upstream and downstream links between the industries of the parent and affiliate, as defined by the U.S. input-output table. As previously shown in Alfaro and Charlton (2009), we find that multinational corporations own affiliates in industries that are vertically linked to the parent’s industry. The input-output coefficient between the affiliate’s and the parent’s industries of operation, however, is not related to the existence and the magnitude of the trade in goods between the two. These findings are similar to those in Atalay et al. (2014), who study multi-establishment firms within the United States: The ownership of vertically linked affiliates is not related to the transfer of goods within the boundaries of the firm.

 

 

 

Key Sources of Research:

 

GLOBALISATION AND INTRA-FIRM TRADE: AN EMPIRICAL NOTE

Marcos Bonturi and Kiichiro Fukasaku

1993

Click to access 33948827.pdf

 

 

U.S. Direct Investment Abroad: Trends and Current Issues

James K. Jackson
Specialist in International Trade and Finance

June 29, 2017

Click to access RS21118.pdf

 

Foreign Direct Investment in the United States (FDIUS): Final Results from the 2012 Benchmark Survey

 

https://www.bea.gov/international/fdius2012_final.htm

 

 

U.S. Direct Investment Abroad (USDIA): Revised 2009 Benchmark Data

https://www.bea.gov/international/usdia2009r.htm

 

U.S. Intrafirm Trade in Goods

By William J. Zeile

1997

Click to access 0297iid.pdf

 

Global Production: Firms, Contracts, and Trade Structure

Pol Antràs
Harvard University
June, 2015

Click to access global_production_slides.pdf

 

 

Trade in Goods Within Multinational Companies:
Survey-Based Data and Findings for the United States of America

William J. Zeile
U.S. Bureau of Economic Analysis
Washington, DC 20230
2003

Click to access IFT_OECD_Zeile.pdf

 

 

An Overview of U.S. Intrafirm-trade Data Sources

Kim J. Ruhl
New York University Stern School of Business
May 2013

Click to access Ruhl_USIntrafirm-tradeData_May2013.pdf

 

 

How Well is U.S. Intrafirm Trade Measured?

By KIM J. RUHL

20015

Click to access How_Well_March_2015.pdf

 

 

 

An Overview of U.S. Intrafirm-trade Data Sources

Kim J. Ruhl
New York University Stern School of Business
May 2013

http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.343.7532&rep=rep1&type=pdf

 

 

THE DETERMINANTS OF INTRAFIRM TRADE

Gregory Corcos

Delphine M. Irac

Giordano Miony

Thierry Verdier

First draft: January 26, 2008. This draft : December 9, 2010.

Click to access coirmive.pdf

 

 

MULTINATIONAL FIRMS AND THE STRUCTURE OF INTERNATIONAL TRADE

Pol Antràs
Stephen R.Yeaple

Working Paper 18775

February 2013

Click to access w18775.pdf

 

 

INTRA-FIRM TRADE AND PRODUCT CONTRACTIBILITY (LONG VERSION)

Andrew B. Bernard
J. Bradford Jensen
Stephen J. Redding
Peter K. Schott

April 2010

Click to access w15881.pdf

 

 

FIRMS, CONTRACTS, AND TRADE STRUCTURE

POL ANTRAS

Click to access fcts.pdf

 

 

On Intra-firm Trade and Multinationals: Offshoring and Foreign Outsourcing in Manufacturing

  • Ashok Deo Bardhan
  • Dwight Jaffee

https://link.springer.com/chapter/10.1057%2F9780230522954_2

 

 

INTRAFIRM TRADE AND VERTICAL FRAGMENTATION IN U.S. MULTINATIONAL
CORPORATIONS

Natalia Ramondo
Veronica Rappoport
Kim J. Ruhl
August 2015

Click to access w21472.pdf

 

 

 

INTRA-FIRM TRADE: PATTERNS, DETERMINANTS AND POLICY IMPLICATIONS

Rainer Lanz,
Sébastien Miroudot,

OECD

Click to access 5kg9p39lrwnn.pdf

 

 

Intrafirm Trade and Product Contractibility

By Andrew B. Bernard, J. Bradford Jensen, Stephen J. Redding,
and Peter K. Schott

Click to access Intrafirm_trade_and_product_compatibility_(lsero).pdf

 

Vertical Specialization in Multinational Firms

Gordon H. Hanson

Raymond J. Mataloni, Jr.

Matthew J. Slaughter

Initial Draft: September 2002

Click to access VertSpec.pdf

 

 

GLOBAL VALUE CHAINS SURVEYING DRIVERS AND MEASURES

João Amador and Sónia Cabral

2014

https://www.ecb.europa.eu/pub/pdf/scpwps/ecbwp1739.en.pdf?13f6d86f40a3c60325f27cbc08a18742

Click to access wp20143.pdf

 

 

EU-US ECONOMIC LINKAGES:
THE ROLE OF MULTINATIONALS AND INTRA-FIRM TRADE

C. Lakatos and T. Fukui

2013

Click to access tradoc_151922.%202_November%202013.pdf

 

 

THREE ESSAYS ON INTRAFIRM TRADE

Sooyoung Lee

2015

http://scholar.colorado.edu/cgi/viewcontent.cgi?article=1061&context=econ_gradetds

 

 

 

On Intra-Firm Trade and Multinationals: Foreign Outsourcing and Offshoring in Manufacturing

Ashok Deo Bardhan

Dwight Jaffee

2004

Click to access d993275ddc9ba520060c9022fb84435a4d6a.pdf

 

International Fragmentation of Production and the Intrafirm Trade
of U.S. Multinational Companies

Maria Borga and William J. Zeile

January 22, 2004

Click to access intrafirmtradejanuary04.pdf

 

 

 

Globalization and trade flows: what you see is not what you get!

Andreas Maurer and Christophe Degain

Click to access ersd201012_e.pdf

 

 

How US corporations structure their international production chains

Natalia Ramondo, Veronica Rappoport, Kim Ruhl

07 October 2015

http://voxeu.org/article/international-production-networks-and-intra-firm-trade-new-evidence

 

 

 

WHY DO FIRMS OWN PRODUCTION CHAINS?

Enghin Atalay
Ali Hortacsu
Chad Syverson

April 2012

Click to access w18020.pdf

 

 

 

Vertical Integration and Input Flows

Enghin Atalay

Ali Hortaçsu

Chad Syverson

August, 2013

Click to access verticalownership.pdf

Click to access viplantevidence.pdf

 

 

Outsourcing versus Vertical Integration: A Dynamic Model of Industry Equilibrium.

Román Fossati

March 2014

Click to access 1March2014-RomanFossati.pdf

 

 

Production Networks, Geography and Firm Performance

Andrew B. Bernardy

Andreas Moxnesz

Yukiko U. Saitox

This Version: May 2014 –

Click to access MOXNES%20-%20j_network_ERWIT4.pdf

 

 

 

 

Vertical Integration and Firm Boundaries: The Evidence

FRANCINE LAFONTAINE AND MARGARET SLADE

2007

Click to access Lafontaine_Slade%20-%20Vertical%20integration%20and%20firm%20boundaries.pdf

 

 

 

 

Foreign affiliates with and without intra-firm trade:
Evidence from sub-Saharan Africa

Sotiris Blanas

Adnan Seric

Click to access WP_13.pdf

 

 

 

Outsourcing, Vertical Integration, and Cost Reduction

Simon Loertscher†

Michael H. Riordan‡

September 8, 2014

Click to access Loertscher_Outsourcing.pdf

 

 

 

VERTICAL PRODUCTION NETWORKS IN MULTINATIONAL FIRMS

Gordon H. Hanson
Raymond J. Mataloni, Jr.
Matthew J. Slaughter

May 2003

Click to access w9723.pdf

 

 

Network structure of production

Enghin Atalaya, Ali Hortaçsua,1, James Robertsb, and Chad Syversonc

Edited by Lars Peter Hansen, University of Chicago, Chicago, IL, and approved February 2, 2011 (received for review October 15, 2010)

Click to access pnas.201015564.pdf

 

 

 

Cross-border Vertical Integration and Intra-firm Trade:
New evidence from Korean and Japanese firm-level data

Hyunbae CHUN

Jung HUR

Young Gak KIM

Hyeog Ug KWON

Click to access 17e049.pdf

Click to access chun_aep_2017.pdf

 

 

 

Offshoring in the Global Economy
Lecture 1: Microeconomic Structure
Lecture 2: Macroeconomic Implications

Robert C. Feenstra

September 2008
http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.294.715&rep=rep1&type=pdf

 

 

 

THE NETWORK STRUCTURE OF INTERNATIONAL TRADE

Thomas Chaney

January 2011

Click to access w16753.pdf

FDI vs Outsourcing: Extending Boundaries or Extending Network Chains of Firms

FDI vs Outsourcing: Extending Boundaries or Extending Network Chains of Firms

 

Foreign Direct Investments of Firms can have three objectives:

  • Vertical Integration (Control of Supply Chain)
  • Horizontal Integration (Seeking Market Share)
  • Diversification ( Market Seeking)

In this post, Focus is on Sourcing of Goods and Services in FDI and Outsourcing Decisions of Firms.  That means focusing on supply chain related issues.

 

From GLOBAL SOURCING

A fi…rm that chooses to keep the production of an intermediate input within its boundaries can produce it at home or in a foreign country. When it keeps it at home, it engages in standard vertical integration. And when it makes it abroad, it engages in foreign direct investment (FDI) and intra-…firm trade. Alternatively, a …firm may choose to outsource an input in the home country or in a foreign country. When it buys the input at home, it engages in domestic outsourcing. And when it buys it abroad, it engages in foreign outsourcing, or arm’s-length trade.

Intel Corporation provides an example of the FDI strategy; it assembles most of its microchips in wholly-owned subsidiaries in China, Costa Rica, Malaysia, and the Philippines. On the other hand, Nike provides an example of the arm’s-length import strategy; it subcontracts most of its manufacturing to independent producers in Thailand, Indonesia, Cambodia, and Vietnam.

 

 

Intermediate Goods – Make vs.  Buy Decisions of Firms

 

Outsourcing2

 

From Integration of Trade and Disintegration of Production in the Global Economy

 

The rising integration of world markets has brought with it a disintegration of the production process, in which manufacturing or services activities done abroad are combined with those performed at home. Companies are now finding it profitable to outsource increasing amounts of the production process, a process which can happen either domestically or abroad. This represents a breakdown in the vertically-integrated mode of production – the so-called “Fordist” production, exemplified by the automobile industry – on which American manufacturing was built. A number of prominent researchers have referred to the importance of the idea that production occurs internationally: Bhagwati and Dehejia (1994) call this “kaleidoscope comparative advantage,” as firms shift location quickly; Krugman (1996) uses the phrase “slicing the value chain”; Leamer (1996) prefers “delocalization;” while Antweiler and Trefler (1997) introduce “intra-mediate trade.” There is no single measure that captures the full range of these activities, but I shall compare several different measures of foreign outsourcing, and argue that they have all increased since the 1970s.

 

Types of Supply Chain Relations:

  • Intra-firm Trade of MNCs
  • Foreign Outsourcing
  • Domestic Outsourcing
  • Vertical Integration

 

Key Terms:

  • Production Sharing
  • Vertical Integration
  • Fragmentation of Production
  • Global Value Chains
  • Outsourcing
  • Delocalization
  • Intermediate Goods Trade
  • FDI
  • Domestic Outsourcing
  • Production Offshoring
  • Onshoring
  • Economic Globalization
  • Value Added Tasks
  • Intra-firm Trade
  • Multinational Firms
  • Vertical Specialization
  • Vertical Disintegration
  • Transaction Cost Economics
  • Trade in Value Added Tasks
  • Vertical Production Networks
  • Production Unbundling

 

Key Sources of Research:

PHYSICAL CAPITAL, KNOWLEDGE CAPITAL AND THE CHOICE BETWEEN FDI AND OUTSOURCING

Yongmin Chen
Ignatius J. Horstmann
James R. Markusen

Working Paper 14515
http://www.nber.org/papers/w14515

December 2008

Click to access w14515.pdf

 

 

OUTSOURCING VERSUS FDI IN INDUSTRY EQUILIBRIUM

Gene M.Grossman
Elhanan Helpman

Working Paper 9300
http://www.nber.org/papers/w9300

October 2002

Click to access w9300.pdf

 

 

GLOBAL SOURCING

Pol Antràs
Elhanan Helpman

Working Paper 10082
http://www.nber.org/papers/w10082

November 2003

Click to access w10082.pdf

 

 

OUTSOURCING IN A GLOBAL ECONOMY

Gene M. Grossman
Elhanan Helpman

Working Paper 8728
http://www.nber.org/papers/w8728

January 2002

Click to access w8728.pdf

 

 

 

Globalization, Outsourcing, and Wage Inequality

Robert C. Feenstra

Gordon H. Hanson

January 1996

Click to access w5424.pdf

 

Global Production Sharing and Rising Inequality:  A Survey of Trade and wages

Robert C. Feenstra

Gordon H. Hanson

2001

Click to access w8372.pdf

 

 

TRADE, FDI, AND THE ORGANIZATION OF FIRMS

Elhanan Helpman

Working Paper 12091
http://www.nber.org/papers/w12091

March 2006

Click to access w12091.pdf

 

 

 

HOME AND HOST COUNTRY EFFECTS OF FDI

Robert E. Lipsey

Working Paper 9293
http://www.nber.org/papers/w9293

October 2002

Click to access w9293.pdf

 

 

Chapter Title: Introduction to “Foreign Direct Investment”

Chapter Author: Kenneth A. Froot
Chapter URL: http://www.nber.org/chapters/c6531

1992

Click to access c6531.pdf

 

Chapter Title: Where Are the Multinationals Headed?

Chapter Author: Raymond Vernon
Chapter URL: http://www.nber.org/chapters/c6534

1992

Click to access c6534.pdf

 

 

 

Determinants of Foreign Direct Investment: A Sectoral and Institutional
Approach

James P. Walsh and Jiangyan Yu

2010

Click to access wp10187.pdf

 

 

 

DETERMINANTS OF FOREIGN DIRECT INVESTMENT

Bruce A. Blonigen
Jeremy Piger

Working Paper 16704
http://www.nber.org/papers/w16704

January 2011

Click to access w16704.pdf

 

 

 

Determinants of Foreign Direct Investment in Developing Countries: A Comparative Analysis

Khondoker Abdul Mottaleba
Kaliappa Kalirajanb

2010

Click to access WP2010_13.pdf

 

 

 

Determinants of Foreign Direct Investment

Bruce A. Blonigen

Jeremy Piger

 

2014

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2535582

 

Trends and Determinants of Foreign Direct Investment in South Asia

World Bank

2013

Click to access ACS48460WP0P13055B00PUBLIC00A9RBBB1.pdf

 

 

Determinants of Foreign Direct Investment (FDI)

Yi Feng
Publication Date: Jun 2017

http://politics.oxfordre.com/view/10.1093/acrefore/9780190228637.001.0001/acrefore-9780190228637-e-559

http://politics.oxfordre.com/view/10.1093/acrefore/9780190228637.001.0001/acrefore-9780190228637-e-559?print=pdf

 

 

 

Foreign direct investment (FDI)

Click to access s4IP1_8736.pdf

 

 

 

Foreign Direct Investment and the Multinational Enterprise: An Introduction

Steven Brakman and Harry Garretsen

2008

Click to access 9780262026451_sch_0001.pdf

 

 

 

AN EXTENSIVE EXPLORATION OF THEORIES OF FOREIGN DIRECT INVESTMENT

Patricia Lindelwa Makoni

Click to access 10-22495_rgcv5i2c1art1.pdf

 

 

 

A selective review of foreign direct investment theories.

Nayak, Dinkar and Rahul N. Choudhury (2014).

ARTNeT Working Paper Series No. 143, March 2014,

Click to access 782793517.pdf

 

 

Integration of Trade and Disintegration of Production in the Global Economy

Robert C. Feenstra

Revised, April 1998

 

http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.39.7178&rep=rep1&type=pdf

 

 

 

The Distributional Effects of International Fragmentation,

Kohler, Wilhelm (2002)

Working Paper, Department of Economics, Johannes Kepler University of Linz, No. 0201

 

Click to access wp0201.pdf

 

 

 

International Fragmentation of Production and the Intrafirm Trade of U.S. Multinational Companies

Maria Borga and William J. Zeile
WP2004-02
January 22, 2004

Paper presented at:

The National Bureau of Economic Research/Conference on Research in Income and Wealth meeting on Firm-level Data, Trade, and Foreign Direct Investment, Cambridge, Massachusetts
August 7-8, 2003,
and
The OECD Committee on Industry and Business Environment/Working Party on Statistics
Session on Globalization,
Paris, France
November 3-4, 2003.

Click to access intrafirmtradejanuary04.pdf

 

 

The governance of global value chains

Gary Gereffi
John Humphrey
Timothy Sturgeon
2005

Click to access GVC_Governance.pdf

 

The economic consequences of increased protectionism

Riksbank of Sweden

2017

Click to access ppr_fordjupning_3_170427_eng.pdf

 

 

 

Deep integration and production networks: an empirical analysis

Gianluca Orefice
Nadia Rocha
World Trade Organization
Manuscript date: July 2011

Click to access ersd201111_e.pdf

 

 

 

Measuring success in the global economy: international trade, industrial
upgrading, and business function outsourcing in global value chains

Timothy J. Sturgeon and Gary Gereffi

Click to access diaeiia200910a1_en.pdf

 

 

 

Topics in International Trade

Reading list

Click to access readings-topics09.pdf

 

 

 

FOREIGN DIRECT INVESTMENT, TRADE, AND GLOBAL PRODUCTION NETWORKS
IN ASIA AND EUROPE

GPN Working Paper 2
October 2002

Click to access gpnwp2.pdf

 

 

Why has world trade grown faster than world output?

Mark Dean

Maria Sebastia-Barriel

Click to access Other_Paper_1.pdf

 

 

Vertical Specialization, Global Value Chains and the changing Geography of Trade: the Portuguese Rubber and Plastics Industry Case

João Carlos Lopes and Ana Santos

Click to access wp122015.pdf

 

 

The changing structure of trade linked to global production systems: What are the policy implications?

William MILBERG

 

Click to access Changing-Structure-of-Trade-Linked-to-Global-Production-Systems.pdf

 

 

WHO PRODUCES FOR WHOM IN THE WORLD ECONOMY?

Guillaume Daudin (Lille-I (EQUIPPE) & Sciences Po (OFCE), Christine Rifflart, Danielle
Schweisguth (Sciences Po (OFCE))1

This version: July 2009

Click to access WP2009-18.pdf

 

THE NATURE AND GROWTH OF VERTICAL SPECIALIZATION IN WORLD TRADE

David Hummels
Jun Ishii
Kei-Mu Yi
March 1999

http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.475.3874&rep=rep1&type=pdf

 

Click to access sr72.pdf

 

 

Expansion Strategies of U.S. Multinational Firms

Gordon H. Hanson, Raymond J. Mataloni, and Matthew J. Slaughter

WP2001-01
May 10-11, 2001

Paper presented at:

The Brookings Trade Forum 2001, Washington, D.C.
May 10-11, 2001

Click to access HMS1.PDF

 

 

INTERNATIONAL JOINT VENTURES AND THE BOUNDARIES OF THE FIRM

Mihir A. Desai C. Fritz Foley James R. Hines Jr.

Working Paper 9115 http://www.nber.org/papers/w9115
August 2002

 

Click to access 000000005694_01.PDF

 

 

 

The Globalization of Production

Gordon H. Hanson

 

http://www.nber.org/reporter/spring01/hanson.html

 

 

 

The Politics of Transnational Production Systems A Political Economy Perspective

Helge Hveem
Department of Political Science
University of Oslo

Click to access hveem.pdf

 

 The Architecture of Globalization: A Network Approach to International Economic Integration.

Raja Kali and Javier Reyes

Second Revision: October 9, 2006

Click to access TradeNetwork.pdf

 

 

 

 

 

Paris School of Economics – Summer School on Trade

2017

Click to access trade-sumschool-pse-2017.pdf

 

 

Spain in the global value chains

2017

Click to access beaa1703-art20e.pdf

 

 

 An Outsourcing Bibliography

Foreign Policy magazine

2004

An outsourcing bibliography

 

 

 

OFFSHORING, FOREIGN DIRECT INVESTMENT, AND THE STRUCTURE OF U.S. TRADE

2006

 

http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.564.6639&rep=rep1&type=pdf

 

 

 A Survey of Literature on Research of Intra-firm Trade

WANG Li, SHEN Rui

Click to access 2013jrgjgc311b13.pdf

 

 

Global Value Chains

OECD, WTO and World Bank Group
Report prepared for submission to the G20 Trade Ministers Meeting Sydney, Australia, 19 July 2014

Click to access gvc_report_g20_july_2014.pdf

 

 

 

TRADE IN INTERMEDIATE GOODS AND SERVICES

OECD Trade Policy Working Paper No. 93
by Sébastien Miroudot, Rainer Lanz and Alexandros Ragoussis

Click to access 44056524.pdf

 

 

The Boundaries of Multinational Enterprises and the Theory of International Trade

James R. Markusen

 

http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.551.4665&rep=rep1&type=pdf

 

 

Incomplete Contracts and the Boundaries of the Multinational Firm

Nathan Nunn

Daniel Trefler

June 2008

Click to access NunnTreflerPaper.pdf

 

 

The Theory of the Firm goes Global

Dalia Marin

2008

Click to access 370.pdf

Trends in Cross Border Mergers and Acquisitions

Trends in Cross Border Mergers and Acquisitions

 

From The Location of Cross-Border Mergers & Acquisitions in the USA

The vast majority of foreign direct investment (FDI) takes place in the form of cross-border mergers and acquisitions (M&As), see Evenett (2004). Analyzing the determinants and consequences of M&As is part of a large and growing literature in both (international) economics and (international) business. In economics, the dominant industrial organization (IO) literature does, however, typically not deal with the cross-border aspect of M&As, but instead concentrates on national M&As (Salant et al., 1983; O’Brien and Shaffer, 2005; Davis and Wilson, 2008; Egger and Hahn, 2010). A relatively small literature explicitly tries to include the cross-border aspect of M&As, but neglects the role of country factors that are central in international economics and international business to explain the structure and variation of cross-border transactions (Anand and Delios, 2002; Nocke and Yeaple, 2007, 2008, Bertrand and Zitouna, 2006; Fugmagalli and Vasconcelos, 2009, Halverson, 2012). The impact of country wide differences on cross-border M&As is taken explicitly into account by Neary (2004, 2007) who focuses on differences in comparative advantage between countries in a general equilibrium model to explain the occurrence of cross-border M&As. Empirical support for this idea is found by Brakman et al (2013), see also Blonigen et al (2014). In the international business literature – ever since the introduction of Dunning’s Ownership-Location-Internalization (OLI) framework – the mode of foreign entry and the choice of a foreign location have been central, but not explicitly modelled, as the OLI framework is more a taxonomy of relevant elements for location choice than a model (see for example Dunning, 2000).2

Both for the modern international business and international economics literature, however, whenever the location of cross-border M&As is taken into account, it usually refers to the host country as a whole. Where to locate the M&A within the host country is not analyzed. This amounts to assuming that if foreign firms have decided to engage in an M&A they choose a country but are indifferent regarding the target location within that country. This observation is the starting point for the present paper. In contrast to this observation with respect to cross-border M&As, the within country location choice with respect to greenfield FDI has been analyzed in depth. The seminal study by Head et al. (1995) was pivotal, and initiated a large and growing body of literature; see for example Fontagne and Mayer (2005); Basile et al., (2008); Defever, (2006); or Mataloni, (2011). Similar analyses for cross-border M&As are largely absent and this is striking because the bulk of FDI is in the shape of cross-border M&As. A priori, there is no reason to assume that the location decision of greenfield investments and M&As are similar. M&As, by definition, merge with or acquire existing firms at a specific location, whereas greenfield investments can, in principle, locate anywhere.

 

From Economic and Financial Integration and the Rise of Cross-Border M&As

FDI8

 

From CROSS-BORDER MERGERS & ACQUISITIONS: THE FACTS AS A GUIDE FOR INTERNATIONAL ECONOMICS

FDI

  • Most of the Foreign Direct Investment (FDI) is in the form of Cross Border M&A.

 

The motivation for Cross Border M&A can be several:

  • Horizontal Integration ( Seeking Market Share)
  • Vertical Integration ( Control of Supply Chain)
  • Diversification (Market Seeking)

Research indicate that most of the cross border M&A are for seeking markets.

 

From CROSS-BORDER MERGERS & ACQUISITIONS: THE FACTS AS A GUIDE FOR INTERNATIONAL ECONOMICS

FDI2

  • Cross Border Mergers have been rising since 1985.

 

From CROSS-BORDER MERGERS & ACQUISITIONS: THE FACTS AS A GUIDE FOR INTERNATIONAL ECONOMICS

FDI3

 

  • Europe and North America dominate regions in which cross borders M&A are taking place.

 

From CROSS-BORDER MERGERS & ACQUISITIONS: THE FACTS AS A GUIDE FOR INTERNATIONAL ECONOMICS

FDI4

From CROSS-BORDER MERGERS & ACQUISITIONS: THE FACTS AS A GUIDE FOR INTERNATIONAL ECONOMICS

FDI6

 

From CROSS-BORDER MERGERS & ACQUISITIONS: THE FACTS AS A GUIDE FOR INTERNATIONAL ECONOMICS

FDI5

From CROSS-BORDER MERGERS & ACQUISITIONS: THE FACTS AS A GUIDE FOR INTERNATIONAL ECONOMICS

FDI7

 

From  M&A Today: A Quick Pre-Financial Crisis Comparison

FDI9FTD10FDI11

Sources of M&A Data:

From Exploration of Mergers and Acquisitions Database: Deals in Emerging Asian Markets

There are four popular mergers and acquisitions databases,

  • SDC Platinum Mergers & Acquisitions (M&A) database,
  • Bloomberg M&A database,
  • Mergerstat M&A database,
  • ZEPHYR M&A database.

The SDC Platinum M&A Database covers domestic deals from 1979 to present and international deals from 1985 to present. Thomson Reuters states that the SDC includes more transactions than any other source and is widely used by the industry professionals and academic researchers.

The Bloomberg M&A database began putting the mergers and acquisitions product together in January 1998, with the intention of providing “100 percent coverage of all global deals as they were announced” (Ide, 2001). Bloomberg states that it has mergers and acquisitions staff in 12 offices worldwide compiling M&A data and relationships with over 800 legal and financial firms.

According to the Zimmerman (2006), the Mergerstat database covers both acquisitions and divestitures where at least one significant party is a U.S. company.

the ZEPHYR database covers transactions both inside and outside the U.S. and is particularly useful to study M&A deals in Europe (from 1997 forward for European transactions; from 2000 forward for North American transactions; global coverage begins in 2003).

 

Academic Libraries

 

Deloitte Consulting M&A Services

https://www2.deloitte.com/us/en/pages/mergers-and-acquisitions/solutions/merger-and-acquisition-services.html

 

KPMG Consulting

https://advisory.kpmg.us/content/kpmg-advisory/deal-advisory/ma-spotlight/ma-spotlight-june-2017.html?gclid=CjwKCAjwo4jOBRBmEiwABWNaMQAFeh6oDkE3FAlfCTiA8yKJkpHwuRPwcvBQlnZpFbm_JpODEt1AuRoC8t4QAvD_BwE

 

Thomson Reuters

https://financial.thomsonreuters.com/en/markets-industries/investment-banking-financial-advisory/mergers-and-acquisitions.html

 

PITCHBOOK.COM

http://get.pitchbook.com/mergers-and-acquisitions-data/?utm_term=mergers%20and%20acquisitions&utm_source=adwords&utm_campaign=ma&utm_content=ma&_bt=166828976390&_bm=p&_bn=g&gclid=CjwKCAjwo4jOBRBmEiwABWNaMSspbwSShK79f6OskgjShGv0_8c8qgrnqF35qv2Fu9t9ZvgwfzfTpxoCaa8QAvD_BwE

White and Case

http://mergers.whitecase.com

 

IMAA-Institute.org

https://imaa-institute.org/mergers-and-acquisitions-statistics/

FACTSET / MERGERSTAT

https://www.factset.com/data/company_data/mergers_acq

 

Bureau Van Dijk/ZEPHYR

https://www.bvdinfo.com/bvd/media/reports/global-fy-2016.pdf

 

STATISTA

https://www.statista.com/topics/1146/mergers-and-acquisitions/

UNCTAD / World Investment Report

http://unctad.org/en/Pages/DIAE/World%20Investment%20Report/World_Investment_Report.aspx

Wilmer and Hale Law Firm

https://www.wilmerhale.com/uploadedFiles/Shared_Content/Editorial/Publications/Documents/2017-WilmerHale-MA-Report.pdf

 

Dealogic.com

http://www.dealogic.com/insight/ma-outlook-2017/

Please also see other related posts:

Mergers and Acquisitions – Long Term Trends and Waves

External Balance sheets of Nations

Low Interest Rates and International Investment Position of USA

 

Key sources of Research:

CROSS-BORDER MERGERS AND ACQUISITIONS:
ON REVEALED COMPARATIVE ADVANTAGE AND MERGER WAVES

Steven Brakman
Harry Garretsen
Charles van Marrewijk

2008

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1087886https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1087886

 

Cross-Border Mergers & Acquisitions: The Facts as a Guide for International Economics

CESifo Working Paper Series No. 1823

 

Steven Brakman

Harry Garretsen

Charles van Marrewijk

 

Date Written: October 2006

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=940348

 

Cross-border Mergers and Acquisitions: Their Role in Industrial Globalisation

2000

Nam-Hoon Kang and Sara Johansson

 

http://www.oecd-ilibrary.org/docserver/download/137157251088.pdf?expires=1505877469&id=id&accname=guest&checksum=BA90C157DC1196BE6E7C3CE1726D31FF

 

 

Theoretical foundations of cross-border mergers and acquisitions: A review of current research and recommendations for the future

Katsuhiko Shimizua,*, Michael A. Hittb,1, Deepa Vaidyanathc,2, Vincenzo Pisanod,3

Available online 24 July 2004

 

 

 Determinants of Cross-Border Mergers and Acquisitions

Isil Erel / Rose C. Liao /  Michael S. Weisbach

March 15, 2011

https://fisher.osu.edu/supplements/10/9864/ELW_JFRound3Revision.pdf

The Cross-Border Mergers and Acquisitions Wave of the Late 1990s

Simon J. Evenett

 

http://www.nber.org/chapters/c9545.pdf

 

 

 

The Macroeconomic Determinants of Cross Border Mergers and Acquisitions and Greenfield Investments

Paula Neto; Antonio Brandão; António Cerqueira

2010

 

https://www.researchgate.net/profile/Antonio_Brandao3/publication/46466162_The_Macroeconomic_Determinants_of_Cross_Border_Mergers_and_Acquisitions_and_Greenfield_Investments/links/0912f50c5ab64daab5000000.pdf

 

 

The Impact of FDI, Cross Border Mergers and Acquisitions and Greenfield Investments on Economic Growth

Paula Neto; Antonio Brandão; António Cerqueira

2010

https://www.researchgate.net/profile/Antonio_Brandao3/publication/24111675_The_Impact_of_FDI_Cross_Border_Mergers_and_Acquisitions_and_Greenfield_Investments_on_Economic_Growth/links/0912f50c5ab651626b000000.pdf

 

Exploration of Mergers and Acquisitions Database: Deals in Emerging Asian Markets

 

http://www.myacme.org/ijmtp/IJMTPV14N1/3%20IJMTP14005%20Draft%203%20final.pdf

 

 

Cross Border Mergers and Acquisitions

Scott Whitaker

2016

 

 

Economic and Financial Integration and the Rise of Cross-Border M&As

STEVEN BRAKMAN

GUS GARITA

HARRY GARRETSEN

CHARLES VAN MARREWIJK

March 2009

 

 

 

The Location of Cross-Border Mergers & Acquisitions in the USA

Steven Brakman
Harry Garretsen
Charles Van Marrewijk

CESIFO WORKING PAPER NO. 5331

APRIL 2015

 

 

M&A Today: A Quick Pre-Financial Crisis Comparison

2017

 

https://financial.thomsonreuters.com/content/dam/openweb/documents/pdf/financial/pre-financial-crisis-comparison.pdf

 

 

 

 

Cross-Border Mergers and Acquisitions and Financial Development:
Evidence from Emerging Asia

Douglas H. Brooks and Juthathip Jongwanich

No. 249 | February 2011

 

https://www.adb.org/sites/default/files/publication/28703/economics-wp249.pdf

 

 

 

MERGERS AND ACQISITIONS (M&As)

Prepared by
Directorate for Financial and Enterprise Affairs, Investment Division, OECD

May 2004

 

https://www.imf.org/External/NP/sta/bop/pdf/diteg4a.pdf

 

 

 

OECD BENCHMARK DEFINITION OF FOREIGN DIRECT INVESTMENT:

FOURTH EDITION –

ISBN 978-92-64-04573-6 – © OECD 2008

 

https://www.oecd.org/daf/inv/investmentstatisticsandanalysis/40193734.pdf

 

 

 

Economic and Other Impacts of Foreign Corporate Takeovers in OECD Countries

 

https://www.oecd.org/daf/inv/investment-policy/40476100.pdf

 

 

 

A Comparative Analysis of the Economic Effects of Cross-Border Mergers and Acquisitions in European Countries

Anita Maček

 

https://cdn.intechopen.com/pdfs-wm/38482.pdf