Crisis contagion in the world trade network
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Applied Network Science
RESEARCH
Open Access
Crisis contagion in the world trade network Célestin Coquidé1 , José Lages1* *Correspondence: [email protected] 1 Institut UTINAM, UMR 6213, CNRS, Université Bourgogne Franche-Comté, Besançon, France Full list of author information is available at the end of the article
and Dima L. Shepelyansky2
Abstract We present a model of worldwide crisis contagion based on the Google matrix analysis of the world trade network obtained from the UN Comtrade database. The fraction of bankrupted countries exhibits an on-off phase transition governed by a bankruptcy threshold κ related to the trade balance of the countries. For κ > κc , the contagion is circumscribed to less than 10% of the countries, whereas, for κ < κc , the crisis is global with about 90% of the countries going to bankruptcy. We measure the total cost of the crisis during the contagion process. In addition to providing contagion scenarios, our model allows to probe the structural trading dependencies between countries. For different networks extracted from the world trade exchanges of the last two decades, the global crisis comes from the Western world. In particular, the source of the global crisis is systematically the Old Continent and The Americas (mainly US and Mexico). Besides the economy of Australia, those of Asian countries, such as China, India, Indonesia, Malaysia and Thailand, are the last to fall during the contagion. Also, the four BRIC are among the most robust countries to the world trade crisis. Keywords: Complex networks, World trade, Contagion crisis, Google matrix, PageRank, Phase transition
Introduction The financial crisis of 2007-2008 highlighted the enormous effect of contagion over world bank networks (see e.g. Gai and Kapadia (2010); Elliott et al. (2014); Fink et al. (2016)). Similar contagion effects appear also in the world trade which is especially vulnerable to energy crisis mainly related to the trade of petroleum and gas (see e.g. Wikipedia contributors (2019); Kettell (2020)). In this work, we model the crisis contagion in the world trade using the UN Comtrade database (Comtrade 2010). We use the Google matrix analysis (Brin and Page 1998; Langville and Meyer 2012; Ermann et al. 2015) of the world trade network (WTN) developed in Ermann and Shepelyansky 2011; 2015. In comparison with the usual import-export analysis based on the counting of trade volumes directly exchanged between countries, the advantage of the Google matrix analysis is that the long range interactions between the network nodes, i.e., the countries, are taken into account. Otherwise stated, this analysis captures the fact that even two countries which are not direct trade partners can possibly have their economies correlated through the cascade © The Author(s). 2020 Open Access This article is licensed under a Creative Commons Attribution 4.0 International License, which permits use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the
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