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The Structure and Growth of International Trade

Author

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  • Massimo Riccaboni
  • Stefano Schiavo

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 inten- sive 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 suc- cessful 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 char- acterized 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.

Suggested Citation

  • Massimo Riccaboni & Stefano Schiavo, 2010. "The Structure and Growth of International Trade," Department of Economics Working Papers 1005, Department of Economics, University of Trento, Italia.
  • Handle: RePEc:trn:utwpde:1005
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    References listed on IDEAS

    as
    1. 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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    Cited by:

    1. Fan, Ying & Ren, Suting & Cai, Hongbo & Cui, Xuefeng, 2014. "The state's role and position in international trade: A complex network perspective," Economic Modelling, Elsevier, vol. 39(C), pages 71-81.

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    More about this item

    Keywords

    international trade; development; weighted networks; proportionate growth; industrial policy;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • O25 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Industrial Policy

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