Foreign direct investment–using network analysis to understand the position of Portugal in a global FDI network

Published in IFC Bulletin, 2020

Recommended citation: Filipa Lima & Flávio Pinheiro & João Falcão Silva & Pedro Matos, 2020. "Foreign direct investment – using network analysis to understand the position of Portugal in a global FDI network," IFC Bulletins chapters, in: Bank for International Settlements (ed.), Bridging measurement challenges and analytical needs of external statistics: evolution or revolution?, volume 52, Bank for International Settlements. https://ideas.repec.org/h/bis/bisifc/52-27.html

Understanding the role of foreign direct investment (FDI) is of utmost importance in a world economy of increasingly interdependent economies. However, the lack of an unified data source of FDI covering a long time frame has posed serious challenges to its analysis. In this article we apply methods of network analysis to build a representation of the global FDI relationships. We show how the network representation of the global FDI can be used to identify patterns, identify preferential paths for investment, establish trends and describe the relations between countries over time. We present the results by using specific visualisation tools that graphically illustrate the interlinkages between the economies, and that can be a valuable instrument for the design and deployment of regulating instruments.

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