Trade network dynamics in a globalized environment and on the edge of crises

Abstract

At the edges of crises, the roles of trade networks and supply chains are evident. Global trade networks aggregate all legal trade activities. Thus, researchers believe that network structure changes reflect phenomena such as crises, globalization, deglobalization, or even technological development, including those related to green technologies. Although trade network analysis has been widely researched, researchers have focused mainly on one or a few products or product groups. While the impact of crises and technological changes in the case of individual products has been demonstrated in some studies, less attention has been given to structural pattern changes in trade on these products. To understand how a shock, crisis, or technological change in one product may affect the trade network of another product, the patterns and relationships of node- and network-level indicators across products need to be identified. In this study, the dynamics and interdependencies of trade networks are analyzed using a combination of network indicators, cluster analysis and causality analysis. Variations and implications of the temporal patterns and causal relationships of trade network indicators are revealed for different products and product groups. Researchers have argued that the deterioration of structural indicators exacerbates crises and amplifies their consequences. A causality analysis shows that disruptions in one product’s supply chain quickly affect the trade of other products, altering the structural characteristics of trade networks. The proposed temporal pattern analysis shows that while the 2008 financial crisis did not cause structural changes in the product trade network, indicators improved before, during, and after the crisis. Nevertheless, before the pandemic, there was a noticeable deterioration in almost all structural indicators, signaling more deglobalization. This study contributes to a comprehensive understanding of trade networks, equipping decision-makers with the knowledge to promote the resilience and sustainability of these networks in an evolving global landscape.