The Double-Edged Sword of Global Integration: Robustness, Fragility & Contagion in the International Firm Network

Everett Grant and Julieta Yung

No 313, Globalization Institute Working Papers from Federal Reserve Bank of Dallas

Abstract: We estimate global inter-firm networks across all major industries from 1981 through 2016 and provide the first empirical tests for both robust (beneficial) and fragile (harmful) network behavior, relating firms' health with global integration. More connected firms are less likely to be in distress and have higher profit growth and equity returns, but are also more exposed to direct contagion from distressed neighboring firms and network level crises. Our analysis reveals the centrality of finance in the international firm network and increased globalization, with greater potential for crises to spread globally when they do occur.

JEL-codes: C3 F36 F61 G15 (search for similar items in EconPapers)
Pages: 56 pages
Date: 2017-05-01
New Economics Papers: this item is included in nep-bec, nep-dcm, nep-int, nep-net and nep-tid
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Citations: View citations in EconPapers (2)

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Working Paper: The Double-Edged Sword of Global Integration: Robustness, Fragility \& Contagion in the International Firm Network (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:fip:feddgw:313

DOI: 10.24149/gwp313

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