Network structure impacts global commodity trade growth and resilience.

Ali Kharrazi,Brian D Fath,Elena Rovenskaya,Rodrigo Huerta-Quintanilla

doi:10.1371/journal.pone.0171184

Abstract

Global commodity trade networks are critical to our collective sustainable development. Their increasing interconnectedness pose two practical questions: (i) Do the current network configurations support their further growth? (ii) How resilient are these networks to economic shocks? We analyze the data of global commodity trade flows from 1996 to 2012 to evaluate the relationship between structural properties of the global commodity trade networks and (a) their dynamic growth, as well as (b) the resilience of their growth with respect to the 2009 global economic shock. Specifically, we explore the role of network efficiency and redundancy using the information theory-based network flow analysis. We find that, while network efficiency is positively correlated with growth, highly efficient systems appear to be less resilient, losing more and gaining less growth following an economic shock. While all examined networks are rather redundant, we find that network redundancy does not hinder their growth. Moreover, systems exhibiting higher levels of redundancy lose less and gain more growth following an economic shock. We suggest that a strategy to support making global trade networks more efficient via, e.g., preferential trade agreements and higher specialization, can promote their further growth; while a strategy to increase the global trade networks’ redundancy via e.g., more abundant free-trade agreements, can improve their resilience to global economic shocks.

Highlights

Global commodity trade is perhaps one of the most critical networks of our modern age
Three main classification systems are provided in the UN-Comtrade data and here we use the Harmonized System (HS), introduced in 1988, which is a detailed breakdown of products to individual categories
We examine correlations between the long- and short-term sectorial total system throughput (TST) growth rates and corresponding commodity trade network configurations using two key network indicators of efficiency (Eq 1) and redundancy (Eq 2)

Summary

Introduction

Global commodity trade is perhaps one of the most critical networks of our modern age. Given the expansion of globalization over the last centuries, trade networks have grown enormously in size and complexity. As reflected in the 17th Sustainable Development Goal [1], to accommodate the growing population and to overcome poverty, the sustainable growth and development of global trade networks is essential beyond the current state. In leveraging the comparative advantage of production by various countries, flourishing trade is a fundamental basis for economic growth. Food [2] and energy [3] security become critically dependent on the reliable functioning of commodity trade networks.

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Conclusion