The Local Structure of Globalization: The Network Dynamics of Foreign Direct Investments in the International Electricity Industry

Abstract

We study the evolution of the network of foreign direct investment (FDI) in the international electricity industry during the period 1994-2003. We assume that the ties in the network of investment relations between countries are created and deleted in continuous time, according to a conditional Gibbs distribution. This assumption allows us to take simultaneously into account the aggregate predictions of the well-established gravity model of international trade as well as local dependencies between network ties connecting the countries in our sample. According to the modified version of the gravity model that we specify, the probability of observing an investment tie between two countries dep..