Gone with the epidemic? The spatial effects of the Covid-19 on global investment network

The outbreak of Covid-19 epidemic has a prolonged impact on global economic activities. In recent years, many scholars have been motivated to estimate the effects of Covid-19 shock on global foreign direct investment (FDI). However, existing studies have not paid enough attention to the spillover effects caused by the epidemic. Although few academic works have explored the geographic-neighboring spillover effects of epidemic shock on global investment, we further extent the understanding of the spillover effects in an economic network. On the basis of country-month greenfield FDI panels, we construct a spatial Durbin model, and figure out that Covid-19 shock may have positive FDI spillover effects in an economic network via global FDI transfers. Furthermore, we find that such spillovers are greatly conditioned by country-level network position and institutional ties among nations. Our research suggests that global FDI transfers may partly offset economic-adverse effects of the Covid-19 shock. While global countries, especially those in the Global South, should be more closely embedded in the global investment network in such an uncertain environment.