Worldwide spreading of economic crisis

We model the spreading of a crisis by constructing a global economic network and applying the Susceptible-Infected-Recovered (SIR) epidemic model with a variable probability of infection. The probability of infection depends on the strength of economic relations between the pair of countries, and the strength of the target country. It is expected that a crisis which originates in a large country, such as the USA, has the potential to spread globally, like the recent crisis. Surprisingly we show that also countries with much lower GDP, such as Belgium, are able to initiate a global crisis. Using the {\it k}-shell decomposition method to quantify the spreading power (of a node), we obtain a measure of ``centrality'' as a spreader of each country in the economic network. We thus rank the different countries according to the shell they belong to, and find the 12 most central countries. These countries are the most likely to spread a crisis globally. Of these 12 only six are large economies, while the other six are medium/small ones, a result that could not have been otherwise anticipated. Furthermore, we use our model to predict the crisis spreading potential of countries belonging to different shells according to the crisis magnitude.Comment: 13 pages, 4 figures and Supplementary Materia

Association of Southeast Asian Nations, People's Republic of China, and India Growth and the Rest of the World: The Role of Trade

This paper explores the impact of past and future growth in the Association of Southeast Asian Nations (ASEAN)1 Since the mid-1990s, ACI growth has improved the non-oil terms of trade of the developed countries. There have also been strong complementarities between ACI suppliers of intermediate inputs and PRC exports. More developed Asian countries have benefited from PRC capital goods demand. ACI growth has, however, put competitive pressures on other less-developed manufacturing exporters, worsening their terms of trade and constraining their pricing ability. ACI growth has been especially beneficial for oil and minerals commodity producers. On the other hand, net food importers and oil importing countries have been adversely affected by high import costs. , the People's Republic of China (PRC), and India - here referred to as the ACI countries - on aggregate welfare, relative wages, and global emissions in the rest of the world. It outlines several analytical frameworks, considers effects over the past decade and, based on consensus forecasts, the implications of that growth for the rest of the world in the decades to come. Future ACI growth provides opportunities and challenges for the rest of the world. For developed countries the opportunities are for selling high-end services and capital and consumer goods in the ACI markets and enjoying the benefits from intra-industry trade; the challenges will come from increased head-to-head competition in manufactured goods and services that should become more intense in future decades. For medium-income producers currently at between 30% and 60% of US levels, there will be a tougher tradeoff between more intensive competition with the PRC and serving the growing middle classes in ACI countries. For poorer countries, there will greater opportunities for becoming part of global supply chains in manufactured exports. Standard frameworks that assume internal factor mobility suggest continuing pressures for wage inequality in developed countries. But these hinge on the assumption that the ACI and developed countries will continue to produce similar products and that the ACI will specialize in unskilled labor-intensive products. In fact, as their exports become more technology - intensive and developed countries more specialized these pressures could be alleviated. On the one hand, as the "flying geese" process continues, exports from countries with lower incomes than the PRC are likely to displace PRC labor-intensive exports rather than domestic production in developed countries. On the other hand, while it may cause job loss and erode the returns to specific factors, PRC export growth is less likely to be a source of wage inequality in advanced economies

National institutional systems’ hybridisation through interdependence. The case of EU-Russia gas relations

International audienceThe interdependencies between the EU and its external natural gas suppliers and Russia question the transformative impact of interdependence linked to hybridization processes. Our approach combines theories of institutional change, and French Regulation Theory. These approaches lead to a new look to characterize the way in which the confrontation of two regulatory systems (EU and Russia) is resolved today. The importance of the European market leads however to an adaptation of the Russian governance model for gas exchanges. But it also implies a transformation of the European model. The competitive norm acts as a lever to bring about hybridization of regulations in the Russian gas sector and EU energy policy

The Threat of Capital Drain: A Rationale for Public Banks?

This paper yields a rationale for why subsidized public banks may be desirable from a regional perspective in a financially integrated economy. We present a model with credit rationing and heterogeneous regions in which public banks prevent a capital drain from poorer to richer regions by subsidizing local depositors, for example, through a public guarantee. Under some conditions, cooperative banks can perform the same function without any subsidization; however, they may be crowded out by public banks. We also discuss the impact of the political structure on the emergence of public banks in a political-economy setting and the role of interregional mobility

Comparing the hierarchy of keywords in on-line news portals

The tagging of on-line content with informative keywords is a widespread phenomenon from scientific article repositories through blogs to on-line news portals. In most of the cases, the tags on a given item are free words chosen by the authors independently. Therefore, relations among keywords in a collection of news items is unknown. However, in most cases the topics and concepts described by these keywords are forming a latent hierarchy, with the more general topics and categories at the top, and more specialised ones at the bottom. Here we apply a recent, cooccurrence-based tag hierarchy extraction method to sets of keywords obtained from four different on-line news portals. The resulting hierarchies show substantial differences not just in the topics rendered as important (being at the top of the hierarchy) or of less interest (categorised low in the hierarchy), but also in the underlying network structure. This reveals discrepancies between the plausible keyword association frameworks in the studied news portals

Production Networks in Asia: A Case Study from the Hard Disk Drive Industry

Production networks have been extensively developed in East Asia. Previous studies on production networks used international trade data or input-output tables, but such aggregate data cannot explain how the networks actually operate. With the aim of understanding the features and characteristics of East Asian production networks, this paper examines the procurement system of a HDD assembler operating in Thailand. This micro-level case study found that this particular production network consists mostly of arm's-length suppliers, who are independent and on an equal footing with the assembler. These arm's-length suppliers are mostly located in the assembling country, but some are located in neighboring countries. This proximity is necessary to establish good relationships between customer and suppliers and allows problems to be solved as soon as they occur. The arm's-length suppliers engaged in each country's leading industries, such as the electronics industry in Malaysia and Singapore and the automobile industry in Thailand, have extended their business to supply the HDD industry. These suppliers have formed an industrial cluster in each country within a two- or three-hour drive area. Each cluster that spans different countries is linked by a well-developed logistic network that employs the just-in-time production method that prevails in East Asia. On a regional level, these separate clusters tend to form international production networks that connect to each other across neighboring countries within a distance that provides a quick response time for problem solving. This study also found that American HDD assemblers outsourced indigenous suppliers in Malaysia and Singapore because American suppliers did not follow the assemblers' move to the region. However, since Japanese suppliers did follow the Japanese HDD assemblers to the Philippines and Thailand, indigenous suppliers were not outsourced