Network analysis of trade and FDI

Deepika Srivastava () and M Rahul
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Deepika Srivastava: Ministry of Finance, Government of India

SN Business & Economics, 2024, vol. 4, issue 1, 1-27

Abstract: Abstract In recent years, there has been a spectacular increase in trade and FDI flows. This increase in trade and FDI flows is not only between countries already linked in the past but also between countries with newly created links as reported by Fagiolo (in: Victor, Montgomery, Lubell (eds) The Oxford handbook of political networks. Oxford University Press, Oxford, 2006). This has led to a complex network of trade and FDI that connects many countries. This paper investigates the link between FDI and trade using techniques from network analysis. We study the features of the two networks and investigate whether a country’s economic size and geographical distance play an important role in network formation. We study the Trade and FDI networks over four periods and find that the two networks are strongly related to each other. Further, we find that the trade network is guided by the country’s geographic distance, while the location of a country does not seem to affect the FDI network. However, both networks can be explained by the country’s economic size.

Keywords: International trade and FDI network; Community detection; Hubs; QAP correlation (search for similar items in EconPapers)
JEL-codes: F13 F14 F21 F23 (search for similar items in EconPapers)
Date: 2024
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Citations: View citations in EconPapers (1)

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DOI: 10.1007/s43546-023-00606-1

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