Advertisement

Understanding the Evolution of the World Trade Network: An Analytic Network Process Framework

  • Guoqin Zhao
  • Sam Dzever
Chapter

Abstract

This paper combines weighted and non-weighted networks to analyse the evolution of the world trade web for the period 1995 through 2013 (with a particular focus on China) deconstructing the most influential factors and related characteristics. The results show that the world trade web has a relatively high density and increasingly tighter structure indicating the existence of closer trade relationships. However, the web is still an extremely asymmetric network that is led by the main trading powers. Therefore, whether weighted or non-weighted the symmetric index of the world trade web fluctuation is around 0.1. Based on specific situations of countries in this web our research finds that most countries have relatively high trade partners and low trade intensity and that only a few countries show high trade disparity. And from fluctuation of correlation between related nodal indexes, countries with fewer trade partners tend to trade with countries with relative more trade partners. Meanwhile, countries with low trade intensity tend to trade with countries with high trade intensity. The feature of “disassortative-mating” and “rich club” still exists in this web which has no significant improvement compared with that in previous research. Moreover, the structure of “hub and spoke” becomes increasingly more obvious. Furthermore, analysis of influential factors shows that only the difference in foreign direct investment has a relatively larger impact on the world trade web structure among the major factors (e.g. exchange rates, inflation rate) affecting trade flows. At the same time an important finding of this research is that economic and trade organisation and regional trade agreements among different countries have significant influence on the world trade web. Geographical association, difference in foreign direct investment, economic and trade organisation and regional trade agreement association can explain 30.3% of the variation of the world trade web. Supported by these conclusions the following policy initiatives are suggested as the way forward for China: first of all, China needs to participate in global governance at a more deeper level. It is suggested that China not only obey and uphold international trade rules but also promote and lead the formation of trade rules. Through this mechanism China will be able to develop and maintain a multilevel trade system. Secondly, due to the significant influence of cooperation China needs to carry on internal mediation in APEC and promote FTAAP gradually in order to reduce negative impact caused by TPP. China should increase its regional trade agreements in the Asia-Pacific area through which it can establish its own “hub and spoke” structure. At the same time the “One Belt and One Road” strategy will help China transform political trust and economic complementarity to cooperation benefits for all its trading partners in the region.

Keywords

World trade web Economic and trade cooperation Analytic network process framework China 

References

  1. Barnett, A. G. (2007). Encyclopedia of Social Networks. London: Sage.Google Scholar
  2. Bhattacharya, K., Mukherjee, G., Saramki, J., Kaski, K., & Manna, S. (2008). The International Trade Network: Weighted Network Analysis and Modeling. Journal of Statistical Mechanics: Theory and Experiment, 2008(2). http://stacks.iop.org/JSTAT/2008/P02002.  https://doi.org/10.1088/1742-5468/2008/02/P02002.CrossRefGoogle Scholar
  3. Chen, Y. (2011). Social Network Analysis on World Trade Pattern in 2000–2009. Journal of International Trade (Chinese), 11.Google Scholar
  4. De Benedictis, L., & Tajoli, L. (2008). Similarity in Trade Structures: Integration and Catching-Up. The Economics of Transition, 16(2), 165–182.CrossRefGoogle Scholar
  5. Fagiolo, G., Javier, R., & Setfano, S. (2009). World Trade Web: Topological Properties, Dynamics, and Evolution. Physical Review E, 79(3), 480–514.Google Scholar
  6. Fagiolo, G., Javier, R., & Setfano, S. (2010). The Evolution of the World Trade Web: A Weighted-Network Analysis. Journal of Evolution Economics, 20(4), 479–514.CrossRefGoogle Scholar
  7. Garlaschelli, D., & Loffredo, M. (2004). Patterns of Link Reciprocity in Directed Networks. Physical Review Letter, 93(26). arXiv:cond-mat/0404521v2.Google Scholar
  8. Kali, R., Méndez, F., & Reyes, J. (2006). Trade Structure and Economic Growth. Journal of International Trade & Economic Development, 16(2), 245–269.CrossRefGoogle Scholar
  9. Li, X., Jin, Y. Y., & Chen, G. (2003). Complexity and Synchronization of the World Trade Web. Physical Review A, 328(1), 287–296.CrossRefGoogle Scholar
  10. Luis, A., Rivera-batiz, L., & Romer, P. (1991). Economic Integration and Endogenous Growth. The Quarterly Journal of Economics, 106(2), 531–555.CrossRefGoogle Scholar
  11. Onnela, J., Saramaki, J., & Kaski, K. (2005). Intensity and Coherence of Motifs in Weighted Complex Networks. Physical Review E, 71(2). PMID: 16089800.  https://doi.org/10.1103/physRevE.71.065103.
  12. Saramaki, J., Kivela, M., Onnela, J., Kaski, K., & Kertsz, J. (2007). Generalizations of the Clustering Coefficient to Weighted Complex Networks. Physical Review E, 75(2), 027105-1–027105-4.Google Scholar
  13. Serrano, A., Boguñà, M., & Vespignani, A. (2007). Patterns of Dominant Flow in the World Trade Web. Journal of Economic Interact Coordination, 2(2), 111–124.CrossRefGoogle Scholar
  14. Smith, D., & White, D. (1992). Structure and Dynamics of the Global Economy: Network Analysis of International Trade 1965–1980. Social Forces, 70(4), 857–893.CrossRefGoogle Scholar
  15. Snyder, D., & Kick, E. (1979). Structural Position in the World System and Economic Growth 1955–70: A Multiple Network Analysis of Transnational Interaction. American Journal of Sociology, 84(5), 1096–1126.CrossRefGoogle Scholar
  16. Tzekina, I., Danthi, K., & Rockmore, D. N. (2008). Evolution of Community Structure in the World Trade Web. The European Physical Journal B, 64(3), 541–545.CrossRefGoogle Scholar
  17. Zhuo, D. (2012). Determinants and Characteristics of International Trade Network Structure: An Example About China-ASEAN Free Trade Area. Journal of International Trade (Chinese), 12, 72–83.Google Scholar

Copyright information

© The Author(s) 2018

Authors and Affiliations

  • Guoqin Zhao
    • 1
  • Sam Dzever
    • 2
  1. 1.Institute of Finance and Economics, Central University of Finance and EconomicsBeijingChina
  2. 2.Institut Mines-Telecom Business School, LITEM, Université Paris-SaclayEvryFrance

Personalised recommendations