Econophysics Point of View of Trade Liberalization: Community dynamics, synchronization, and controllability as example of collective motions

Yuichi Ikeda, Hideaki Aoyama, Hiroshi Iyetomi, Takayuki Mizuno, Takaaki Ohnishi, Yohei Sakamoto and Tsutomu Watanabe

Discussion papers from Research Institute of Economy, Trade and Industry (RIETI)

Abstract: In physics, it is known that various collective motions exist. For instance, a large deformation of heavy nuclei at a highly excited state, which subsequently proceeds to fission, is a typical example. This phenomenon is a quantum mechanical collective motion due to strong nuclear force between nucleons in a microscopic system consisting of a few hundred nucleons. Most national economies are linked by international trade and consequently economic globalization forms a giant economic complex network with strong links, i.e., interactions due to increasing trade. In Japan, many small and medium enterprises could achieve higher economic growth by free trade based on the establishment of an economic partnership agreement (EPA), such as the Trans-Pacific Partnership (TPP). Thus, it is expected that various interesting collective motions will emerge in the global economy under trade liberalization. In this paper, we present collective motions in trade liberalization observed in the analysis of the industry sector-specific international trade data from 1995 to 2011 and production index time series from 1998 to 2015 for G7 countries. We discuss the results and implications for three collective motions: (i) synchronization of international business cycle, (ii) immediate propagation of economic risk, and (iii) difficulty of structural controllability during economic crisis.

Pages: 36 pages
Date: 2016-03
New Economics Papers: this item is included in nep-int
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Persistent link: https://EconPapers.repec.org/RePEc:eti:dpaper:16026

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