Centrality in the macroeconomic multi-network explains the spatiotemporal distribution of country per-capita income

Abstract

AbstractThis paper empirically investigates the role played by cross-country spillovers in shaping spatiotemporal differences in country income. While existing literature focused on effects captured by direct spillovers with partner countries only, here we take a complex network perspective to explore whether the global embeddedness of countries in the macroeconomic multi-network may significantly impact income, net of country local characteristics such as local foreign exposure. We employ data for the period 2000–2020 to build a time sequence of 3-layer multi graphs, with countries as nodes and links weighted by the intensity of bilateral relations in international trade, finance and human migration. Using panel-regression techniques, we then ask if country (eigenvector) centrality in the multi network can account for parts of the observed heterogeneity in country per-capita income, both cross-sectionally and over time. Robustly across a number of alternative specifications of the empirical model, we find that being more central significantly boosts country income. This implies that income-enhancing technological spillovers are not only channeled via local exposure, but also through indirect interactions with more distant nodes.