Cross-Border Mergers & Acquisitions: A Piece of the Natural Resource Curse Puzzle
Tinbergen Institute Discussion Paper 09-053/2
51 Pages Posted: 13 Jun 2009 Last revised: 27 Aug 2009
Date Written: August 18, 2009
We combine the resource curse literature with the literature on cross-border mergers and acquisitions (M&As) to investigate two hypotheses, namely (i) natural resource wealth: countries with a comparative advantage in natural resources attract more M&As in natural resource intensive sectors and (ii) natural resources dependency: countries with a high natural resources dependency attract fewer M&As in all sectors. Using the Thomson dataset we test these hypotheses for a sample of 49 African and Latin American countries in the period 1988-2007. To test these hypotheses we disaggregate the data in sectors intensive and not intensive in natural resources. We emphasize the distinction between resource dependency and wealth. Both hypotheses were confirmed by our findings. Thus, resource dependency has a "crowding out" effect on M&As in all sectors, and natural resources wealth has a "crowding in" effect on M&As in sectors intensive in natural resources.
Keywords: Gravity Equation, Mergers and Acquisitions, Natural Resources, Resource Curse
JEL Classification: F23, Q56
Suggested Citation: Suggested Citation