A network analysis of world trade structural changes (1996–2019)

Global trade suffered a significant contraction in the value of trade flows as a result of 2008 financial crisis, and again in 2020 with the pandemic crisis. There are questions arising from these observations: What is the structure of international trade? How has it changed due to these shocks? Inspired by the advantages of the network method and using the most extensive coverage data in terms of time and geography, we explore the structure of international trade by presenting a comprehensive analysis of the World Trade Network (WTN) from several angles. Connectivity results suggest that countries’ efforts towards multilateral trade relations have resulted in an increasingly dense network, highly reciprocal and clustered. However, the network has not been fully connected yet. While trade connections are distributed homogeneously among countries, trade value is concentrated in a small set of countries yielding a weighted core-periphery structure. We analyze the consequences of the past financial crisis of 2008 to infer the potential effects of the recent crisis. Although the shock did not affect the main connective overall trends, their tendencies were restrained after 2008. The financial downturn also marks a turning point in the clustering of the WTN from two main groups, led by the United States and Germany, to three, led by the United States, China, and Germany. Revisions in preferential trade partners are visible from 2008 onward. Our study provides an intuitive insight for policymakers in revising the medium term effects of a global shock.