Forum for Science, Industry and Business

Sponsored by:     3M 
Search our Site:

 

Preferential trade agreements enhance global trade at the expense of its resilience

17.02.2017

The global commodity trade is a complex system where its network structure, which may arise from bilateral and multilateral agreements, affects its growth and resilience. At time of economic shocks, redundancy in this system is vital to the resilience of growth.

Bi- and multilateral trade agreements can make commodity trade networks more efficient and lead to more rapid growth of the volume of trade, but these gains come at the expense of resilience to economic shocks, such as the 2009 global financial crisis which decimated economies around the world. A new study published in the journal PLOS ONE makes use of the similarities between ecosystems and commodity trade networks to explore these phenomena.


Global trade of cotton (HS 52) in 2009; only 49 countries with trade above $ 100 million USD are depicted. Names of countries are represented by the ISO 3166 standard three letter code.

Kharrazi et al, 2017

“There is a fundamental trade-off between efficiency and growth, on one hand, and redundancy and resilience of growth on the other,” says University of Tokyo researcher Ali Kharrazi, who started the work as a participant in the 2012 Young Scientists Summer Program at the International Institute for Applied Systems Analysis (IIASA).

Global commodity trade networks are increasingly complex dynamic systems, affected also by bilateral agreement between countries as well as broad regional trade agreements. Traditional economic methods struggle to account for the complexity of these interactions and their role in defining the resilience of trade. In the new study, Kharrazi and researchers at IIASA applied an approach first developed to study ecological networks in order to better understand the dynamics and properties of the global commodity trade system.

“In this study, for the first time, we demonstrate empirically how redundancy and efficiency in global trade networks can make them resilient to global economic shock, while sustaining both long- and short-term growth,” says IIASA Advanced Systems Analysis Program Director Elena Rovenskaya, who contributed to the study.

“Local and global shocks, such as economic and financial crises, political instability, and environmental disasters require strategies to increase our capacity for resilience,” says Kharrazi, “Policy and decision making should consider both the short and long term growth and resilience of growth based on inclusivity or exclusivity and intensity of trading partners from a network perspective.”

The researchers point out that resilience and growth are not the only targets that should be considered in economic policymaking, adds Brian Fath, a researcher at IIASA and Towson University in the USA who also worked on the study. He says, “While our study showed growth is not hindered by redundancy, resilience of growth is not the only metric to consider in a healthy community. The merits of continued trade growth should be evaluated based on the three economic, environmental, and social pillars of sustainable development.”

Reference
Kharrazi A, Rovenskaya E, Fath BD (2017). Network Structure Impacts Global Commodity Trade Growth and Resilience. PLOS ONE http://journals.plos.org/plosone/article?id=10.1371/journal.pone.0171184

Katherine Leitzell | idw - Informationsdienst Wissenschaft

More articles from Business and Finance:

nachricht Mathematical confirmation: Rewiring financial networks reduces systemic risk
22.06.2017 | International Institute for Applied Systems Analysis (IIASA)

nachricht Frugal Innovations: when less is more
19.04.2017 | Fraunhofer-Institut für Arbeitswirtschaft und Organisation IAO

All articles from Business and Finance >>>

The most recent press releases about innovation >>>

Die letzten 5 Focus-News des innovations-reports im Überblick:

Im Focus: Cold molecules on collision course

Using a new cooling technique MPQ scientists succeed at observing collisions in a dense beam of cold and slow dipolar molecules.

How do chemical reactions proceed at extremely low temperatures? The answer requires the investigation of molecular samples that are cold, dense, and slow at...

Im Focus: Shrinking the proton again!

Scientists from the Max Planck Institute of Quantum Optics, using high precision laser spectroscopy of atomic hydrogen, confirm the surprisingly small value of the proton radius determined from muonic hydrogen.

It was one of the breakthroughs of the year 2010: Laser spectroscopy of muonic hydrogen resulted in a value for the proton charge radius that was significantly...

Im Focus: New nanomaterial can extract hydrogen fuel from seawater

Hybrid material converts more sunlight and can weather seawater's harsh conditions

It's possible to produce hydrogen to power fuel cells by extracting the gas from seawater, but the electricity required to do it makes the process costly. UCF...

Im Focus: Small collisions make big impact on Mercury's thin atmosphere

Mercury, our smallest planetary neighbor, has very little to call an atmosphere, but it does have a strange weather pattern: morning micro-meteor showers.

Recent modeling along with previously published results from NASA's MESSENGER spacecraft -- short for Mercury Surface, Space Environment, Geochemistry and...

Im Focus: Austrian and Chinese Academies of Sciences successfully conducted first Inter-Continental Quantum Video Call

The two Academy presidents Chunli Bai and Anton Zeilinger tested quantum encrypted communication between Beijing and Vienna in a live-experiment. The quantum key was transmitted via the Chinese quantum satellite Micius.

From quantum cryptography to the quantum internet – fundamental research into the world of the quantum promises several new tech opportunities in the future....

All Focus news of the innovation-report >>>

Anzeige

Anzeige

Event News

World Health Summit 2017: International experts set the course for the future of Global Health

10.10.2017 | Event News

Climate Engineering Conference 2017 Opens in Berlin

10.10.2017 | Event News

Conference Week RRR2017 on Renewable Resources from Wet and Rewetted Peatlands

28.09.2017 | Event News

 
Latest News

The LBT gets polarized: First light for the PEPSI polarimeters

13.10.2017 | Physics and Astronomy

IVAM Product Market presents future intelligent medical technologies at COMPAMED 2017

13.10.2017 | Trade Fair News

Cold molecules on collision course

13.10.2017 | Physics and Astronomy

VideoLinks
B2B-VideoLinks
More VideoLinks >>>