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Entropy of international trades.
1Department of Physics, Inha University, Incheon 22212, Korea.
Physical Review. E
|June 17, 2017
Summary
International trade complexity increased from 1950-2000, driven by more trade partners. This expansion, measured by trade entropy, correlates with countries
Area of Science:
- Economic Complexity
- International Trade Dynamics
- Network Theory
Background:
- Global trade organization is complex due to varied production resources.
- Understanding trade flux and its entropy is crucial for economic analysis.
Purpose of the Study:
- To evaluate the entropy of world trades from 1950 to 2000.
- To analyze the drivers of changes in global trade patterns.
Main Methods:
- Quantified trade flux as export probability between countries.
- Calculated world trade entropy over a 50-year period.
- Analyzed country-level GDP and trade partner data.
Main Results:
- World trade entropy significantly increased between 1950 and 2000.
- Trade entropy growth is primarily attributed to the expansion of trade partnerships.
- Mean trade entropy, for a fixed number of partners, remained stable at ~60% of maximum, indicating consistent flux heterogeneity.
Conclusions:
- Increased trade partnerships are the main driver of rising global trade entropy.
- Trade flux heterogeneity is a stable characteristic, linked to universal trade-flux distribution properties.
- Economic growth for most nations was facilitated by broadening international trade relationships.
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