Trade Dependence Research Articles

글로벌 공급망 재편과 대북제재 컴플라이언스(compliance)

Is North Korea an exception to our economic security targets? Reorganizing the global supply chain is a global issue that no country can avoid, and it is also a significant challenge for North Korea. Normally, North Korea has a closed and isolated economic structure, so it can be considered an exception to global economic issues. However, although the trade volume is minimal and the country is highly dependent on China, North Korea also engages in trade and its foreign trade has been on the rise after the COVID-19 pandemic. In addition, if the influx of luxury goods prohibited by sanctions against North Korea occurs through laundering in overseas markets, no states guarantee that it may free from involving an unintentional violation of sanctions. When doing business with a country that is conducting trade with North Korea, great care must be taken to ensure that the goods are not ultimately transferred to North Korea. In particular, China accounts for 19.7% of Korea's trade volume and maintains its status as Korea's No. 1 trading partner, and North Korea shows a 96.7% trade dependence on China, so no one can secure the in-case possibility of unintentional transferring South Korea’s product to North Korea does not happen. Sincere care must be taken not to become involved in destination issues. In addition, although the amount is small, advance preparation and inspection are required to avoid involvement in unsavory secondary sanctions related to North Korea, which is expanding trade with Vietnam, Argentina, Nigeria, Netherlands, Ethiopia, India, Bangladesh, Spain, and Hong Kong in addition to China. To prevent any emergency from occurring, sanctions compliance education and programs must be strengthened and understanding further improved.

Rare earth trade dependence network structure and its impact on trade prices: An industry chain perspective

Rare earth is an important raw material for military manufacturing, artificial intelligence, and the new energy industry, relating to national security and technological development. The article constructs a rare earth trade dependence network to analyze the overall rare earth trade characteristics, trade associations evolution, and the characteristics of world major economies from 2008 to 2022 and explores the impact of the network characteristics on prices using panel regression. The study found that: (1) the rare earth trade dependence network shows an expanding trend, and the trade is more direct; (2) the trade community features, China occupies an important position in the up and middle stream of the industrial chain, and the United States maintains a leading position in the downstream; (3) there are obvious differences in the degree of dependence of the central countries, and their roles are different in each chain segment; (4) the structural features of the network affect the trade price of rare earths, and there are differences in the key influences in each chain segment. Based on the above findings, the article puts forward corresponding policy suggestions.

The economic and energy security implications of the Russian energy weapon

The Russian–Ukrainian war of 2022 sent shockwaves through the global economy and disrupted energy markets on an unprecedented scale. The conflict not only caused extensive devastation in Ukraine but also triggered a commodity supply shock in various international markets. In this paper, we look at the impacts of this energy weapon and the global consequences of its use. We investigate the interplay between gas market fluctuations, energy price shocks, and trade dependencies, while offering insights into building resilient global systems for a sustainable and secure energy futures. Using a novel approach we combine energy trade modelling and integrated assessment modelling to compare a hypothetical counterfactual scenario, with no price and supply shock, to a scenario of disrupted trade and regionalized gas prices. We conclude that the Russian energy weapon had only had short-term economic consequences, but influences energy-system transformation in the EU, accelerating diversification and renewable deployment.

The importance of immigrants on American intervention in international crises

Immigrants have a substantial impact on US foreign policy: doubling the proportion of the American voters who were born in a country yields a 4% increase in the probability that the United States will intervene in a crisis involving that country. This result is significant at the 1% level. Moreover, the immigrants’ level of education and income do not affect this result. Apart from unemployment and real gross domestic product growth, other quantifiable domestic and international variables, from presidential approval to trade dependency and defense pacts, do not have a statistically significant impact on American intervention.

South-South cooperation and food security: Evidence from Chinese agricultural technology demonstration Center in Africa

Using the Chinese Agriculture Technology Demonstration Center (ATDC) in Africa as a quasi-natural experiment, we examine the causal impacts of China’s aid on crop production in Africa. The data pertain to African country-by-crop panel data from 2000 to 2018. Leveraging the triple difference-in-differences method, we find that the ATDC leads to increased crop production and improved trade dependence. The positive effects are more pronounced for free-standing technical support and ATDCs operated by state-owned enterprises. Lastly, the ATDC has profound implications for local agriculture and rural development.

Trade dependence of Mexico on barley (Hordeum vulgare L.)

Objective: To determine the degree of trade dependence of the Mexican market on, imported barley from 1994 to 2021.Design/Methodology/Approach: The growth rates of the barley production variables in the domestic market were estimated, the relative trade balance was calculated, and the trade dependence was determined.Results: The production variables had growth rates in the analysis period, the relative trade balance was -1, and the trade dependence was close to 0.Study Limitations/Implications: There is no correlation between the barley market and the brewing industry in Mexico.Findings/Conclusions: Mexico is a net importer of barley despite the positive growth rates of the production variables. Nevertheless, this grain does not have a trade dependence on the foreign market.

Measurement and Influencing Factors of Economic Resilience over a Long Duration of COVID-19: A Case Study of the Yangtze River Delta, China

The COVID-19 pandemic put forward a new test for an economic resilience study. Its long-term and diffusive spatiotemporal characteristics suggest that we need to pay attention to the resilience and spatial heterogeneity of cities over a longer period. This paper applied SARIMA and the performance curve to measure the economic resilience of each city under the pandemic, and explored its influencing factors and spatial heterogeneity using a geodetector and geographically weighted regression model. The results show that: (1) From 2020 to 2022, the economic resilience in the Yangtze River Delta presented a downward to upward to slightly downward trend. High-resilience cities were concentrated in southern Jiangsu, while vulnerable cities were primarily located in western Anhui. The performance of regional core cities was not as strong as in previous research focusing on long-term economic resilience. (2) Fixed-asset investment, related variety, labor supply level, foreign trade dependence, and innovation level were the main influencing factors, on average. The effects of these factors had spatial heterogeneity related to the regional endowment and development quality. The findings suggest that the specificity of public health risks and the lack of coping experience may lead to a general failure of economic resilience. Identifying key factors and current weaknesses in each region can make resilience improvement strategies more targeted and effective.

Green technology innovation, trade deficit and carbon emission transfer in agriculture under the new “dual circulation” development pattern of China

Under the new development pattern of domestic and international “dual circulation” in China, studying the relationship among green technology innovation, agricultural trade deficit (ATD) and carbon emission transfer embodied in agricultural trade (ATCT) becomes crucial for achieving coordinated and unified high-quality economic development and efficient environmental protection. Based on this, the paper uses environmental input–output model, “two-stage” decoupling and recoupling model, panel vector auto-regressive model, spatial econometric model and “rolling” Grey-BP neural network prediction model to explore present status of ATD, ATCT and their relationship, driving role of green technology innovation, as well as whether that relationship will be improving in the future. The results reveal the following: (1) China's ATD and ATCT show an increasing trend year by year, and their inter-provincial differences are gradually significant over time. The overall relationship between ATD and ATCT does not display ideally, which makes it necessary to quickly transform that relationship into reasonable and ideal state. (2) Green technology innovation has significant positive “U-shaped” and inverted “U-shaped” local effects on ATD and ATCT respectively, with a reasonable range of ATD reduction while ATCT increase valuing from 0 to 0.290, and has significant positive “U-shaped” spatial spillover effect on both without any reasonable range. The short-term effect of green technology innovation on coordinated promotion between ATD and ATCT is superior to the long-term one. (3) Green technology innovation has a significant regional heterogeneity. Regional differences must be taken into consideration seriously, and the measures adapted to local conditions are crucial. The role of fundamental and progressive green technology innovation has heterogeneity, which means that targeted development and utilization of green technology products are important. (4) Regardless of the time horizon, the relationship between ATD and ATCT will improve, which can provide a key step for coordinated development of economy and environment in agricultural trade. Therefore, in order for China to implement and promote further opening-up, reduce agricultural trade dependence, ensure food security and important agricultural product supply, as well as achieve the unity of high-quality economic development and ecological efficient protection, it is necessary to reasonably reverse trade deficit and increase carbon emission transfer in agriculture.

Topological analysis, endogenous mechanisms, and supply risk propagation in the polycrystalline silicon trade dependency network

High-purity polycrystalline silicon, as a core raw material in the photovoltaic industry, has a trade structure whose robustness affects the supply security of the entire photovoltaic industry. Using social network analysis methods and dependence indicators, this study constructs a Polycrystalline Silicon Trade Dependency Network (PSTDN) from 1995 to 2019, and performs descriptive statistical analysis and trade community divisions on the network. The Temporal Exponential Random Graph Model (TERGM) is used to explore the factors influencing the formation of trade dependencies. Based on the cascading failure model, a Photovoltaic Multilayer Network Supply Risk Propagation Model (PMNSRPM) is constructed to study the risk propagation process of polycrystalline silicon supply interruption as a raw material in the photovoltaic industry. Finally, using the risk propagation range and dependency degree, the study measures the importance of nations comparatively. The results show that (1) the PSTDN exhibits reciprocity, geographical clustering, and weak network convergence; (2) the evolution of the PSTDN's community has gone through three stages: the rising expansion phase from 1995 to 2007, the crisis recession phase from 2008 to 2010, and the competitive contraction phase from 2010 to 2019; (3) the evolution of the PSTDN shows strong reciprocity effects, transitive effects, stabilization effects, and lag effects as endogenous mechanisms; (4) the average risk propagation range is continuously increasing along the supply chain, while there is no significant difference in the risk propagation rate along the supply chain. The risk propagation rate of different risk sources shows a long-tail effect, with the risk propagation rate of leading countries like the United States and China growing rapidly over time. The United States can infect China, but China cannot infect the United States and Western Europe; (5) The risk propagation range and the dependency degree present a positive correlation ranging between 0.5 and 0.7, which is not as highly positive as initially anticipated, and the correlation between them shows a downward trend. This study explores the statistical characteristics of the PSTDN, community evolution, and evolutionary factors, demonstrates the importance of polycrystalline silicon supply security for the production of the photovoltaic industry, quantifies the risk propagation capabilities of different countries, and identifies a group of countries that actually have a high risk propagation range but tend to be underestimated due to their low dependency degree in normal trade network. This can help enhance the early warning capabilities for photovoltaic supply security risks of various countries.

The effect of fluctuations in bilateral relations on trade: evidence from China and ASEAN countries

China and ASEAN have strong ties and have become each other’s largest trading partners. This article uses the gravity model and a novel method of analysis, based on massive event data provided by the Global Database of Events, Language, and Tone, to empirically analyse the impact of fluctuations in bilateral relations between China and ASEAN on bilateral trade from January 2001 to December 2020. An analysis of 1,204,126 event records concluded that the improvement of bilateral relations was beneficial for trade between China and ASEAN countries. China’s export trade was more easily influenced by bilateral relations than its import trade. Compared to the one-way behavioural attitude of ASEAN countries towards China, China’s one-way reaction to ASEAN countries had a greater impact on bilateral trade. China’s trade dependence level with most ASEAN countries maintains a trend of steady growth, and trade relations show a positive trend. Therefore, China and ASEAN should maintain stable political ties, enhance mutual understanding, strengthen economic and political connectivity, take adequate measures to promote mutual trust, continue optimizing cooperation models, and promote high-quality and high-level sustainable development across the region.

Can trade and security alliance help reduce interstate war?

This study explains how the gap between theory and empirical research hinders scientific progress in the area of international political economy. To demonstrate this point, I use Chen's Extended Dependence Theory, which challenges liberal peace theory but fails to provide supporting empirical evidence. Chen contends that it is not trade dependence between two states that fosters peace but a challenger's trade relations with the defense-pact partners of the target. Although Chen criticizes liberal peace proponents whose primary concern is how to deter war, his empirical analysis is confined to how to decrease (fatal) militarized disputes short of war. I argue that for his theory to succeed, it must be validated against the most severe and intense form of conflict. Using statistical tests and substantive significance, I uncover no peace-building effect, with regards to war, attributable to Extended Dependence. It appears that the Extended Dependence variable exhibits a ceiling effect. Future research should explain why economic ties and security institutions fail to work together to lower the risk of the most destructive form of conflict.

The emperors' new armor: Strategic sectors and trade dependence in recent protectionism

The emperors' new armor: Strategic sectors and trade dependence in recent protectionism

Trend of critical minerals utilization for Indonesia’s Sustainable Energy Transition: A review

The European Union calculates supplies of essential minerals using an economic significance index, a supply risk index and an environmental risk index. The U.S. Geological Survey uses three indicators to assess critical mineral risks in the country: foreign ownership of mineral assets and activities, trade dependence, and indirect trade dependence. Indonesia has a history of strong mineral production, and new prospects in the critical minerals sector are developing rapidly. Positioned as a major producer of nickel, the main component of lithium-ion batteries used in electric cars. This supports technological innovation that can improve infrastructure and support sustainable development, which is in line with SDG 9. Indonesia is increasing its capacity to produce other important minerals, such as rare earth elements and cobalt, in addition to nickel production. This research uses the literature study method. The aim is to review the development of essential minerals towards sustainable development.

Has the Development of Inter-Provincial Transportation Infrastructure Improved the Construction of China’s Unified Market?

With the implementation of regional development policies in recent years, transportation infrastructure has greatly promoted regional economic development, but what impact it has on the construction of market integration in the local and surrounding regions has not been specifically answered. Based on the provincial panel data of China from 2010 to 2021, this paper uses the spatial panel method to study the impact of transportation infrastructure development and the construction of national unified market and its spatial spillover effects. The empirical results show that there is significant spatial auto-correlation between inter-provincial transport infrastructure and market integration. Railway density plays a greater role in promoting the national unified market. The government expenditure and foreign direct investment play a positive role in promoting the construction of a unified national market, while the dependence of foreign trade inhibits the development of market integration. In the analysis of spatial spillover effects, the direct effect of railway density is significantly higher than that of highway. The government should strengthen the quality and efficiency of railway transportation, promote the scale of foreign direct investment of enterprises, and actively promote the construction of national unified market.

Will the EU‘s Fourth Freedom Be Further Challenged by Present Members of the Single Market?

Abstract The creation of a single market in Europe, conceived as the application of the so-called four freedoms (goods, services, capital and manpower) of movement was in vogue in the 1990s. What has happened to this dream? At the time not only business communities but also consumer associations, and even labour unions were all in favour of opening their national economies to the winds of continental competition. Three decades after, some national communities seem to have turned their backs on the free movement of people. The case of Eastern European immigrants settling for work in the UK after 2004 comes to mind, something which arguably was one of the main reasons for the Brexit vote in 2016. The issue could again become the focus of populist governments or parties (e.g., in Italy, France, Sweden, Austria, Hungary or The Netherlands), should the danger of an EU-wide recession or an idiosyncratic crisis in one of the poorest member states (MSs) materialize. Actually, a new intensification of intra-EU migration flows could be one of the outcomes of the unravelling of supply chains as a result of the COVID epidemic and geopolitical considerations, such as the EU’s wish to diminish trade dependence from China and Russia. The ground is slowly eroding under the feet of those adamant to cling to the free movement of people as part of the acquis. The EU Commission should give thought, before it is too late, about the fourth freedom particularly in view of future EU enlargements.

Impact of COVID-19 Pandemic and Russo-Ukrainian War on Tunisian Stock Exchange Performance and Volatility

The purpose of our study was to investigate the impact of COVID-19 pandemic and the Russo-Ukraine (RU) war on the return volatility and value of the Tunisian Stock Exchange proxied by TUNINDEX. We applied GARCH (1,1) to assess the impact on the index return volatility, using daily observations from January 2019 to December 2022, and a multiple linear regression to determine the effect on the index value, based on monthly observations for January 2018 to December 2022. GARCH output revealed that both exogenous shocks led to higher stock market return volatility. The regression results disclosed statistically significant though opposite impacts on the index price. The pandemic exerted a positive, though extremely mild impact on the Index value, while the war had a negative effect on its performance. As for the control variables, both inflation rate and industrial production index exhibited positive effects on the TUNINDEX values, while trade balance had a negative impact. GDP growth rate and interest rate however, showed no significant influence on the index performance during the study period. We faced some difficulty accessing data, in addition to the scarcity of data on other potentially relevant factors, along with a short study period. Incorporating new variables i.e. mortality rates, unemployment due to the lockdown, travel bans effect, trade dependence with Ukraine and Russia, and using Time-Varying Vector Auto Regressive model may add additional value to our work. The paper contributes to the literature on external shocks impacts on stock markets, specifically on the Tunisian stock exchange. In addition, it offers insights on the potential expected economic effects of unpredicted events, and may help identify appropriate strategies to mitigate their dramatic effects. Finally, this research presents the first investigation on the impact of the Russian invasion on Ukraine on the Tunisian stock exchange by probing into the impact on both volatility and performance of the market’s index.

한국의 에너지 소비와 경제성장의 탈동조화에 대한 분석

Purpose - This study analyzed the decoupling phenomenon between energy consumption and economic growth in Korea from 1990 to 2021. The main purpose of this study is to suggest policy implications for achieving a low-carbon society and decoupling that Korea must move forward in the face of the climate change crisis.
 Design/methodology/approach - This study investigated the relationship between energy consumption and economic growth by energy source and sector using the energy-EKC (EEKC) hypothesis which included the energy consumption on the traditional Environmental Kuznets Curve (EKC), and the impulse response function (IRF) model based on Bayesian vector auto-regression (BVAR).
 Findings - During the analysis period, the trend of decoupling of energy consumption and economic growth in Korea is confirmed starting from 1996. However, the decoupling tendency appeared differently depending on the differences in energy consumption by sources and fields. The results of the IRF model using data on energy consumption by source showed that the impact of GDP and renewable energy consumption resulted in an increase in energy consumption of bio and waste, but a decrease in energy consumption by sources, and the impact of trade dependence was found to increase the consumption of petroleum products.
 Research implications or Originality - According to the main results, efficient distribution by existing energy source is required through expansion of development of not only renewable energy but also alternative energy. Additionally, in order to increase the effectiveness of existing energy policies to achieve carbon neutrality, more detailed strategies by source and sector of energy consumption are needed.

The Renminbis Ascent: Challenges, Opportunities, and Implications for the Global Monetary System

The Renminbis (RMB) journey towards international prominence encapsulates China's economic metamorphosis and the evolving dynamics of the global monetary system. This paper delves into the multifaceted trajectory of the RMB, highlighting the challenges and opportunities it faces in its quest for global acceptance. It provides an in-depth analysis of the implications of the US-China trade war and the global pandemic on the RMBs internationalization. The paper also underscores the transformative potential of strategic initiatives such as China's Belt and Road Initiative (BRI) and the pioneering Digital Yuan. Through a nuanced exploration of these themes, this study offers insights into the RMB's current status and its prospective role in the global monetary order. As countries grapple with changing trade dependencies and the digital revolution in finance, the RMB emerges not just as a participant but as a potential leader in reshaping the contours of international finance.

Measuring economic resilience for the CEE and Black Sea countries in the framework of comprehensive defense

The main research objective of this paper is to identify key factors influencing economic resilience from the perspective of comprehensive defence. This involves developing a composite economic resilience index (Ericda) that outlines the relative economic resilience of countries in Central and Eastern Europe and the Black Sea regions, within the comprehensive defence framework. The paper employs qualitative research methods, focusing on an analysis of specialist literature pertaining to economic resilience. Quantitative methods are also used for developing the Economic Resilience Index from the Comprehensive Approach to Defence (Ericda) perspective. This includes using data on selected resilience indicators in Central and the Eastern European and Black Sea region countries to generate rankings. The results of the study reveal strong positive correlations between the economic resilience index and various factors, such as logistics and infrastructure, economic complexity, foreign trade vulnerabilities and dependence, economic stability and development, governance effectiveness, military, and human capital. Additionally, a negative correlation was observed with the resilience index. The research findings suggest that to ensure effective comprehensive defence, isolated measures targeting individual pillars are inadequate. Economic resilience requires a collaborative approach, extending beyond the purview of the finance ministry and involving a broader range of stakeholders.

Factors of foreign trade resilience on the example of the North Europe countries. Ability to recover

The article analyses the factors of foreign trade resilience of countries, as well as makes their quantitative assessment on the example of the North Europe countries. These factors are divided into two large groups: reflecting the country's resilience and characterising its ability to recover. The factors described in this article are divided into congenital and acquired. This article is devoted to the analysis of only those factors that characterise the ability to recover. Mutual trade dependence and flexibility of the structure of the economy of the exporter's home region are identified as innate. And as acquired - diversification of trade relations, redundancy in the trading network, its modularity. Indicators to help characterise these factors are calculated for the North Europe countries. As a result, a picture of foreign trade resilience was obtained in terms of the ability of these countries to recover after shocks. The import and export positions of Finland, Sweden and Denmark in this regard turned out to be quite strong. This situation has become possible due to their wide specialisation, high diversification of trade networks, as well as the high redundancy of the EU-27 trade network. The situation in Norway and Iceland appeared to be less stable due to the fact that they have a pronounced foreign trade specialisation. These factors should theoretically contribute to a relatively high rate of recovery of foreign trade of the country in question after shocks. This was confirmed by the correlation coefficient calculated for them and the elasticity of a foreign trade.