Exports and FDI: comparing networks in the new millennium

Trade and foreign direct investments (FDI) represent the real and the capital side of international economic integration, recently challenged by the late 2000s worldwide economic crisis and by new scepticisms against globalisation. The economic literature on the description of world trade network (WTN) is wide, but few analyses have been carried out so far on world investment networks (WIN), since FDI data suitable for comparison are very scarce and very complex to collect. In this analysis we exploit a database (FDI Bilateral Statistics by UNCTAD (UNCTAD, 2014), in order to compare WTN and WIN in the first decade of the new millennium, before and after 2008 economic crisis. We focus on the dynamics of Exports and bilateral outward FDI stocks networks from 2001 to 2012 among 75 countries, representing 96.5% of world GDP and about 81% of world population in 2012. Results show that these networks are very similar: completely integrated with no isolated nodes when original data are used to analyse the networks (confirming the complexity of global value chain), and a relatively sub-group of countries connected to a unique largest component when the threshold level is increased. Since 2008, the economic crisis affected exclusively Exports, but later on the rise of economic connections continuously increased over time. The key players in WIN and WTN are stable: USA, Germany and China are leaders for Exports, while USA, Germany and France for FDI. In addition, countries do not match randomly: all networks are disassortative with respect to degree, but assortative according to geography and (partially) to economic development. Finally, WIN and WTN links are mutual in all networks, confirming that once a link is established, it is easier to maintain all kinds of commercial relations. Concluding there is a positive association between couplets of WTN and WIN networks, conjecturing that FDI and Exports networks could be complements, rather than substitute.