The Rise of China in the International Trade Network: A Community Core Detection Approach

TLDR

Complex network theory has successfully described diverse systems, yet prior trade studies often view globalization and regionalization as contradictory. The study applies network models to the International Trade Network to reassess the interplay between globalization and regionalization. The authors employed modularity optimization to identify communities and core nodes in the ITN from 1995 to 2011. The analysis reveals time‑varying community structures, including the disappearance and reemergence of the Asia‑Oceania community and a leadership shift from Japan to China, and shows that these global dynamics can be reproduced by a simple dynamic‑edge‑weight mechanism.

Abstract

Theory of complex networks proved successful in the description of a variety of complex systems ranging from biology to computer science and to economics and finance. Here we use network models to describe the evolution of a particular economic system, namely the International Trade Network (ITN). Previous studies often assume that globalization and regionalization in international trade are contradictory to each other. We re-examine the relationship between globalization and regionalization by viewing the international trade system as an interdependent complex network. We use the modularity optimization method to detect communities and community cores in the ITN during the years 1995–2011. We find rich dynamics over time both inter- and intra-communities. In particular, the Asia-Oceania community disappeared and reemerged over time along with a switch in leadership from Japan to China. We provide a multilevel description of the evolution of the network where the global dynamics (i.e., communities disappear or reemerge) and the regional dynamics (i.e., community core changes between community members) are related. Moreover, simulation results show that the global dynamics can be generated by a simple dynamic-edge-weight mechanism.