The Influence of Mergers and Acquisitions on Competitiveness of Economies of Countries of the World

Abstract

Today, the most important factor which determines the development of the world economy is economic globalization. The article presents a scheme of the interdependence of the processes that determine competitiveness of the country in the context of globalization: CER.1 -the cause-effect relation reflecting the influence of M&A with the participation of national companies on concentration of a national economy; CER.2 -reflecting the impact of concentration of the national economy on its competitiveness; CER.3reflecting the impact of intensity of M&A with the participation of national companies on their capitalization; CER.4 -reflecting the impact of the level of national companies' capitalization on competitiveness of the country. The article puts forward and proves, based on the confirmation of the above mentioned cause-effect relations, the following hypotheses: 1. -merges and acquisitions with the participation of national companies influence concentration of a national economy which in turn determines the level of its competitiveness; 2.integration with the participation of national companies through implementation of M&A increases their market capitalization, thereby affecting the level of competitiveness of the country. For simulating, the correlation and regression modeling is used. The statistical base of the study comprises a sample of 42 countries of the world.

The Influence of Mergers and Acquisitions on Competitiveness of Economies of Countries of the World

“…To determine the relationship between M&A of companies and their capitalization, the following indicators are used: the relative index of M&A volume (I MA ) and the relative index of market capitalization (I cap ). The relative index of M&A volume (I MA ) is calculated as the ratio of volume of transactions on M&A of companies (according to the World Investment Report published by UNCTAD [7]) to GDP of the countries in which they were created (according to the World Bank [9]). The relative index of market capitalization (I cap ) is calculated as the ratio of market capitalization of the largest companies (according to Forbes 2000 [8]) to GDP of the countries in which they were created (according to the World Bank [9] As a result of the calculations, the following models characterizing the impact of M&A processes on capitalization of companies involved are obtained: linear; exponential; 2 nd -, 3 d -; 4 th -; 5 th -and 6 th degree polynomial.…”

“…Thus, the analysis of the relationship between M&A volume and market capitalization of companies involved has made it possible to substantiate the following statement: the countries in which M&A processes are more intensive have a higher level of capitalization of companies involved. [8]) to GDP of the countries in which they were created (according to the World Bank [9]). The relative index of competitiveness of the national economy (I com ) is calculated as the Global Competitiveness Index (GCI) of the WEF [10].…”

“…To determine the relationship between M&A with the participation of national companies and economic concentration in a country, the following indicators are used: the relative index of M&A volume (I MA ) and the relative index of concentration of an economy (I co ). As in previous models, the relative index of M&A volume (I MA ) is calculated as the ratio of volume of M&A transactions (according to the World Investment Report published by UNCTAD [7]) to GDP of the countries in which they were created (according to the World Bank [9]). The relative index of concentration of an economy (I co ) is calculated as the ratio of sales of the largest companies (according to Forbes 2000 [8]) to GDP of the countries in which they were created (according to the World Bank [9]).…”

“…To determine the relationship between the concentration of the national economy and its competitiveness, the following indexes are used: the relative index of concentration of economy (I co ) and the relative index of competitiveness of the national economy (I com ). As in previous models, the relative index of concentration of an economy (I co ) is calculated as the ratio of sales of the largest companies (according to Forbes 2000 [8]) to GDP of the countries in which they were created (according to the World Bank [9]). The relative index of competitiveness of the national economy (I com ) is calculated as the Global Competitiveness Index (GCI) of the WEF [10].…”

“…[4]. In our opinion, concentration of capital should be investigated from two standpoints: 1 -as a result of the conversion of profits into capital by capitalizing surplus value; 2 -as strengthening capital through consolidating the capital of various owners [5]. Based a number of the most common definitions of the concept "concentration of an economy", in this study, it is proposed that the essence of the concept "concentration of an economy" be interpreted as degree of concentration of production volumes or provision of services by the largest national companies in relation to the national GDP.…”