What determines international trade? A network approach to global trade patterns

Absztrakt (kivonat)

With globalisation, the world had become more connected than ever before. With the benefits of specialization and free trade, it is in every country’s interest to increase the number of it’s partners. Trading was also a mean of influence even in earlier centuries. This paper tries to answer with network science methodology, whether interdependence connected countries on more than economic level. The main analysis is made with the use of an exponential random graph model, with which this paper tries to find out what influences the formation of global trade partnerships. The research tests some theories regarding global trade, such as the gravity equation or the democratic peace theory, and also tries to measure the influence of some economic or political country level data, like military power or specialization. The results show that differences in political regimes decrease the likelihood of trading, verifying democratic peace theory. According to the level of significance, the likelihood of trading is influenced positively by differences in GDP per capita and geographic region, which questions whether the gravity equation is still correct. Other measures, such as interdependence showed positive, development negative and specialization varied results whether they influence the formation of global trade. Based on the findings, further research questions could be tested with different models, using different combinations of variables for the best fit.