Investigating the Structure and Policy Implications of the Global FDI Network

Samani, Habib Ansari; Pour, Afrooz Sadat Foroughi; Zare, Mohammad Hassan; Shabani, Zahra Dehghan

doi:2026.41.2.429

The Journal of Economic Integration 2026 June;41(2) :429-466.
DOI: https://doi.org/10.11130/jei.2025028

Investigating the Structure and Policy Implications of the Global FDI Network

Habib Ansari Samani¹, Afrooz Sadat Foroughi Pour¹, Mohammad Hassan Zare¹, Zahra Dehghan Shabani²

¹Yazd University, Yazd, Iran
²Shiraz University, Shiraz, Iran

Corresponding Author: Habib Ansari Samani ,Tel: +98-3531233200, Email: h.samani@yazd.ac.ir

ABSTRACT

Foreign direct investment (FDI) plays a vital role in financing projects and generating spillover effects such as technology transfer and human capital development. This study analyzes FDI interactions among 193 countries from 2011 to 2021 by constructing inward and outward FDI networks. Using clustering coefficients, centrality measures, and community detection, the research examines the structural features of these networks. Results show that the United States, the United Kingdom, Luxembourg, and the Netherlands consistently hold central positions. Over time, the number of communities decreased while their size increased, with key FDI countries placed in the same community. Employing the GMM method, the study identifies significant determinants of network positions: trade openness, free-trade agreements, and GDP positively affect both inflow and outflow networks. Inward positions are further strengthened by good governance but weakened by inflation. Conversely, in outward networks, inflation boosts FDI, while governance has a negative impact.

JEL Classification

D85: Network Formation and Analysis: Theory
E22: Capital; Investment; Capacity
F21: International Investment; Long Term Capital Movements
B55:
F65: Finance
F41: Open Economy Macroeconomics

Keywords: Network Theory | Foreign Direct Investment | Modularity | Communities | GMM