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Global networks of trade and bits

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Abstract

Considerable efforts have been made in recent years to produce detailed topologies of the Internet, but so far these data have been overlooked by economists. In this paper, we suggest that such information could be used to characterize both the size of the digital economy and outsourcing at country level. We analyse the topological structure of the network of trade in digital services (trade in bits) and compare it with the more traditional flow of manufactured goods across countries. To perform meaningful comparisons across networks with different characteristics, we define a stochastic benchmark for the number of connections among each country-pair, based on hypergeometric distribution. Original data are filtered so that we only focus on the strongest, i.e. statistically significant, links. We find that trade in bits displays a sparser and less hierarchical network structure, which is more similar to trade in high-skill manufactured goods than total trade. Moreover, distance plays a more prominent role in shaping the network of international trade in physical goods than trade in digital services.

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Authors and Affiliations

  1. LIME, IMT School for Advanced Studies, Lucca, Italy

    Massimo Riccaboni

  2. Department of Managerial Economics, Stategy and Innovation, K.U. Leuven, Leuven, Belgium

    Massimo Riccaboni

  3. DISA, University of Trento, Trento, Italy

    Alessandro Rossi

  4. Department of Economics, University of Trento, via Inama 5, 38122, Trento, Italy

    Stefano Schiavo

  5. OFCE-DRIC, Valbonne, France

    Stefano Schiavo

Authors
  1. Massimo Riccaboni
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  2. Alessandro Rossi
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  3. Stefano Schiavo
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Correspondence to Stefano Schiavo.

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Riccaboni, M., Rossi, A. & Schiavo, S. Global networks of trade and bits. J Econ Interact Coord 8, 33–56 (2013). https://doi.org/10.1007/s11403-012-0101-x

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