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 is a revised and expanded version of the paper entitled “World Trade and Associated Systems Risk of Global Inequality: Empiric Study of Globalization Evolution between 2003-2011 and Regional Pattern Analysis” presented at International Conference on Applied Economics (ICOAE2013), Istanbul, 27-29 June, 2013. This paper analyzes the evolution of world trade flows between 2003-2012 and performs a cross-section analysis of the year 2012. 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. In addition, it analyses the governing rational of globalization evolution. The result of this research shows that economic trade flows are globalizing, but with clear different regional patterns, not only between globalizing and de-globalizing regions, but also within the globalizing and de-globalizing regions itself. 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 of the inverse Kuznets evolution. The different patterns between the different economic world regions can be explained by using the Globalization Type’s Model as well as the Central Theorem of Globalization.
Highlights
Globalization is a natural phenomenon of an open economic system
If we look at disaggregated data, i.e. at the evolution of regional risk shown in the lower part of Table 2 or Figure 1, we notice that Asia and SCA have shown a continuous reduction in risk, during 2009, i.e. a clear globalization trend, whereas NA, and especially EU, have shown a continuous de-globalization trend during the period 2003-2012 (Figure 1) but NA with a significant through-back in 2012
At the first stage, world economic globalization at aggregate level of all economies is correlated to trade volume (L-curve): increased trade will reduce risk level;
Summary
Globalization is a natural phenomenon of an open economic system. Liberalization and deregulation of trade barriers as well as bilateral economic development agreement have been leading to an increase in trade and in wealth generation, and bear the danger of exploitation of disadvantaged regions. The evolution of world economic development is monitored by the WTO (World Trade Association) as well as e.g. the yearly published KOF globalization indicator (Konjunktur-Forschungsstelle) of Swiss ETH (Eidgenössische Technische Hochschule). In this updated study, we will concentrate the analysis first on the evolution of physical trade flows within the major world economic areas given by the WTO table i04, namely North America NA, South Central America SCA, Europe EU, Commonwealth of Independent States CIS, Africa, Middle East ME, and Asia. We will use the type 1 globalization to explain the different evolution of globalization in each geographical region. The paper will investigate questions such as: how are different globalization patterns linked to the trade flows? Why should different regions perform differently? Is it a consequence of different resource endowment or the maturity of the economy? Which are the possible economic driving causes for the different trade patterns?
Sign-in/Register to view highlights & summary 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 callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
