Hostname: page-component-586b7cd67f-g8jcs Total loading time: 0 Render date: 2024-11-23T07:49:12.708Z Has data issue: false hasContentIssue false
  • English
  • Français

Distance-varying assortativity and clustering of the international trade network

Published online by Cambridge University Press:  08 June 2018

ANGELA ABBATE ,
LUCA DE BENEDICTIS ,
GIORGIO FAGIOLO  and
LUCIA TAJOLI
ANGELA ABBATE
Affiliation:
Economic Affairs Division, Swiss National Bank, Bern/Zürich, Switzerland (e-mail: [email protected])
LUCA DE BENEDICTIS
Affiliation:
DED, University of Macerata, Via Crescimbeni 20, Macerata 62100, Italy (e-mail: [email protected])
GIORGIO FAGIOLO
Affiliation:
Institute of Economics, Scuola Superiore Sant'Anna, Piazza Martiri della Libertà 33, Pisa 56127, Italy (e-mail: [email protected])
LUCIA TAJOLI
Affiliation:
Dipartimento di Ingegneria Gestionale, Politecnico di Milano, Piazza Leonardo da Vinci 32, Milano 20133, Italy (e-mail: [email protected])
Get access Rights & Permissions [Opens in a new window]

Abstract

In this paper, we study how the topology of the International Trade Network (ITN) changes in geographical space, and along time. We employ geographical distance between countries in the world to filter the links in the ITN, building a sequence of subnetworks, each one featuring trade links occurring at similar distance. We then test if the assortativity and clustering of ITN subnetworks changes as distance increases, and we find that this is indeed the case: distance strongly impacts, in a non-linear way, the topology of the ITN. We show that the ITN is disassortative at long distances, while it is assortative at short ones. Similarly, the main determinant of the overall high-ITN clustering level are triangular trade triples between geographically close countries. This means that trade partnership choices and trade patterns are highly differentiated over different distance ranges, even after controlling for the economic size and income per capita of trading partners, and it is persistent over time. This evidence has relevant implications for the non-linear evolution of globalization.

Keywords

international tradenetwork analysisdistance
Type
Research Article
Information
Network Science , Volume 6 , Issue 4 , December 2018 , pp. 517 - 544
Copyright
Copyright © Cambridge University Press 2018 

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Abeysinghe, T., & Forbes, K. (2005). Trade linkages and output-multiplier effects: A structural VAR approach with a focus on Asia. Review of International Economics, 13, 356–375.Google Scholar
Albert, R. & Barabási, A.-L. (2002). Statistical mechanics of complex networks. Review of Modern Physics, 74, 47–97.Google Scholar
Anderson, J. E. (2011). The gravity model. Annual Review of Economics, 3, 133–160.Google Scholar
Anderson, J. E. & van Wincoop, E. (2003). Gravity with gravitas: A solution to the border puzzle. American Economic Review, 93, 170–192.Google Scholar
Anderson, J. E. & van Wincoop, E. (2004). Trade costs. Journal of Economic Literature, 42, 691–751.Google Scholar
Anderson, J. E., & Yotov, Y. V. (2012). The gold standard gravity. NBER Working Papers 17835.Google Scholar
Artis, M., Galvao, A. B., & Marcellino, M. (2007). The transmission mechanism in a changing world. Journal of Applied Econometrics, 22, 39–61.Google Scholar
Arvis, J.-F., Duval, Y., Shepherd, B., Utoktham, C., & Raj, A. (2016). Trade costs in the developing world: 1996–2010. World Trade Review, 15, 451–474.Google Scholar
Baltagi, B. H., Egger, P., & Pfaffermayr, M. (2007). Estimating models of complex FDI: Are there third-country effects? Journal of Econometrics, 140, 260–281.Google Scholar
Barigozzi, M., Fagiolo, G., & Garlaschelli, D. (2010). The multi-network of international trade: A commodity-specific analysis. Physical Review E, 81, 046104.Google Scholar
Barthelemy, M. (2011). Spatial networks. Physics Reports, 499, 1–101.Google Scholar
Bernard, A., Jensen, J., Redding, S., & Schott, P. (2007). Firms in international trade. Journal of Economic Perspectives, 21, 105–130.Google Scholar
Bhattacharya, K., Mukherjee, G., & Manna, S. (2007). The international trade network. In Chatterjee, A., & Chakrabarti, B. (Eds.), Econophysics of markets and business networks. Milan, Italy: Springer-Verlag.Google Scholar
Bhattacharya, K., Mukherjee, G., Sarämaki, J., Kaski, K., & Manna, S. (2008). The international trade network: Weighted network analysis and modeling. Journal of Statistical Mechanics: Theory Experiment A, 2, P02002.Google Scholar
Brun, J.-F., Carrère, C., Guillaumont, P., & de Melo, J. (2005). Has distance died? Evidence from a panel gravity model. World Bank Economic Review, 19, 99–120.Google Scholar
Chaney, T. (2008). Distorted gravity: The intensive and extensive margins of international trade. American Economic Review, 98, 1707–1721.Google Scholar
Chaney, T. (2013). The gravity equation in international trade: An explanation. NBER Working Papers 19285.Google Scholar
Chaney, T. (2016). Networks in international trade. In Bramoullé, Y., Galeotti, A., & Rogers, B. (Eds.), The Oxford handbook of the economics of networks (pp. 759–798). Oxford, UK: Oxford University Press.Google Scholar
Chen, M. X., & Joshi, S. (2010). Third-country effects on the formation of free trade agreements. Journal of International Economics, 82, 238–248.Google Scholar
De Benedictis, L., Nenci, S., Santoni, G., Tajoli, L., & Vicarelli, C. (2014). Network analysis of world trade using the BACI-CEPII dataset. Global Economy Journal, 14, 287–343.Google Scholar
De Benedictis, L., & Taglioni, D. (2011). The gravity model in international trade. In De Benedictis, L., & Salvatici, L. (Eds.), The trade impact of European union preferential policies, chapter 4 (pp. 55–89). Berlin Heidelberg: Springer.Google Scholar
De Benedictis, L., & Tajoli, L. (2011). The world trade network. The World Economy, 34, 1417–1454.Google Scholar
De Groot, H. L., Linders, G.-J., Rietveld, P., & Subramanian, U. (2004). The institutional determinants of bilateral trade patterns. Kyklos, 57, 103–123.Google Scholar
Disdier, A., & Head, K. (2008). The puzzling persistence of the distance effect on bilateral trade. Review of Economics and Statistics, 90, 37–48.Google Scholar
Dorogovtsev, S., & Mendes, J. (2003). Evolution of networks: From biological nets to the internet and WWW. Oxford: Oxford University Press.Google Scholar
Duenas, M., & Fagiolo, G. (2013). Modeling the international-trade network: A gravity approach. Journal of Economic Interaction and Coordination, 8, 155–178.Google Scholar
Eaton, J., & Kortum, S. (2002). Technology, geography, and trade. Econometrica, 70, 1741–1779.Google Scholar
Egger, P., & Larch, M. (2008). Interdependent preferential trade agreement memberships: An empirical analysis. Journal of International Economics, 76, 384–399.Google Scholar
Eichengreen, B., & Irwin, D. A. (1995). Trade blocs, currency blocs and the reorientation of world trade in the 1930s. Journal of International Economics, 38, 1–24.Google Scholar
Eicher, T. S., & Henn, C. (2011). In search of WTO trade effects: Preferential trade agreements promote trade strongly, but unevenly. Journal of International Economics, 83, 137–153.Google Scholar
Ekholm, K., Forslid, R., & Markusen, J. R. (2007). Export-platform foreign direct investment. Journal of the European Economic Association, 5, 776–795.Google Scholar
Fagiolo, G. (2007). Clustering in complex directed networks. Physical Review E, 76, 026107.Google Scholar
Fagiolo, G. (2010). The international-trade network: Gravity equations and topological properties. Journal of Economic Interaction and Coordination, 5, 1–25.Google Scholar
Fagiolo, G. (2015). The international trade network: Empirics and modeling. In Victor, J. Nicoll, Lubell, M., & Montgomery, A. H. (Eds.), Oxford handbook of political networks, chapter 29. Oxford, UK: Oxford University Press.Google Scholar
Fagiolo, G., Schiavo, S., & Reyes, J. (2008). On the topological properties of the world trade web: A weighted network analysis. Physica A, 387, 3868–3873.Google Scholar
Fagiolo, G., Schiavo, S., & Reyes, J. (2009). World-trade web: Topological properties, dynamics, and evolution. Physical Review E, 79, 036115.Google Scholar
Fagiolo, G., Schiavo, S., & Reyes, J. (2010). The evolution of the world trade web: A weighted-network approach. Journal of Evolutionary Economics, 20, 479–514.Google Scholar
Feenstra, R. (2002). Border effects and the gravity equation: Consistent methods for estimation. Scottish Journal of Political Economy, 49, 491–506.Google Scholar
Forbes, K. (2002). Are trade linkages important determinants of country vulnerability to crises? In Edwards, S. and Frankel, J. A. (Eds.), Preventing currency crises in emerging markets. Chicago: University of Chicago Press.Google Scholar
Fujita, M., & Krugman, P. R. (2004). The new economic geography: Past, present and the future. Papers in Regional Science, 83, 139–164.Google Scholar
Garlaschelli, D., Di Matteo, T., Aste, T., Caldarelli, G. & Loffredo, M. (2007). Interplay between topology and dynamics in the World Trade Web. The European Physical Journal B, 57, 1434–6028.Google Scholar
Garlaschelli, D., & Loffredo, M. (2004). Fitness-dependent topological properties of the world trade web. Physical Review Letters, 93, 188701.Google Scholar
Garlaschelli, D., & Loffredo, M. (2005). Structure and evolution of the world trade network. Physica A, 355, 138–44.Google Scholar
Haggett, P., & Chorley, R. (1969). Network analysis in geography. London, UK: Edward Arnold.Google Scholar
Head, K., & Mayer, T. (2010). Gravity, market potential and economic development. Journal of Economic Geography, 11 (2), 281–294.Google Scholar
Head, K., & Mayer, T. (2014). Gravity equations: Workhorse, toolkit, and cookbook. Handbook of International Economics, 4, 131–195.Google Scholar
Helliwell, J. F., & Padmore, T. (1985). Empirical studies of macroeconomic interdependence. In Jones, R., & Kenen, P. (Eds.), Handbook of International Economics. North Holland, Amsterdam, The Netherlands: Elsevier Science Publishers B.V.Google Scholar
Helpman, E., Melitz, M., & Rubinstein, Y. (2008). Estimating trade flows: Trading partners and trading volumes. Quarterly Journal of Economics, 123, 441–487.Google Scholar
Hillberry, R., & Hummels, D. (2008). Trade responses to geographic frictions: A decomposition using micro-data. European Economic Review, 52, 527–550.Google Scholar
Hummels, D. (2007). Transportation costs and international trade in the second era of globalization. Journal of Economic Perspectives, 21, 131–154.Google Scholar
Iapadre, P. L., & Tajoli, L. (2014). Emerging countries and trade regionalization. A network analysis. Journal of Policy Modeling, 36, S89–S110.Google Scholar
Jackson, M. O. (2010). Social and economic networks. Princeton, NJ: Princeton University Press.Google Scholar
Kali, R., Méndez, F., & Reyes, J. (2007). Trade structure and economic growth. Journal of International Trade & Economic Development, 16, 245–269.Google Scholar
Kali, R., & Reyes, J. (2007). The architecture of globalization: A network approach to international economic integration. Journal of International Business Studies, 38, 595–620.Google Scholar
Krugman, P. (1995). Growing world trade: Causes and consequences. Brookings Papers on Economic Activity, 26, 327–377.Google Scholar
Krugman, P. R. (1998). What's new about the new economic geography? Oxford Review of Economic Policy, 14, 7–17.Google Scholar
Krugman, P. R., & Venables, A. (1995). Globalization and the inequality of nations. Quarterly Journal of Economics, 110, 857–880.Google Scholar
Lawless, M. (2010). Deconstructing gravity: Trade costs and extensive and intensive margins. Canadian Journal of Economics, 43, 1149–1172.Google Scholar
Lendle, A., Olarreaga, M., Schropp, S., & Vézina, P.-L. (2016). There goes gravity: eBay and the death of distance. The Economic Journal, 126, 406–441.Google Scholar
Li, X., Jin, Y. Y., & Chen, G. (2003). Complexity and synchronization of the World trade Web. Physica A: Statistical Mechanics and its Applications, 328, 287–96.Google Scholar
McPherson, M., Smith-Lovin, L., & Cook, J. M. (2001). Birds of a feather: Homophily in social networks. Annual Review of Sociology, 27, 415–444.Google Scholar
Melitz, J., & Toubal, F. (2014). Native language, spoken language, translation and trade. Journal of International Economics, 93, 351–363.Google Scholar
Melitz, M. J. (2003). The impact of trade on intra-industry reallocations and aggregate industry productivity. Econometrica, 71, 1695–1725.Google Scholar
Newman, M. E. J. (2002). Assortative mixing in networks. Physical Review Letters, 89, 87–101.Google Scholar
Newman, M. E. J. (2003). Mixing patterns in networks. Physical Review E, 67, 026126.Google Scholar
Obstfeld, M., & Rogoff, M. (2001). The six major puzzles in international macroeconomics: Is there a common cause?. NBER Macroeconomics Annual 2000, 15, 339–412.Google Scholar
Piccardi, C., & Tajoli, L. (2015). Are preferential agreements significant for the world trade structure? A network community analysis. Kyklos, 68, 220–239.Google Scholar
Redding, S. J. (2011). Theories of heterogeneous firms and trade. Annual Review of Economics, 3, 77–105.Google Scholar
Redding, S. J., & Venables, A. J. (2004). Economic geography and international inequality. Journal of International Economics, 62, 53–82.Google Scholar
Reichardt, J., & White, D. (2007). Role models for complex networks. The European Physical Journal B, 60, 217–224.Google Scholar
Reyes, J., Schiavo, S., & Fagiolo, G. (2008). Assessing the evolution of international economic integration using random-walk betweenness centrality: The cases of East Asia and Latin America. Advances in Complex Systems, 11, 685–702.Google Scholar
Santos Silva, J. M. C., & Tenreyro, S. (2006). The log of gravity. The Review of Economics and Statistics, 88, 641–658.Google Scholar
Serrano, A., & Boguñá, M. (2003). Topology of the world trade web. Physical Review E, 68, 015101(R).Google Scholar
Serrano, A., Boguñá, M., & Vespignani, A. (2007). Patterns of dominant flows in the world trade web. Journal of Economic and Coordination, 2, 111–124.Google Scholar
Squartini, T., Fagiolo, G., & Garlaschelli, D. (2011a). Randomizing world trade. I: A binary network analysis. Physical Review E, 84, 046117.Google Scholar
Squartini, T., Fagiolo, G., & Garlaschelli, D. (2011b). Randomizing world trade. II: A weighted network analysis. Physical Review E, 84, 046118.Google Scholar
Subramanian, A., & Wei, S.-J. (2007). The WTO promotes trade, strongly but unevenly. Journal of international Economics, 72, 151–175.Google Scholar
Tzekina, I., Danthi, K., & Rockmore, D. (2008). Evolution of community structure in the world trade web. The European Physical Journal B–-Condensed Matter, 63, 541–545.Google Scholar
Wei, S. (1996). Intra-national versus International trade: How Stubborn are Nations in Global Integration?. NBER Working Paper 5531.Google Scholar
Wilson, A. (2000). Complex spatial systems: The modelling foundations of urban and regional analysis. London: Routledge.Google Scholar
WTO (2011). The WTO and preferential trade agreements: From co-existence to coherence. World Trade Report 2011. Geneva: WTO Publications.Google Scholar