Linking FDI Network Topology with the Covid-19 Pandemic

Roberto Antonietti, Giulia De Masi and Giorgio Ricchiuti

Working Papers - Economics from Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa

Abstract: Globalization has considerably increased the movement of people and goods around the world, which constitutes a key channel of viral infection. Increasingly close economic links between countries speeds up the transfer of goods and information, and the knock-on effect of economic crises, but also the transmission of diseases. Foreign direct investment (FDI), in particular, establishes clear ties between countries of origin and destination, and it is along these chains that contagious phenomena can unfold. In this paper, we investigate whether countries with more central positions in the global production network have higher COVID-19 infection and mortality rates. We merge data on EU-28 outward FDI with data on COVID-19 per capita infection and death rates to analyze their association with the topology of the FDI network. Our estimates reveal that countries most exposed to the COVID-19 outbreak are those characterized by a more central role in the global production network. This result is robust to the use of alternative measures of network centrality, and to the possible influence of the 2008 financial crisis on the structure of the global production network. We also find that exposure to the pandemic increases with the centrality of a country in the FDI network of certain industries, including business machinery and equipment, business services, real estate, tourism and transport.

Keywords: Foreign direct investment; economic networks; centrality measurements; COVID-19; pandemic (search for similar items in EconPapers)
JEL-codes: D85 F23 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2020
New Economics Papers: this item is included in nep-int
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Citations: View citations in EconPapers (2)

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Working Paper: Linking FDI Network Topology with the Covid-19 Pandemic (2020)
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