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International production networks and the world trade structure

Author

Listed:
  • Isabella Cingolani
  • Lelio Iapadre
  • Lucia Tajoli
Abstract
In this work, we examine bilateral trade data in two industries with different technological characteristics (textiles and apparel, and electronics) in order to detect the presence of international production networks in these sectors and to assess their structures and organization. Moving from the recent stream of literature that underlines the importance of assessing the participation and position of a country within an international production system, generally much more complex than a simple chain, we examine if these networks can be identified using traditional trade data and if they are still mainly regional. We start by applying a particular specification of bilateral trade intensity indices to the matrix of world trade in each sector (from the BACI – CEPII database), using the BEC classification to distinguish between intermediate and final goods, in order to highlight trade flows driven by international production networks. We compute indicators for the world trade matrix and its regional partitions, as defined by exogenous geographical criteria, or by the existence of regional integration agreements. The resulting pattern of revealed trade preferences conveys useful information about the actual geographic distribution of the underlying international value chains. The core of the paper is an application of network analysis to better understand the topology of global and regional value chains. In each industry, we identify endogenous geographical sub-networks based on preferential trade links, again distinguishing between trade flows in intermediate or final goods, and we examine the topological structure of the trading regions, to assess whether they are similar across industries and goods’ categories, and if they are built around a central core country. On the basis of both approaches, we conclude that trade regionalization is still high, especially in electronics, confirming that geographical proximity and other integration factors still play a role in facilitating international production and trade. However, regionalization has slightly declined in the recent past, and there are some relevant preferential linkages bridging different regions. In addition, the topology of trade networks can indeed shed some light on the structure of the underlying production linkages. In particular, a stronger preferentiality and selection of partners seem to occur for trade in intermediate goods, as suggested by the theory of international fragmentation of production.

Suggested Citation

  • Isabella Cingolani & Lelio Iapadre & Lucia Tajoli, 2018. "International production networks and the world trade structure," International Economics, CEPII research center, issue 153, pages 11-33.
    • Handle: RePEc:cii:cepiie:2018-q1-153-3
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    4. Yaya Li & Yongtao Peng & Jianqiang Luo & Yihan Cheng & Eleonora Veglianti, 2019. "Spatial-temporal variation characteristics and evolution of the global industrial robot trade: A complex network analysis," PLOS ONE, Public Library of Science, vol. 14(9), pages 1-14, September.
    5. Yujing Wang & Fu Ren & Ruoxin Zhu & Qingyun Du, 2020. "An Exploratory Analysis of Networked and Spatial Characteristics of International Natural Resource Trades (2000–2016)," Sustainability, MDPI, vol. 12(18), pages 1-34, September.
    6. Aggarwal, Sakshi, 2023. "Machine Learning algorithms, perspectives, and real-world application: Empirical evidence from United States trade data," MPRA Paper 116579, University Library of Munich, Germany.
    7. Wang, Yue & Zhang, Zhenke & Xu, Minghui, 2023. "Evolution pattern of African countries' oil trade under the changing in the global oil market," Energy, Elsevier, vol. 284(C).
    8. Alessandro Nicita, 2023. "International supply networks: A portrait of global trade patterns in four sectors," UNCTAD Working Papers #3, United Nations Conference on Trade and Development.

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    More about this item

    Keywords

    Global production networks; Global value chains; Regionalization;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation

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