Management potential of an international trade network based on cointegration analysis

- 14 November 2019

Trade topics: World Trade, Complex Networks of International Trade, Complex Weighted Network, World Trade Web, Co-integration, Network Core, Network Drivers

This article investigates whether cointegration approach can be the basis of an international trade network and whether such a network is relevant for analysis. We fit data on international-trade flows with a cointegration specification using cointegration approach. In addition, we use the force algorithm of Kamada and Kawai for replicating the weighted international trade network. We find that the cointegration approach in combination with the Kamada and Kawai algorithm successfully replicates the weighted international trade network structure. The presented methodological toolkit allowed to distribute the countries-participants of the network into separate groups (communities).We also identify the specific network participants – network-drivers which have specific management functions in the international trade network. Driver countries are able to change the system configuration with a relatively small impact on them. This means that to change the network configuration, it is advisable to act on the driver nodes.