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Linking FDI and trade network topology with the COVID-19 pandemic

Author

Listed:
  • Roberto Antonietti

    (University of Padua)

  • Giulia De Masi

    (Technology Innovation Institute
    Khalifa University)

  • Giorgio Ricchiuti

    (University of Florence
    Catholic University of the Sacred Heart)

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) and trade establish 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’ centrality in both global production and trade network corresponds to higher COVID-19 infection and mortality rates. Merging data on EU-27 greenfield FDI and international trade with data on COVID-19 infections and deaths, we find that countries mostly exposed to the COVID-19 outbreak are those characterized by a higher eigenvector centrality. This result is robust to the use of an alternative measure of network centrality and to the inclusion of other possible confounding factors.

Suggested Citation

  • Roberto Antonietti & Giulia De Masi & Giorgio Ricchiuti, 2023. "Linking FDI and trade network topology with the COVID-19 pandemic," Journal of Economic Interaction and Coordination, Springer;Society for Economic Science with Heterogeneous Interacting Agents, vol. 18(4), pages 807-833, October.
    • Handle: RePEc:spr:jeicoo:v:18:y:2023:i:4:d:10.1007_s11403-023-00393-w
    DOI: 10.1007/s11403-023-00393-w
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    More about this item

    Keywords

    Foreign direct investment; International trade; Network centrality; COVID-19; Globalization;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation

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