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The Structure and Growth of International Trade

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  • Massimo Riccaboni

    (Department of Computer and Management Sciences, University di Trento (Italy)
    Department of Physics Boston University)

  • Stefano Schiavo

    (Department of Economics, University of Trento
    Observatoire Français des Conjonctures Économiques)

Abstract

The paper develops a model of proportionate growth to describe the dynamics of international trade flows. We show that a large number of the empirical regularities characterizing international trade — such as the fraction of zero trade flows across pairs of countries, the positive relationship between intensive and extensive margins, the high concentration of trade with respect to both products and destinations, the core-periphery structure of exchanges — are well explained by this simple stochastic setup. This helps us to distinguish among economically relevant regularities and those simply resulting from the mechanical interactions among agents. Furthermore, our model can be used to describe the process of 'self-discovery' that lie at the foundations of successful export-led growth and is thought to play a crucial role in the process of economic development. Our model correctly predicts that large export flows are rare events, as pointed out in the empirical literature: yet, countries characterized by large 'discovery' efforts are much more likely to draw a 'big hit' due to the (very skewed) shape of the distribution of bilateral export flows.

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Bibliographic Info

Paper provided by Observatoire Francais des Conjonctures Economiques (OFCE) in its series Documents de Travail de l'OFCE with number 2009-24.

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Date of creation: 2009
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Handle: RePEc:fce:doctra:0924

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  1. Miklos Koren & Roc Armenter, 2008. "A Balls-and-Bins Model of Trade," 2008 Meeting Papers 365, Society for Economic Dynamics.
  2. Massimo Riccaboni & Fabio Pammolli & Sergey V. Buldyrev & Linda Ponta & H. Eugene Stanley, 2009. "The Size Variance Relationship of Business Firm Growth Rates," Papers 0904.1404, arXiv.org, revised Apr 2009.
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  12. Guimarães, Paulo & Figueiredo, Octávio & Woodward, Douglas, 2009. "Dartboard tests for the location quotient," Regional Science and Urban Economics, Elsevier, vol. 39(3), pages 360-364, May.
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  14. Dongfeng Fu & Fabio Pammolli & S. V. Buldyrev & Massimo Riccaboni & Kaushik Matia & Kazuko Yamasaki & H. E. Stanley, 2005. "The Growth of Business Firms: Theoretical Framework and Empirical Evidence," Papers physics/0512005, arXiv.org.
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  17. D. Garlaschelli & M. I. Loffredo, 2004. "Fitness-dependent topological properties of the World Trade Web," Papers cond-mat/0403051, arXiv.org, revised Oct 2004.
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  19. Massimo Riccaboni & Stefano Schiavo, 2009. "The Structure and Growth of Weighted Networks," Papers 0908.0348, arXiv.org, revised Dec 2009.
  20. Sebastian Krautheim, 2007. "Gravity and Information: Heterogeneous Firms, Exporter Networks and the 'Distance Puzzle'," Economics Working Papers ECO2007/51, European University Institute.
  21. Yamasaki, Kazuko & Matia, Kaushik & Buldyrev, Sergey V. & Fu, Dongfeng & Pammolli, Fabio & Riccaboni, Massimo & Stanley, H. Eugene, 2004. "Preferential attachment and growth dynamics in complex systems," MPRA Paper 15908, University Library of Munich, Germany, revised 06 Feb 2006.
  22. Thomas Chaney, 2008. "Distorted Gravity: The Intensive and Extensive Margins of International Trade," American Economic Review, American Economic Association, vol. 98(4), pages 1707-21, September.
  23. Sergey V. Buldyrev & Jakub Growiec & Fabio Pammolli & Massimo Riccaboni & H. Eugene Stanley, 2007. "The Growth of Business Firms: Facts and Theory," Journal of the European Economic Association, MIT Press, vol. 5(2-3), pages 574-584, 04-05.
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  25. Growiec, Jakub & Pammolli, Fabio & Riccaboni, Massimo & Stanley, H. Eugene, 2008. "On the size distribution of business firms," Economics Letters, Elsevier, vol. 98(2), pages 207-212, February.
  26. Besedes, Tibor & Prusa, Thomas J., 2006. "Product differentiation and duration of US import trade," Journal of International Economics, Elsevier, vol. 70(2), pages 339-358, December.
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  28. Cesar A. Hidalgo & Ricardo Hausmann, 2009. "The Building Blocks of Economic Complexity," Papers 0909.3890, arXiv.org.
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