Complexity, Centralization, and Fragility in Economic Networks

Trade networks, across which countries distribute their products, are crucial components of the globalized world economy. Their structure is strongly heterogeneous across products, given the different features of the countries which buy and sell goods. By using a diversified pool of indicators from network science and product complexity theory, we quantitatively confirm the intuition that, overall, products with higher complexity -- i.e., with larger technological content and number of components -- are traded through a more centralized network -- i.e., with a small number of countries concentrating most of the export flow. Since centralized networks are known to be more vulnerable, we argue that the current composition of production and trading is associated to high fragility at the level of the most complex -- thus strategic -- products

Economic Integration and Similarity in Trade Structures

In this paper we look at the similarity of trade structures in an integrating area. In particular, we analyse the export flows toward the EU market of four of the so-called “accession countries" of Central and Eastern Europe by comparing them to those of the pre-2004 members of the European Union (EU15). From a methodological point of view, we evaluate the appropriateness of different classes of similarity indices - correlation indices and distance metrics - opting for the use of the Bray-Curtis semi-metric to assess changes in the trade similarity. We examine its evolution over time - from 1989 to 2001 - considering both self-similarity (how the export composition of a CEEC has changed with respect to the beginning of the transition process) and EU-similarity (if and how the export composition of a CEEC has changed with respect to the EU15 export composition). Finally, we use EU-similarity matrices to test if the dynamics of sectoral distribution of total exports of Poland, Hungary, Romania, and Bulgaria to the EU is related to the role acquired by processed trade in the 1990s. Using a nonparametric Mantel test we give evidence that: (1) processed trade is crucial in explaining changes in the overall structure of exports of transition countries, and (2) that greater economic integration in terms of trade flows and processing trade does not always lead to greater export similarity between the CEECs and the EU15 member States.EU, CEECs, Transition, Similarity, Nonparametrics

Patterns of International Fragmentation of Production and Implications for the Labor Markets

Growing shares of international trade flows consist of intermediate and unfinished goods shipped from one country to another to combine manufacturing or services activities at home with those performed abroad. This configuration of the productive structure has been named “internationally fragmented”. The purpose of our work is to analyze the labor market effects of international fragmentation of production in Europe, looking at how it affects relative labor demand. Models of trade due to fragmentation of production suggest that when international fragmentation takes place we can expect to observe a change in the relative factor intensities of the affected industries. We use international trade data specifically related to international fragmentation of production to test if the shift in intensity of skilled and unskilled labor employed in Italy and Germany during the 1990s it related to the fragmentation activity.international fragmentation of production, trade, labour demand

Patterns of International Fragmentation of Production and Implications for the Labor Markets

Growing shares of international trade flows consist of intermediate and unfinished goods shipped from one country to another to combine manufacturing or services activities at home with those performed abroad. This configuration of the productive structure has been named “internationally fragmented”. The purpose of our work is to analyze the labor market effects of international fragmentation of production in Europe, looking at how it affects relative labor demand. Models of trade due to fragmentation of production suggest that when international fragmentation takes place we can expect to observe a change in the relative factor intensities of the affected industries. We use international trade data specifically related to international fragmentation of production to test if the shift in intensity of skilled and unskilled labor employed in Italy and Germany during the 1990s it related to the fragmentation activity.international fragmentation of production, trade, labor demand

How Offshoring Can Affect the Industries’ Skill Composition

While most offshoring literature focus on the effects on relative wages, other implications do not receive the necessary attention. This paper investigates effects on the industries’ skill ratio. It sum-marizes the empirical literature, discusses theoretical findings, and provides first empirical evidence for Germany. As results show, effects are mainly driven by the industry where offshoring takes place. In high skill intensive industries, the high skill labor ratio increases (vice versa for low skill intensive industries). Since this result is in line with other empirical findings but seems to contradict with theory, the paper additionally discusses possible explanations.oshoring; labor market implications; skill ratio; skill composition

The World Trade Network

      This paper uses the tools of network analysis and graph theory to graphically and analytically represent the characteristics of world trade. The structure of the World Trade Network is compared over time, detecting and interpreting patterns of trade ties among countries. In particular, we assess whether the entrance of a number of new important players into the world trading system in recent years has changed the main characteristics of the existing structure of world trade, or whether the existing network was simply extended to a new group of countries. We also analyze whether the observed changes in international trade flow patterns are related to the multilateral or the regional liberalization policies. The results show that trade integration at the world level has been increasing but it is still far from being complete, with the exception of some areas, that there is a strong heterogeneity in the countries’ choice of partners, and that the WTO plays an important role in trade integration. The role of the extensive and the intensive margin of trade is also highlighted.Network analysis,International Trade,WTO,Extensive and Intensive Margins of Trade,Gravity

How much integration after the enlargement?

Three years have gone by after the enlargement of the EU to 10 new member states. It is now possible to dismiss the fears on the negative effects of this enlargement that circulated in Europe (and not only) before 2004. What is more relevant to assess now is how far the actual economic integration between the EU15 and the new member states has arrived. This is the aim of this paper, where we show that integration is indeed deep in a number of areas, but it is still a goal in others. Pursuing an effective integration process is necessary for all countries to benefit of the advantages created by the Single Market

Similarity in export composition and catching-up

In this paper we look at the role of export composition in the growth process, considering how increased similarity in trade structure among countries can induce catching-up in income levels. We apply our analysis to the Central and Eastern European Countries (CEECs) using the EU as a benchmark. We explicitly consider the sectoral export patterns of the CEECs by comparing them to those of the current members of the EU, focusing on countries' specialization as suppliers for the EU market. Our main result is that similarity in export composition has a positive, significant and nonlinear impact on catching-up, and seems to be driven by the growth of the main export market more than by other factors. Results are robust to controlling for openness and country-size and for investment, schooling, and the quality of institutions.EU enlargement,CEECs,,growth,,export composition,

Too much of a good thing? Russia-EU international trade relations at times of war

In this paper, we investigate the evolution of Russia’s position in the world trade system, especially in relation to the European Union (EU). Data show that after entering into the WTO, Russia did not use this accession to develop and diversify trade flows (like China did, for example) but it augmented its specialization in fuels and raw materials, increasing its dependency on the rest of the world, and especially on European demand. Russia did not exploit its trade potential and its favorable geographic position to foster its economic development and to improve the welfare of its population. At the same time, the integration within the European Single Market and with the rest of the world both for older and new EU member formerly linked to the Soviet Union, has helped the EU to maintain high standards of living, and a relative stability, even if increasing its dependency on Russian fuels. We argue that it is also because of these differences and the related economic problems that tensions between Russia and the EU grew over time