Analyzing global trade network resilience during economic crises: A model-based exploration of countries' interactions, USDX variation, and number of exporting countries

Abstract

The global trade network can be viewed from different perspectives. The common ones are the volume of exports and the number of countries that export products. The variation in number of exporting countries for products has been studied over the years. The U.S. dollar has been used for invoicing exportation in global trade, and its variation in values against global currencies negatively affects the volume of exports and the number of exporters. United States dollar indices (USDX) have been globally used to measure the values of global currencies against the U.S. dollar. Many studies have been done on the effect of the global economic crisis on global trade networks. However, scholars have not yet developed a complex dynamical model and established the critical transitional or threshold values that separate the resilient network of exporting countries from a non-resilient one. This study modelled the dynamic representation of a complex network of exporting countries by modifying Lotka-Volterra models. Using the developed model and empirical data USDX and export data of 161 countries from 1971 to 2020, the critical transition values have been calculated for different phases of economic crises. This study references five major crises, revealing that the variation of U.S. dollar indices significantly impacts global network system resilience. It suggests that policies reducing trade restrictions among trading partners are more important than controlling variation in U.S. dollar indices. This information will be crucial in addressing future crises like the Russian-Ukraine conflict.