The state's role and position in international trade: A complex network perspective

Ying Fan, Suting Ren, Hongbo Cai and Xuefeng Cui

Economic Modelling, 2014, vol. 39, issue C, 71-81

Abstract: Based on statistical physics and graph theory, the research paradigm of a complex network, which has sprung up in the last decade, provides us with new global perspective to discuss the topic of international trade. In this paper, we engage in the issue of countries' roles and positions in international trade using the latest complex network theories. On a mid-level structure, countries are classified into three communities that reflect the structure of the “core/periphery” using the weighted extremal optimisation algorithm and the coarse graining process. On a micro-level, countries' rankings are provided with the aid of network's node centralities, which presents world trade as a closed, imbalanced, diversified and multi-polar development. Further, we firstly introduce the improved bootstrap percolation to simulate cascading influences following the breaking down of bilateral trade relations. We find that the breakdown of EU's export relations can more easily form a cascading reaction, which would result in a global collapse of world trade. All the results highlight the important positions of the EU, USA and Japan in the international trade system, which plays a positive role in promoting the world economy.

Keywords: International Trade Network; Countries' rank; Trading relation; Community; Centrality; Bootstrap percolation (search for similar items in EconPapers)
JEL-codes: C65 F14 F17 F40 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (43)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:39:y:2014:i:c:p:71-81

DOI: 10.1016/j.econmod.2014.02.027

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