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On the Structure of the World Economy: An Absorbing Markov Chain Approach
The expansion of global production networks has raised many important questions about the interdependence among countries and how future changes in the world economy are likely to affect the countries’ positioning in global value chains. We are approaching the structure and lengths of value chains f...
Autores principales: | , , |
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Formato: | Online Artículo Texto |
Lenguaje: | English |
Publicado: |
MDPI
2020
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Materias: | |
Acceso en línea: | https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7516966/ https://www.ncbi.nlm.nih.gov/pubmed/33286256 http://dx.doi.org/10.3390/e22040482 |
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author | Kostoska, Olivera Stojkoski, Viktor Kocarev, Ljupco |
author_facet | Kostoska, Olivera Stojkoski, Viktor Kocarev, Ljupco |
author_sort | Kostoska, Olivera |
collection | PubMed |
description | The expansion of global production networks has raised many important questions about the interdependence among countries and how future changes in the world economy are likely to affect the countries’ positioning in global value chains. We are approaching the structure and lengths of value chains from a completely different perspective than has been available so far. By assigning a random endogenous variable to a network linkage representing the number of intermediate sales/purchases before absorption (final use or value added), the discrete-time absorbing Markov chains proposed here shed new light on the world input/output networks. The variance of this variable can help assess the risk when shaping the chain length and optimize the level of production. Contrary to what might be expected simply on the basis of comparative advantage, the results reveal that both the input and output chains exhibit the same quasi-stationary product distribution. Put differently, the expected proportion of time spent in a state before absorption is invariant to changes of the network type. Finally, the several global metrics proposed here, including the probability distribution of global value added/final output, provide guidance for policy makers when estimating the resilience of world trading system and forecasting the macroeconomic developments. |
format | Online Article Text |
id | pubmed-7516966 |
institution | National Center for Biotechnology Information |
language | English |
publishDate | 2020 |
publisher | MDPI |
record_format | MEDLINE/PubMed |
spelling | pubmed-75169662020-11-09 On the Structure of the World Economy: An Absorbing Markov Chain Approach Kostoska, Olivera Stojkoski, Viktor Kocarev, Ljupco Entropy (Basel) Article The expansion of global production networks has raised many important questions about the interdependence among countries and how future changes in the world economy are likely to affect the countries’ positioning in global value chains. We are approaching the structure and lengths of value chains from a completely different perspective than has been available so far. By assigning a random endogenous variable to a network linkage representing the number of intermediate sales/purchases before absorption (final use or value added), the discrete-time absorbing Markov chains proposed here shed new light on the world input/output networks. The variance of this variable can help assess the risk when shaping the chain length and optimize the level of production. Contrary to what might be expected simply on the basis of comparative advantage, the results reveal that both the input and output chains exhibit the same quasi-stationary product distribution. Put differently, the expected proportion of time spent in a state before absorption is invariant to changes of the network type. Finally, the several global metrics proposed here, including the probability distribution of global value added/final output, provide guidance for policy makers when estimating the resilience of world trading system and forecasting the macroeconomic developments. MDPI 2020-04-23 /pmc/articles/PMC7516966/ /pubmed/33286256 http://dx.doi.org/10.3390/e22040482 Text en © 2020 by the authors. Licensee MDPI, Basel, Switzerland. This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license (http://creativecommons.org/licenses/by/4.0/). |
spellingShingle | Article Kostoska, Olivera Stojkoski, Viktor Kocarev, Ljupco On the Structure of the World Economy: An Absorbing Markov Chain Approach |
title | On the Structure of the World Economy: An Absorbing Markov Chain Approach |
title_full | On the Structure of the World Economy: An Absorbing Markov Chain Approach |
title_fullStr | On the Structure of the World Economy: An Absorbing Markov Chain Approach |
title_full_unstemmed | On the Structure of the World Economy: An Absorbing Markov Chain Approach |
title_short | On the Structure of the World Economy: An Absorbing Markov Chain Approach |
title_sort | on the structure of the world economy: an absorbing markov chain approach |
topic | Article |
url | https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7516966/ https://www.ncbi.nlm.nih.gov/pubmed/33286256 http://dx.doi.org/10.3390/e22040482 |
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