THE NETWORK OF INTER-REGIONAL DIRECT INVESTMENT STOCKS ACROSS EUROPE

DOI10.1142/S0219525907000933MaRDI QIDQ3447016zbMATH OpenOpenAlexDBLPWikidataFDO

Authors Stefano Battiston, Joao F. Rodrigues, Hamza Zeytinoglu

Publication date 28 June 2007

Published in Advances in Complex Systems (Search for Journal in Brave)

Full work available at URL https://arxiv.org/abs/physics/0508206

zbMATH Keywords

complex networksgeographical networksinvestmentscaling laws

Mathematics Subject Classification ID

Applications of graph theory (05C90) Deterministic network models in operations research (90B10) Social networks; opinion dynamics (91D30) Corporate finance (dividends, real options, etc.) (91G50)

Abstract: We propose a methodological framework to study the dynamics of inter-regional investment flow in Europe from a Complex Networks perspective, an approach with recent proven success in many fields including economics. In this work we study the network of investment stocks in Europe at two different levels: first, we compute the inward-outward investment stocks at the level of firms, based on ownership shares and number of employees; then we estimate the inward-outward investment stock at the level of regions in Europe, by aggregating the ownership network of firms, based on their headquarter location. Despite the intuitive value of this approach for EU policy making in economic development, to our knowledge there are no similar works in the literature yet. In this paper we focus on statistical distributions and scaling laws of activity, investment stock and connectivity degree both at the level of firms and at the level of regions. In particular we find that investment stock of firms is power law distributed with an exponent very close to the one found for firm activity. On the other hand investment stock and activity of regions turn out to be log-normal distributed. At both levels we find scaling laws relating investment to activity and connectivity. In particular, we find that investment stock scales with connectivity in a similar way as has been previously found for stock market data, calling for further investigations on a possible general scaling law holding true in economical networks.

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Cites work

• On the size distribution of firms: additional evidence from the G7 countries
• Random difference equations and renewal theory for products of random matrices
• Some Generalized Functions for the Size Distribution of Income
• The worldwide air transportation network: Anomalous centrality, community structure, and cities' global roles

Cited in

(3)

• High-order degree and combined degree in complex networks
• The local structure of globalization
• From Graph Theory to Models of Economic Networks. A Tutorial

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