Abstract
Statistical analysis of trade flows structure can significantly help to reveal or to confirm important macroeconomic phenomena. Because of relative character of these multivariate observations, application of standard multivariate methods directly to raw data can lead to meaningless results, affected by trade sizes of different countries. As a way out, it is proposed to employ the logratio methodology that is able to capture interesting features through logratios between compositional parts. Particularly, the perturbation operation together with clr coefficients for coordinate representation of compositions seem to be easy to handle and to interpret for the purpose. Popular exploratory tools, principal component analysis and PARAFAC modeling of threeway data, resulting from a long-term study of the export/import structure, are applied in the compositional context for data from OECD and WIOD databases. The results show that the logratio methodology enables to reveal interesting features of world trade flows and thus provides a preferable alternative to existing exploratory tools.
Highlights
In today’s globalised world, export and import play an important role in the country’s economic situation
Since we focus on the structure of trade flows, the absolute values of exports and imports are no longer relevant for the analysis
It is of particular importance to consider carefully the natural properties of the observations at hand prior to their further statistical processing
Summary
In today’s globalised world, export and import play an important role in the country’s economic situation. Globalisation causes growth of international trade in goods and services and two structural changes in trade patterns: the increasing importance of emerging economies and rapid growth of trade in intermediate goods as a result of vertical specialisation, meaning that each country is specialised in one or more innovation and production processes and it is common for the value chain of a particular final product to span several countries. Even manufacturing processes are fragmented, which means that tasks requiring low-skilled labour (e.g. assembling, control) are off-shored to developing countries (or countries with lower labour costs). This contributes significantly to the amount of exports while the value added to the product in developing countries may be small. Much more interest in the part is devoted to relative structure of export rather than to its amount in absolute numbers
Sign-in/Register to view highlights & summary Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
