Understanding the World Trade Network with a Hub and Authority Model
International economists are interested in developing sound theories to model international trade patterns. Many of these models understand global trade as a graph. In this graph, the nodes are nations participating in trade, and an edge between nations symbolizes trade. These edges can take on a number of properties, such as weight and direction, to make them more informative. Within these graphs, we are often interested in which participants in international trade are more “important” than others. In class, we have learned that we can think of certain graphs as systems of hubs and authorities. In this piece from 2014, Deguchi et al. attempt to apply this thinking to the world trade network (WTN) and define global hubs and authorities.
The authors develop a unique way to define hubs and authorities in this network. They started their exploration with the PageRank update procedure. They incorporate PageRank into a weighted HITS algorithm, which they used to separate and score hubs and authorities. They found that their unique implementation outperformed the default HITS algorithm in predicting the relationship between nations. Their modified HITS algorithm revealed some interesting findings. The most basic results are summarized in these figures:
Between 1992 and 2012, the hub scores of Germany, Japan, and the United States all fell. However, the hub score of China has risen greatly in that interval. To understand why this is, one must consider which countries receive Chinese goods. In that window, Chinese export became increasingly dedicated to American markets. The United States was assigned a very high authority score, which is reflective of its status as a global economic hegemon in that window. The weighted HITS algorithm assigns high hub scores to those nodes that point to nodes with high authority scores, so China became a highly rated hub my pointing more exclusively to a highly rated authority.
In this way, their model clearly defines authorities, or countries that are large consumers. Countries that are large producers and conttend to be hubs, as they point to, or export to, the consuming authorities.
Source: https://journals.plos.org/plosone/article?id=10.1371/journal.pone.0100338