Structural Hamiltonian of the international trade network

TL;DR

This paper models the international trade network using structural Hamiltonians, revealing that its binary structure aligns with the configuration model and trade volumes follow a gravity model based on GDP products.

Contribution

It introduces a Hamiltonian framework for analyzing the ITN, connecting network structure to maximum entropy ensembles and economic indicators.

Findings

Binary trade networks follow the configuration model.

Weighted trade volumes are proportional to the product of countries' GDPs.

The network is a typical example of a maximally random network.

Abstract

It is common wisdom that no nation is an isolated economic island. All nations participate in the global economy and are linked together through trade and finance. Here we analyze international trade network (ITN), being the network of import-export relationships between countries. We show that in each year over the analyzed period of 50 years (since 1950) the network is a typical representative of the ensemble of maximally random networks. Structural Hamiltonians characterizing binary and weighted versions of ITN are formulated and discussed. In particular, given binary representation of ITN (i.e. binary network of trade channels) we show that the network of partnership in trade is well described by the configuration model. We also show that in the weighted version of ITN, bilateral trade volumes (i.e. directed connections which represent trade/money flows between countries) are only characterized by the product of the trading countries' GDPs, like in the famous gravity model of trade.