The nested structural organization of the worldwide trade multi-layer network

TL;DR

This paper introduces a multi-layer network model of global trade that captures inter-industry transactions and reveals nested organizational patterns across countries and industries over time.

Contribution

It develops a novel multi-layer network approach using the World Input-Output Database to analyze nestedness in international trade beyond bipartite representations.

Findings

Identifies variations in nestedness over time.

Pinpoints key countries and industries contributing to nestedness.

Provides insights into the organization of global value chains.

Abstract

Nestedness has traditionally been used to detect assembly patterns in meta-communities and networks of interacting species. Attempts have also been made to uncover nested structures in international trade, typically represented as bipartite networks in which connections can be established between countries (exporters or importers) and industries. A bipartite representation of trade, however, inevitably neglects transactions between industries. To fully capture the organization of the global value chain, we draw on the World Input-Output Database and construct a multi-layer network in which the nodes are the countries, the layers are the industries, and links can be established from sellers to buyers within and across industries. We define the buyers' and sellers' participation matrices in which the rows are the countries and the columns are all possible pairs of industries, and then compute nestedness based on buyers' and sellers' involvement in transactions between and within industries. Drawing on appropriate null models that preserve the countries' or layers' degree distributions in the original multi-layer network, we uncover variations of country- and transaction-based nestedness over time, and identify the countries and industries that most contributed to nestedness. We discuss the implications of our findings for the study of the international production network and other real-world systems.