The hidden hyperbolic geometry of international trade: World Trade Atlas 1870-2013

TL;DR

This paper constructs the World Trade Atlas 1870-2013, revealing that international trade networks are hyperbolic and increasingly hierarchical, with implications for globalization and trade dynamics over time.

Contribution

It introduces a novel hyperbolic geometric model of global trade networks and analyzes their evolution from 1870 to 2013, highlighting increasing hierarchy and the limitations of trade agreements.

Findings

Trade networks are hyperbolic, not flat.

Trade distances and hierarchy have increased since WWI.

Large economies are becoming more globally connected.

Abstract

Here, we present the World Trade Atlas 1870-2013, a collection of annual world trade maps in which distance combines economic size and the different dimensions that affect international trade beyond mere geography. Trade distances, which are based on a gravity model predicting the existence of significant trade channels, are such that the closer countries are in trade space, the greater their chance of becoming connected. The atlas provides us with information regarding the long-term evolution of the international trade system and demonstrates that, in terms of trade, the world is not flat but hyperbolic, as a reflection of its complex architecture. The departure from flatness has been increasing since World War I, meaning that differences in trade distances are growing and trade networks are becoming more hierarchical. Smaller-scale economies are moving away from other countries except for the largest economies; meanwhile those large economies are increasing their chances of becoming connected worldwide. At the same time, Preferential Trade Agreements do not fit in perfectly with natural communities within the trade space and have not necessarily reduced internal trade barriers. We discuss an interpretation in terms of globalization, hierarchization, and localization; three simultaneous forces that shape the international trade system.