Linking FDI topology with COVID-19 Pandemic

Document Type

Article

Source of Publication

Papers in Evolutionary Economic Geography

Publication Date

2020

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 speed 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.

Disciplines

Business

Keywords

Foreign direct investment, economic networks, centrality measurements, COVID-19, pandemic

Indexed in Scopus

no

Open Access

yes

Open Access Type

Bronze: This publication is openly available on the publisher’s website but without an open license

Link to Full Text

Share

COinS