Does global FDI network position affect innovation?

The release of the International Monetary Fund's (IMF) Coordinated Direct Investment Survey (CDIS) data accelerated research in a notable area within the FDI network literature: global FDI network research. This sparked research on the characteristics of the global FDI network graph, the country characteristics that determine their position in the graph, and the economic and environmental consequences of a country's global FDI network position. However, these studies did not examine the impact of a country's FDI network position on innovativeness. Adopting network theory, this study examines how countries' positions in the global FDI network graph affect their innovation performance. We apply social network analysis to generate the network graphs. Then, we use a panel data estimation to test the hypotheses. The IMF CDIS data are used to create the network graph. The data cover a 10-year period from 2009 to 2018. Global FDI networks exhibit a power-law distribution or core-periphery structure. As expected, the developed countries have a central position in global FDI networks. The network density increased by 40% since 2009. Having more ties in a global FDI network positively affects a country's innovation performance. However, this influence diminishes as the degree centrality increases. A country's closeness centrality has U-shaped relationship with its innovation performance, whereas betweenness centrality has not statistically significant effect.