The World Trade Network

Abstract

AbstractThis study uses the tools of network analysis to graphically and analytically represent the characteristics of world trade. The structure of the World Trade Network is compared over time, detecting and interpreting patterns of trade ties among countries. The results show that the trading system has become more intensely interconnected, and trade integration at the world level has been increasing, but it is still far from being complete, with the exception of a few areas. At the same time, we observed a strong and increasing heterogeneity in countries’ choice of trade partners, with countries holding very different positions within the network, so that it is very difficult to talk of a representative country in the international trade system. Network indices were also used in a gravity model regression, adding to the explanatory power of the model. Furthermore, the analysis shows that trade policies do play a role in shaping the trade network, and that WTO members are more closely connected than the rest of the world. The structural difference between the extensive and the intensive margin of trade is also highlighted. An important feature of these results is that they pertain to the trading system as a whole, giving a unified view of the system characteristics and complexity.