Abstract
We analyze the patterns of import/export bilateral relations, with the aim of assessing the relevance and shape of “preferentiality” in countries’ trade decisions. Preferentiality here is defined as the tendency to concentrate trade on one or few partners. With this purpose, we adopt a systemic approach through the use of the tools of complex network analysis. In particular, we apply a pattern detection approach based on community and pseudocommunity analysis, in order to highlight the groups of countries within which most of members’ trade occur. The method is applied to two intra-industry trade networks consisting of 221 countries, relative to the low-tech “Textiles and Textile Articles” and the high-tech “Electronics” sectors for the year 2006, to look at the structure of world trade before the start of the international financial crisis. It turns out that the two networks display some similarities and some differences in preferential trade patterns: they both include few significant communities that define narrow sets of countries trading with each other as preferential destinations markets or supply sources, and they are characterized by the presence of similar hierarchical structures, led by the largest economies. But there are also distinctive features due to the characteristics of the industries examined, in which the organization of production and the destination markets are different. Overall, the extent of preferentiality and partner selection at the sector level confirm the relevance of international trade costs still today, inducing countries to seek the highest efficiency in their trade patterns.
Highlights
The past decades have witnessed a remarkable increase of international trade flows among countries, and the involvement of a large number of new players in international markets [1]
We model the trading system as a directed, weighted network with nodes N = {1, 2, . . ., n} and weight matrPix W = [wij], namPely wij ! 0 is the value of the trade flow from country i to country j, siin 1⁄4 jwji and soi ut 1⁄4 jwij are, respectively, the in- and out-strength of node i, and si 1⁄4 siin þ soi ut is the strength
We focus our investigation on international trade flows of Textiles and Textile Articles and Electronics, two categories of manufactured goods identified in the Harmonized System (HS) classification
Summary
The past decades have witnessed a remarkable increase of international trade flows among countries, and the involvement of a large number of new players in international markets [1]. Declining transportation and communication costs and lower trade barriers [2], as well as the spreading of international production networks [3], are commonly acknowledged as the main causes for this increase in economic globalization. These changes have dramatically increased the intricacy of world markets, giving rise to new opportunities and to potentially higher search costs both in industries producing complex manufactured goods with a high technological content and in traditional manufacturing sectors where the number of potential competitors. The focus of this work is on discovering patterns of preferentiality in trade flows within a given industry, highlighting possibly different outcomes due to the peculiar characteristics of the industries
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