Stefano Schiavo

Financial Constraints and Firm Export Behaviour

The paper analyzes the link between financial constraints and firm export behavior. Our main finding is that firms enjoying better financial health are more likely to become exporters. The result contrasts with the previous empirical literature which found evidence that export participation improves firm financial health, but not that export starters display any ex-ante financial advantage. On the contrary, we find that financial constraints act as a barrier to export participation. Better access to external financial resources increases the probability to start exporting and also shortens the time before firms decide to serve foreign customers. This finding has important policy implications as it suggests that, in presence of financial markets imperfections, public intervention can be called for to help eficient but financially constrained firms to overcome the sunk entry costs into export markets and expand their activities abroad.

On the topological properties of the world trade web: A weighted network analysis

This paper studies the topological properties of the World Trade Web (WTW) and its evolution over time by employing a weighted-network analysis. We show that the WTW, viewed as a weighted network, displays statistical features that are very different from those obtained by using a traditional binary-network approach. In particular, we find that: (i) the majority of existing links are associated to weak trade relationships; (ii) the weighted WTW is only weakly disassortative; (iii) countries holding more intense trade relationships are more clustered.

International trade and financial integration: a weighted network analysis

The authors analyse patterns of international trade and financial integration using complex network analysis. The combination of both binary and weighted approaches delivers more precise and thorough insights into the topological structure and properties of international trade and financial networks (ITN and IFN). It is found that the ITN is more densely connected than the IFN, while both types of network display a core–periphery structure. This hierarchical organization is more pronounced in financial markets, suggesting that the bulk of trade in financial assets occurs through a handful of countries acting as hubs. High-income countries are better linked and form groups of tightly interconnected nodes. This kind of structure can explain why the recent financial crisis has spread rapidly among advanced countries while reaching emerging markets only in a second phase.

Financial Integration, GDP Correlation and the Endogeneity of Optimum Currency Areas

The paper analyses the relationship between trade, financial integration and business cycle synchronization in the euro area. The introduction of the euro has had a noticeable impact on European financial markets. Evidence that capital market integration exerts a positive effect on output correlation has two major implications. First, it corroborates the hypothesis of the endogeneity of optimum currency areas, whereby after joining a monetary union countries better meet standard OCA criteria; second, it provides European policy-makers with yet another reason to pursue financial integration in the euro area (and in prospective members as well).

Structure and growth of weighted networks

We develop a simple theoretical framework for the evolution of weighted networks that is consistent with a number of stylized features of real-world data. In our framework, the Barabasi-Albert model of network evolution is extended by assuming that link weights evolve according to a geometric Brownian motion. Our model is verified by means of simulations and real world trade data. We show that the model correctly predicts the intensity and growth distribution of links, the size-variance relationships of the growth of link weights, the relationship between the degree and strength of nodes, as well as the scale-free structure of the network.

ASSESSING THE EVOLUTION OF INTERNATIONAL ECONOMIC INTEGRATION USING RANDOM WALK BETWEENNESS CENTRALITY: THE CASES OF EAST ASIA AND LATIN AMERICA

Over the past four decades, the high-performing Asian economies (HPAE) have followed a development strategy based on the exposure of their local markets to the presence of foreign competition and on outward-oriented production. In contrast, Latin American (LATAM) economies began taking steps in this direction only in the late 1980s and early 1990s, but before this period they were more focused on the implementation of import substitution policies. These divergent paths have led to sharply different growth performances in the two regions. Yet, standard trade openness indicators fall short of portraying the peculiarity of the Asian experience, and of explaining why other emerging markets with similar characteristics have been less successful over the last 25 years. We offer an alternative perspective on this issue by exploiting recently developed indicators based on weighted network analysis. We study the evolution of the core–periphery structure of the World Trade Network (WTN) and, more specifically, the evolution of the HPAE and LATAM countries within this network. Using random walk betweenness centrality, we show that the HPAE countries are more integrated into the WTN and many of them, which were on the periphery in the 1980s, are now in the core of the network. In contrast, the LATAM economies have at best maintained their position over the 1980–2005 period, and in some cases have fallen in the ranking of centrality.

Using Complex Networks Analysis to Assess the Evolution of International Economic Integration: The Cases of East Asia and Latin America

This paper exploits recently-developed indicators based on network analysis to investigate the pattern of international integration followed by East Asian countries and compares it with the Latin American performance. Standard trade openness indicators fall short of portraying the peculiarity of the Asian experience, and of explaining why other emerging markets with similar characteristics have been less successful over the last 25 years. The analysis offers an alternative perspective on the issue regarding international economic integration by taking into account the whole structure of international trade relationships and by determining both the position of countries in the world trade network, and its evolution over time. We find that East Asian countries are more integrated into the world economy, as they have moved from the periphery of the network towards its core. Our results support the idea that the degree of openness matters but it is not enough to characterize economic integration. The number and identity of trade partners, and the specific individual structure of trade for each country, need to be incorporated in order to fully characterize international economic integration. By doing so, it is possible to argue that the integration process of the East Asian countries mirrors their high economic performance, while the lower degree of integration of Latin America can be related to the lack of economic development of the region, even though their degree of openness has increased.

Financial Constraints and Firm Export Behavior

The paper analyzes the link between financial constraints and firm export behavior. Our main finding is that firms enjoying better financial health are more likely to become exporters. The result contrasts with the previous empirical literature which found evidence that export participation improves firm financial health, but not that export starters display any ex-ante financial advantage. On the contrary, we find that financial constraints act as a barrier to export participation. Better access to external financial resources increases the probability to start exporting and also shortens the time before firms decide to serve foreign customers. This finding has important policy implications as it suggests that, in presence of financial markets imperfections, public intervention can be called for to help eficient but financially constrained firms to overcome the sunk entry costs into export markets and expand their activities abroad.(This abstract was borrowed from another version of this item.)

The Relation between Global Migration and Trade Networks

In this paper we develop a methodology to analyze and compare multiple global networks. We focus our analysis on the relation between human migration and trade. First, we identify the subset of products for which the presence of a community of migrants significantly increases trade intensity. To assure comparability across networks, we apply a hyper geometric filter to identify links for which migration and trade intensity are both significantly higher than expected. Next we develop an econometric methodology, inspired by spatial econometrics, to measure the effect of migration on international trade while controlling for network interdependencies. Overall, we find that migration significantly boosts trade across sectors and we are able to identify product categories for which this effect is particularly strong.

Stochastic trade networks

This paper develops a simple network model to describe the dynamic of the intensive and extensive margin of international trade flows. The result is achieved by means of the combination of two mechanisms of proportional growth: the first (discrete) determines the formation of trade links, the second (continuous) governs trade intensity. We show that our setup is able to simultaneously match a large number of empirical regularities, such as the fraction of zero trade flows across pairs of countries or the high concentration of trade with respect to both products and destinations. Our findings suggest that stylized facts are strongly interconnected across different levels of aggregation of trade data , so that a unifying explanation is called for. By incorporating stochastic elements into standard trade models we can improve their ability to explain relevant facts about world trade.