Abstract
As many countries are now seeking to protect their own markets rather than indulge in global trade, this paper examines whether this type of de-globalization behavior has been having any effect on international investment relationships through a systematic analysis of international investment network (IIN) in 127 economies from 2005 to 2016. Unlike previous studies that only analyzed portfolio investment data, the bilateral international investment data were estimated using a matrix-based iteration approach, and the IIN established using complex network theory. Using bilateral international investment data made the results more reliable and somewhat closer to reality. To analyze the structural properties and evolution of the IIN, complex network indicators including a new one named node similarity were developed. The node similarity is defined as the proportion of common relationships of the current economy between two successive years which is useful to reveal the dynamics of the IIN. This paper finds that there are heterogenous and hierarchal properties in the IIN, several economies had a wide range of international investment partners, while most others had only a small range of investment partners and were more likely to form tight groups within the network. The economies in the IIN were tending towards smaller but closer communities, a new trend of regional financial cooperation was developing. The IIN is divided into more communities over time while the top active and central economies often locate in different communities. These findings imply that the structure of the IIN is changing geographically during the de-globalization rather than independent with regions. The regional cooperation has made positive effect on the international investment. The governments should ensure that they continue to support liberal financial policies and to promote better regional financial cooperation.
Highlights
After the 2008 global financial crisis, the international investment market fluctuated dramatically as many countries sought to disengage their economies from global financial influences [1], which changed the international development landscape
Results for the countries ranking in the international investment network (IIN) were somewhat different from previous research; for example, when portfolio investment data were interrogated, of the top 10 countries and regions from 2001 to 2010, Spain tops the rank from 2003 to 2007, and some larger economies such as China and Russia were not even in the top eight
The degree and clustering coefficient analysis implied that the economies with more investment partners are unlikely to form tight relationships due to the diversified investment, and vice versa
Summary
Unlike previous studies that only analyzed portfolio investment data, the bilateral international investment data were estimated using a matrix-based iteration approach, and the IIN established using complex network theory. To analyze the structural properties and evolution of the IIN, complex network indicators including a new one named node similarity were developed. The economies in the IIN were tending towards smaller but closer communities, a new trend of regional financial cooperation was developing. The IIN is divided into more communities over time while the top active and central economies often locate in different communities These findings imply that the structure of the IIN is changing geographically during the de-globalization rather than independent with regions. Complex network analysis of bilateral international investment under de-globalization.
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