Distributions of positive correlations in sectoral value added growth in the global economic network*

Julian Maluck () and Reik V. Donner
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Julian Maluck: Potsdam Institute for Climate Impact Research
Reik V. Donner: Potsdam Institute for Climate Impact Research

The European Physical Journal B: Condensed Matter and Complex Systems, 2017, vol. 90, issue 2, 1-10

Abstract: Abstract International trade has grown considerably during the process of globalization. Complex supply chains for the production of goods have resulted in an increasingly connected International Trade Network (ITN). Traditionally, direct trade relations between industries have been regarded as mediators of supply and demand spillovers. With increasing network connectivity the question arises if higher-order relations become more important in explaining a national sector’s susceptibility to supply and demand changes of its trading partner. In this study we address this question by investigating empirically to what extent the topological properties of the ITN provide information about positive correlations in the production of two industry sectors. We observe that although direct trade relations between industries serve as important indicators for correlations in the industries’ value added growth, opportunities of substitution for required production inputs as well as second-order trade relations cannot be neglected. Our results contribute to a better understanding of the relation between trade and economic productivity and can serve as a basis for the improvement of crisis spreading models that evaluate contagion threats in the case of a node’s failure in the ITN.

Keywords: Statistical; and; Nonlinear; Physics (search for similar items in EconPapers)
Date: 2017
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DOI: 10.1140/epjb/e2016-70485-7

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