Abstract
We examine how the structure of the world trade network has been shaped by globalization and recessions over the last 40years. We show that by treating the world trade network as an evolving system, theory predicts the trade network is more sensitive to recessionary shocks and recovers more slowly from them now than it did 40years ago, due to structural changes in the world trade network induced by globalization. We also show that recession-induced change to the world trade network leads to an increased hierarchical structure of the global trade network for a few years after the recession.
Highlights
The physical theory of evolution predicts that under certain conditions, a changing environment leads to the development of modular structure [1,2,3]
Since the trade network is an evolving system, this physics of evolution may be applied to the world trade system, previously studied by network analysis [4,5,6]
The theory of [1,2] allows us to make three predictions: decreased modular structure in the world trade network increases the sensitivity to recessionary shocks, decreased modular structure decreases the rate of recovery, and recessions themselves spontaneously increase the modular structure of the world trade network
Summary
We show that recession-induced change to the world trade network leads to an increased hierarchical structure of the global trade network for a few years after the recession. The theory predicts that globalization, which reduces hierarchical structure, should lead to increasingly large recessions and a decreased rate of recovery, in contrast to standard economic understanding [7]. The detailed reasons for an increase of hierarchy in the world trade network are many: perhaps protectionism for the domestic economy [13], or because long-distance trade seems costly during a recession. That our theory predicts that greater trade network structure increases both the resistance to recessionary shocks and the rate of recovery from recessions. We use the CCC to measure how the hierarchical structure of the world trade network has changed over time. In the process of globalization, a country tends to increase its total trade value, and to trade with more
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
Free) 
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 call
