Structure and Response in the World Trade Network

We examine how the structure of the world trade network has been shaped by globalization and recessions over the last 40 years. We show that by treating the world trade network as an evolving system, theory predicts the trade network is more sensitive to evolutionary shocks and recovers more slowly from them now than it did 40 years ago, due to structural changes in the world trade network induced by globalization. We also show that recession-induced change to the world trade network leads to an \emph{increased} hierarchical structure of the global trade network for a few years after the recession.Comment: 4 pages, 4 figures, to appear in Phys. Rev. Let

The International Trade Network

Bilateral trade relationships in the international level between pairs of countries in the world give rise to the notion of the International Trade Network (ITN). This network has attracted the attention of network researchers as it serves as an excellent example of the weighted networks, the link weight being defined as a measure of the volume of trade between two countries. In this paper we analyzed the international trade data for 53 years and studied in detail the variations of different network related quantities associated with the ITN. Our observation is that the ITN has also a scale invariant structure like many other real-world networks.Comment: 9 pages, 7 figure

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

Statistical mechanics of the international trade network

Analyzing real data on international trade covering the time interval 1950-2000, we show that in each year over the analyzed period the network is a typical representative of the ensemble of maximally random weighted networks, whose directed connections (bilateral trade volumes) are only characterized by the product of the trading countries' GDPs. It means that time evolution of this network may be considered as a continuous sequence of equilibrium states, i.e. quasi-static process. This, in turn, allows one to apply the linear response theory to make (and also verify) simple predictions about the network. In particular, we show that bilateral trade fulfills fluctuation-response theorem, which states that the average relative change in import (export) between two countries is a sum of relative changes in their GDPs. Yearly changes in trade volumes prove that the theorem is valid.Comment: 6 pages, 2 figure

Google matrix of the world trade network

Using the United Nations Commodity Trade Statistics Database [http://comtrade.un.org/db/] we construct the Google matrix of the world trade network and analyze its properties for various trade commodities for all countries and all available years from 1962 to 2009. The trade flows on this network are classified with the help of PageRank and CheiRank algorithms developed for the World Wide Web and other large scale directed networks. For the world trade this ranking treats all countries on equal democratic grounds independent of country richness. Still this method puts at the top a group of industrially developed countries for trade in {\it all commodities}. Our study establishes the existence of two solid state like domains of rich and poor countries which remain stable in time, while the majority of countries are shown to be in a gas like phase with strong rank fluctuations. A simple random matrix model provides a good description of statistical distribution of countries in two-dimensional rank plane. The comparison with usual ranking by export and import highlights new features and possibilities of our approach.Comment: 14 pages, 13 figures. More detailed data and high definition figures are available on the website: http://www.quantware.ups-tlse.fr/QWLIB/tradecheirank/index.htm

Structure and Evolution of the World Trade Network

The \emph{World Trade Web} (WTW), the network defined by the international import/export trade relationships, has been recently shown to display some important topological properties which are tightly related to the Gross Domestic Product of world countries. While our previous analysis focused on the static, undirected version of the WTW, here we address its full evolving, directed description. This is accomplished by exploiting the peculiar reciprocity structure of the WTW to recover the directed nature of international trade channels, and by studying the temporal dependence of the parameters describing the WTW topology.Comment: Proceedings of the "First Bonzenfreies Colloquium on Market Dynamics and Quantitative Economics", Alessandria (ITALY) September 9-10, 2004. One of the three awarded talk

Gale-Shapley Matching in an Evolutionary Trade Network Game

This study investigates the performance of Gale-Shapley matching in an evolutionary market context. Computational experimental findings are reported for an evolutionary match-and-play trade network game in which resource constrained traders repeatedly choose and refuse trade partners in accordance with Gale-Shapley matching, participate in risky trades modeled as two-person prisoner's dilemma games, and evolve their trade behavior over time. Particular attention is focused on correlations between ex ante market structure and the formation of trade networks, and between trade network formation and the types of trade behavior and social welfare outcomes that these trade networks support. Related work can be accessed here: http://www.econ.iastate.edu/tesfatsi/tnghome.htmGale-Shapley matching; partner choice; agent-based modeling; evolutionary market game; Trade Network Game (TNG)

The Strategic Exploitation of Limited Information and Opportunity in Networked Markets

This paper studies the effect of constraining interactions within a market. A model is analysed in which boundedly rational agents trade with and gather information from their neighbours within a trade network. It is demonstrated that a trader’s ability to profit and to identify the equilibrium price is positively correlated with its degree of connectivity within the market. Where traders differ in their number of potential trading partners, well-connected traders are found to benefit from aggressive trading behaviour.Where information propagation is constrained by the topology of the trade network, connectedness affects the nature of the strategies employed