A Proposed Social Network Analysis of European Bilateral Trade Flows- Cian McCarthy

I will be taking the second half of the class.

The European Economic Community, later to become the European Union, was established to create a common market of goods and promote an “ever closer union” between the states of Europe. A  primary focus of the original establishing document, the Treaty of Rome, was to create an economic interdependence among the countries of Europe which would mitigate the threat of war, as increased trade would lead to increased cooperation. I want to use Social Network Analysis to see the extent to which the European Single Market has truly brought together the European nations, or if perhaps there are still clusters of countries, or remote nations with little trading activity with the rest of the Union. This analysis is important because those clusters or isolates would create the foundations for tension within the community and would challenge the interdependence and economic cooperation that is at the core of the EU.

All European countries have some level of trade with others, but it’s the value of that trade that matters. For my analysis I will use a valued network of incremental degrees to create the network map of bilateral trade  flows between every European country, with every other European country. I will then compare the network over time, most likely before significant moments for the single market (mass admissions, introduction of Euro etc.) to see how these moments affected the trade network of the Union. Visually, I think it would be quite powerful to place each node on a map of Europe, and the ties between the nodes will represent the level of trade between two countries (e.g. thickness increasing with value). By doing both visual and quantitative comparisons between different periods of time, I think I will be able to paint an interesting picture of the evolution of trade and integration of Europe over the last half-century.

Inspiration for this idea came from a previous Social Network Analysis of international trade done by the Centre D’études Prospectives et D’informations Internationale. In their paper, Network Analysis of World Trade using the BACI-CEPII dataset (link), they briefly dealt with European trade flows, and created the following model:

I think this is a really interesting diagram, as it shows a core group of countries which are central to the European trade network, and many others on the periphery. I want to build on their analysis to create a more comprehensive impression of trade networks in Europe.

If during my analysis I find that countries do tend to cluster, then I will posit some questions over the nature of the clustering. Do countries tend to group by language? By the wealth of their citizens? Or is it merely geographic convenience that explains why some countries trade more with each other? And most importantly, my question will look at the impact of EU and Eurozone participation in increasing economic interdependence and cooperation throughout the continent. I’ll also look into the trade of specific commodities and groups of commodities to see whether the network in relation to one is different to that of the other, or the overall trade network. This analysis could be potentially very valuable to scholars and practitioners interested in fostering economic cooperation. Understanding the network of European trade flows would be the first step towards breaking down cliques and factions and fostering overall, universal, economic integration.

The data I will use is the IMF international trade data. From this, I can create a 1 mode directed data set which measures a countries trade flow with each other country. I can then use UCINET and NetDraw to create a network map to visualise and analyse the European trade network. I think I can get some interesting results.