Date of Thesis
The issue of globalization and its perceived winners and losers has recently come to the forefront of international conversation. International trade has become a major part of almost every country’s worldwide presence, and it has allowed consumers everywhere to gain access to goods and services that they would not have access to otherwise. International trade can be traced back centuries to the Silk Road and while more expensive due to transportation and distribution costs, most countries find it in their best interest to be active in global trade. In this project, we sought to answer the following question: has global trade helped decrease inequality among countries?
The overall question guiding this thesis is whether or not international trade has affected the relationship between countries, as world-wide trade can either reduce or amplify the perceived inequality between the participants. Some countries export more than they import, meaning that the products that they sell on the global market exceed those that they purchase. Others import more than they export, purchasing more than they sell. In addition to taxes and tariffs that increase the price of certain imports, many countries also use trade restrictions for reasons such as protectionism, counterterrorism, weapons research, and more. As a result, international trade has become as powerful a political operation as it is an economic one.
In the current political climate, international trade has come under scrutiny. Country officials are questioning whether global trade is beneficial for their economies. Trade is increasingly perceived as being differentially beneficial; some countries soar while others fall deeper into economic inequality (Ghose, 2004; Richardson, 1995). Some of the literature on modeling the global trade network has examined trade flows using social network methods such as centrality, resilience, or distance between nodes and clusters of countries engaging in trade (Benedictis & Tajoli, 2011; Serrano, 2003), but to the best of our knowledge there is no extant literature on analyzing the “popularity” of a country as an active participant in the global trade mechanism using graph theory. Under this paradigm, the ranking given to each country is determined by the volume of their trade as well as who they are trading with. Countries with consistently high volumes of trade with large countries such as the United States, China, Germany, etc. have high rankings while smaller countries such as Belize, Palau, and Sierra Leone have lower rankings. This methodology also helps to track the change in rankings of a certain country or group of countries over time, to see how their involvement in international trade has developed, as well as where they sit in the context of the world.
In this thesis, we will provide an analytical answer to the question "has global trade helped decrease inequality among countries?"-- a question that is typically considered from economic or political perspectives. While traditional methods focus exclusively on imports or exports, we present two novel models that consider the bidirectional nature of trade. The first is a heuristic model that expands the well known PageRank algorithm, and the second is a model based on mathematical optimization. The purpose of these models is to examine the effects of increased global trade over time. We present and compare the results of these different models.
analytics, optimization, global trade, ranking, networks
Honors Thesis (Bucknell Access Only)
Bachelor of Science in Business Administration
Minor, Emphasis, or Concentration
Kelly, Ariel, "Does Global Trade Help or Hinder Inequality? A Network Optimization-Based Approach" (2022). Honors Theses. 599.