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 Microtechnology industry is hiring – positive developments of past years continue
09.04.2018 | IVAM Fachverband für Mikrotechnik

nachricht RWI/ISL-Container Throughput Index with minor decline on a high overall level
20.03.2018 | RWI – Leibniz-Institut für Wirtschaftsforschung

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: UNH scientists help provide first-ever views of elusive energy explosion

Researchers at the University of New Hampshire have captured a difficult-to-view singular event involving "magnetic reconnection"--the process by which sparse particles and energy around Earth collide producing a quick but mighty explosion--in the Earth's magnetotail, the magnetic environment that trails behind the planet.

Magnetic reconnection has remained a bit of a mystery to scientists. They know it exists and have documented the effects that the energy explosions can...

Im Focus: A Chip with Blood Vessels

Biochips have been developed at TU Wien (Vienna), on which tissue can be produced and examined. This allows supplying the tissue with different substances in a very controlled way.

Cultivating human cells in the Petri dish is not a big challenge today. Producing artificial tissue, however, permeated by fine blood vessels, is a much more...

Im Focus: A Leap Into Quantum Technology

Faster and secure data communication: This is the goal of a new joint project involving physicists from the University of Würzburg. The German Federal Ministry of Education and Research funds the project with 14.8 million euro.

In our digital world data security and secure communication are becoming more and more important. Quantum communication is a promising approach to achieve...

Im Focus: Research icebreaker Polarstern begins the Antarctic season

What does it look like below the ice shelf of the calved massive iceberg A68?

On Saturday, 10 November 2018, the research icebreaker Polarstern will leave its homeport of Bremerhaven, bound for Cape Town, South Africa.

Im Focus: Penn engineers develop ultrathin, ultralight 'nanocardboard'

When choosing materials to make something, trade-offs need to be made between a host of properties, such as thickness, stiffness and weight. Depending on the application in question, finding just the right balance is the difference between success and failure

Now, a team of Penn Engineers has demonstrated a new material they call "nanocardboard," an ultrathin equivalent of corrugated paper cardboard. A square...

All Focus news of the innovation-report >>>

Anzeige

Anzeige

VideoLinks
Industry & Economy
Event News

“3rd Conference on Laser Polishing – LaP 2018” Attracts International Experts and Users

09.11.2018 | Event News

On the brain’s ability to find the right direction

06.11.2018 | Event News

European Space Talks: Weltraumschrott – eine Gefahr für die Gesellschaft?

23.10.2018 | Event News

 
Latest News

Purdue cancer identity technology makes it easier to find a tumor's 'address'

16.11.2018 | Health and Medicine

Good preparation is half the digestion

16.11.2018 | Life Sciences

Microscope measures muscle weakness

16.11.2018 | Life Sciences

VideoLinks
Science & Research
Overview of more VideoLinks >>>