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A Look at the World Trade Network and Hubs

For the last decade or so, we have been blessed with the boom of a robust and healthy economy internationally. International trade has been at an all-time high, as the total value of world trade has quadrupled in the last two decades. While many of the superpowers such as the US have undoubtedly solidified their economic and political presence throughout various areas of the globe, many promising and rapidly developing countries such as China and Korea are also quickly emerging and establishing themselves as key players in the international scene. China’s economic presence has grown exponentially recently, surpassing the United States and creating shifts in the global trade network. Many politicians in the US are worried about United States’ diminishing influence in the trade network as countries such as Japan have essentially become hubs for product manufacturing: they receive imports of raw materials and export the finished good once it has been produced in the country. For example, Japan is known for its automobile production; many countries engage in trade deals with Japan due to the massive demand for quality vehicles. Therefore, automobile manufacturers on US soil face increased competition, jeopardizing the economic activity within US soil. I believe the US should not worry too much about losing its trade influence on countries such as China due to two reasons. Let’s take the automobile market for example: for American car companies such as Ford and Chevrolet to compete with superior car manufacturers in other countries, a massive amount of research and development expenses must be incurred to significantly match the performance of foreign cars. Instead of focusing on products that will forever lag behind foreign manufacturers in terms of innovation and performance, the US should focus all of its attention to its biggest export: weapons and military equipment. The US currently holds superior warfare technology that it continues to sell to emerging countries. This establishes a positive relationship and increases the United States’ presence and influence.

The world trade network essentially demonstrates the concept of hubs and authorities and its ever-changing nature as new powers have emerged and shifted in the last few decades. In this scenario, authorities are countries that have numerous imports of raw materials and multiple exports of finished goods. For example, the United States points to Japan as an authority: the US sends Japan raw materials such as computer chips, steel, and other goods for an exchange of a finished car. If we examine the shifting nature of these hubs and authorities, a good example to follow would be China. Back in 1992, China was 13th in global exports, but the country dramatically increased its export value around 2001. China’s exports to the United States have also increased remarkably since 2001, explaining the sharp rise in China’s weighted hub value due to its involvement with the most prominent authority at the time. Another country that has experienced significant changes in its trade influence is Japan. Japan’s hub value was the highest in 1992 due to massive exports of vehicles, establishing itself as the leader and emerging authority in that regard. However, exports from Japan to the US and EU were constrained by trade frictions. Also, Japanese companies wanted to emphasize production for local consumption instead of exports. All of these factors led to Japan’s decrease in its hub value as it was continuously updated. In the end, the world trade network (WTN) is a real and tangible application of hubs and authorities.

https://journals.plos.org/plosone/article?id=10.1371/journal.pone.0100338#pone-0100338-t001

 

 

 

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