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Complexity, Centralization, and Fragility in Economic Networks

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  • Carlo Piccardi
  • Lucia Tajoli

Abstract

Trade networks, across which countries distribute their products, are crucial components of the globalized world economy. Their structure is strongly heterogeneous across products, given the different features of the countries which buy and sell goods. By using a diversified pool of indicators from network science and product complexity theory, we quantitatively confirm the intuition that, overall, products with higher complexity -- i.e., with larger technological content and number of components -- are traded through a more centralized network -- i.e., with a small number of countries concentrating most of the export flow. Since centralized networks are known to be more vulnerable, we argue that the current composition of production and trading is associated to high fragility at the level of the most complex -- thus strategic -- products.

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  • Carlo Piccardi & Lucia Tajoli, 2018. "Complexity, Centralization, and Fragility in Economic Networks," Papers 1802.08575, arXiv.org.
  • Handle: RePEc:arx:papers:1802.08575
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    Cited by:

    1. Chengyuan Han & Dirk Witthaut & Marc Timme & Malte Schröder, 2019. "The winner takes it all—Competitiveness of single nodes in globalized supply networks," PLOS ONE, Public Library of Science, vol. 14(11), pages 1-13, November.
    2. Paolo Bartesaghi & Gian Paolo Clemente & Rosanna Grassi, 2022. "Clustering coefficients as measures of the complex interactions in a directed weighted multilayer network," Papers 2206.06309, arXiv.org, revised Dec 2022.
    3. Paolo Bartesaghi & Gian Paolo Clemente & Rosanna Grassi, 2020. "Community structure in the World Trade Network based on communicability distances," Papers 2001.06356, arXiv.org, revised Jul 2020.
    4. Olivera Kostoska & Sonja Mitikj & Petar Jovanovski & Ljupco Kocarev, 2020. "Core-periphery structure in sectoral international trade networks: A new approach to an old theory," PLOS ONE, Public Library of Science, vol. 15(4), pages 1-24, April.
    5. Hanane Thamik & Jiang Wu, 2022. "The Impact of Artificial Intelligence on Sustainable Development in Electronic Markets," Sustainability, MDPI, vol. 14(6), pages 1-20, March.
    6. Sonja Tilly & Giacomo Livan, 2021. "Macroeconomic forecasting with statistically validated knowledge graphs," Papers 2104.10457, arXiv.org.
    7. Bartesaghi, Paolo & Clemente, Gian Paolo & Grassi, Rosanna, 2023. "Clustering coefficients as measures of the complex interactions in a directed weighted multilayer network," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 610(C).
    8. Oliver Reiter & Robert Stehrer, 2023. "Assessing the importance of risky products in international trade and global value chains," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 50(1), pages 7-33, February.
    9. Shade T. Shutters & Keith Waters & Rachata Muneepeerakul, 2022. "Triad Analysis of Global Energy Trade Networks and Implications for Energy Trade Stability," Energies, MDPI, vol. 15(10), pages 1-15, May.
    10. Paolo Bartesaghi & Gian Paolo Clemente & Rosanna Grassi, 2022. "Community structure in the World Trade Network based on communicability distances," Journal of Economic Interaction and Coordination, Springer;Society for Economic Science with Heterogeneous Interacting Agents, vol. 17(2), pages 405-441, April.
    11. Roberto Antonietti & Paolo Falbo & Fulvio Fontini & Rosanna Grassi & Giorgio Rizzini, 2021. "International Trade Network: Country centrality and COVID-19 pandemic," Papers 2107.14554, arXiv.org.
    12. Margherita Russo & Fabrizio Alboni & Jorge Carreto Sangines & Manlio De Domenico & Giuseppe Mangioni & Simone Righi & Annamaria Simonazzi, 2022. "The Changing Shape of the World Automobile Industry: A Multilayer Network Analysis of International Trade in Components and Parts," Working Papers Series inetwp173, Institute for New Economic Thinking.

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