Colombian export capabilities: building the firms-products network

TL;DR

This paper analyzes Colombia's export network from 2010 to 2014, revealing a strongly modular, cluster-based structure of firms specializing in specific product categories, contrasting with the global trade web.

Contribution

It introduces a bipartite modularity maximization approach and a novel projection algorithm to uncover firm-product clusters, highlighting structural differences with the world trade network.

Findings

Colombian firms form distinct product-specific clusters.

Bipartite structure differs from the global trade web.

Firms tend to export homogeneous product baskets.

Abstract

In this paper we analyse the bipartite Colombian firms-products network, throughout a period of five years, from 2010 to 2014. Our analysis depicts a strongly modular system, with several groups of firms specializing in the export of specific categories of products. These clusters have been detected by running the bipartite variant of the traditional modularity maximization, revealing a bi-modular structure. Interestingly, this finding is refined by applying a recently-proposed algorithm for projecting bipartite networks on the layer of interest and, then, running the Louvain algorithm on the resulting monopartite representations. Important structural differences emerge upon comparing the Colombian firms-products network with the World Trade Web, in particular, the bipartite representation of the latter is not characterized by a similar block-structure, as the modularity maximization fails in revealing (bipartite) nodes clusters. This points out that economic systems behave differently at different scales: while countries tend to diversify their production --potentially exporting a large number of different products-- firms specialize in exporting (substantially very limited) baskets of basically homogeneous products.