Core Capital Dependency and Climate Adaptation: A Longitudinal Network Analysis of Foreign Direct Investment (FDI)

• In Event: Sociology of Development Section Roundtables
  In Refereed Roundtable (60 minute): Table 3: Development & Space

Abstract

Although the effects of foreign direct investment (FDI) on multiple aspects of societies have been extensively studied in the literature on the sociology of development, the debate over its effectiveness or destructiveness seems far from over, as there is no sign of consensus among scholars. The very dynamic nature of the global system of investment seems to be one of the contributing factors to the continued debate, as different ways of conceptualizing and measuring FDI frequently yield different results. Therefore, there have been several calls for more nuanced measurements of foreign capital that reflect the complexity of the current world economy. In this study, I first use network data from the IMF’s The Direct Investment Positions by Counterpart Economy – 2025 to develop a dynamic and relational index for dependency on capital from core economies. This new index brings into the equation the receiver country’s own centrality in the global network, as well as the source of foreign capital and the receiver’s reliance on such capital in relation to its own outward investments. Second, I use this new index for explaining cross-national and longitudinal variation in the Notre Dame Global Adaptation Initiative’s (ND-GAIN) Index that reflects nations’ vulnerability and readiness regarding climate disruptions. Results of growth curve panel models with random intercepts and slopes show that while dependence on foreign capital does not affect a country’s vulnerability to climate disruption, it significantly reduces readiness.

Author

• Peyman Hekmatpour, Oklahoma State University