Data Driven Approach to the Dynamics of Import and Export of G7 Countries

• Main Authors: Gianluca Teza, Michele Caraglio, Attilio L. Stella
• Format: Article
• Language: English
• Published: MDPI AG 2018-09-01
• Series: Entropy
• Subjects: countries-products network; export dynamics; economic complexity
• Online Access: http://www.mdpi.com/1099-4300/20/10/735

The dynamics of imports plus exports of 226 product classes by the G7 countries between 1962 and 2000 is described in terms of stochastic differential equations. The model allows interesting comparisons among the different economies related to the compositions of the national baskets. Synthetic solutions can also be used to estimate hidden and unexploited growth potentials. These prerogatives are strictly connected with the fact that a network structure is at the basis of the model. Such a network expresses the mutual influences of different products through resource transfers, and is a key ingredient producing cooperative growth effects which can be quantified and distinguished from those generated by deterministic drifts and representing direct resource inputs. An analysis of this network, which differs substantially from those previously considered within the economic complexity approach, allows to estimate the centrality of different products in each national basket, highlighting the most essential commodities for each economy. Solutions of the model give the possibility of performing counterfactual analyses aimed at estimating how much the growth of each country could have profited from a general strengthening, or weakening, of the links in the same products network.