World Trade and Associated Systems Risk of Global Inequality: Empirical Study of Globalization Evolution between 2003-2011 and Regional Pattern Analysis

Abstract

The economy is globalizing. But how are the different economic world regions performing regarding globalization of trade flows? Why are they performing differently? Globalization is not only the increase of international trade between certain preferential geographic areas of economy, but also the resulting increase of interweavement of trade flows between different geographical areas, independent of the amount of trade.This paper analyzes the world trade flows between 2003 and 2011 and performs a cross-section analysis of the year 2011. The economic interweavement will be measured by an inequality risk metric applied to the supply-demand matrix. This risk indicator is based on the concept of statistical entropy resulting in an inequality risk measure, giving an indication for the degree of economic globalization and the evolution of globalization in different geographical regions.The result of this research shows that economic trade flows are globalizing but with clear different regional patterns. Indeed, the emerging economies such as China or the Middle East are globalizing whereas mature economies such as North America and Europe are de-globalizing, confirming for globalization the inverse Kuznets evolution. The different patterns between the different economic world regions can be explained by using the globalization type's model.