The Structure and Growth of International Trade

Massimo Riccaboni () and Stefano Schiavo

No 1005, Department of Economics Working Papers from Department of Economics, University of Trento, Italia

Abstract: The paper develops a model of proportionate growth to describe the dynamics of international trade flows. We show that a large number of the empirical regularities characterizing international trade -such as the fraction of zero trade flows across pairs of countries, the positive relationship between inten- sive and extensive margins, the high concentration of trade with respect to both products and destinations, the core-periphery structure of exchanges- are well explained by this simple stochastic setup. This helps us to distinguish among economically relevant regularities and those simply resulting from the mechanical interactions among agents. Furthermore, our model can be used to describe the process of `self-discovery' that lie at the foundations of suc- cessful export-led growth and is thought to play a crucial role in the process of economic development. Our model correctly predicts that large export flows are rare events, as pointed out in the empirical literature: yet, countries char- acterized by large `discovery' efforts are much more likely to draw a `big hit' due to the (very skewed) shape of the distribution of bilateral export flows.

Keywords: international trade; development; weighted networks; proportionate growth; industrial policy (search for similar items in EconPapers)
JEL-codes: F14 F43 O25 (search for similar items in EconPapers)
Date: 2010
New Economics Papers: this item is included in nep-int
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Citations: View citations in EconPapers (1)

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Related works:
Working Paper: The Structure and Growth of International Trade (2010)
Working Paper: The Structure and Growth of International Trade (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:trn:utwpde:1005

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