Dynamics of the Global Trade System

The dynamics of the global trade system is investigated using an empirically derived, city-focused base state in reaction to cyclone shocks, climate change and COVID-19, with an emphasis on how disturbances propagate and decay, and whether the trade system is structually racist.


Shughrue, Chris, BT Werner, and Karen C. Seto. Global spread of local cyclone damages through urban trade networks. Nature Sustainability (2020): 1-8.
Geophysical hazards stress urban social, economic and political systems, but many studies focus on single locations over short periods. The manner in which a natural disaster propagates across cities globally through urban trade networks remains unexplored. Starting from a novel empirical baseline model for global production and trade, here we develop a dynamical model for the spread of individual cyclone impacts across the world’s cities. We find that cities are vulnerable to economic harm even if they are geographically distant from the location of direct impacts of cyclones. These adverse secondary impacts are responsible for up to three-fourths of the effects of the largest storms and are generated primarily by cyclone exposure in North America and East Asia, in part because of the roles of these regions as principal purchasers and suppliers, respectively, of industrial materials. Vulnerability to adverse secondary impacts of cyclones is highest in cities that are strongly dependent on the global trade network but have relatively few suppliers. Our results suggest that, in addition to improvements in protective infrastructure, urban adaptation to storm damage and climate change might require modifications to trade network linkages.


Chris Shughrue, BT Werner and Karen Seto, Climate Change Adaptation Strategies Mediate Tradeoffs Between Local Exposure and Global Resilience
Adaptation will shape the impact of anthropogenic climate change on the global economic system. The dynamics underlying adaptation of infrastructure will affect reductions in exposure to damage at local scales, but also will affect the overall resilience of the global production and trade network. To explore and quantify these effects, we start with an empirically based stable baseline model for production and trade amongst all urban areas with population greater than 300,000, add market-based reaction of production and prices to damage and cost-benefit-based adaptation and associated taxes, and simulate damage using a historical database of cyclones. The time horizon used for making adaptation decisions and the scale for pooling resources for adaptation are varied. Increasing the scale of resource sharing for adaptation and decreasing the decision-making time horizon both reduce the costs of direct impacts of cyclones by 2.9% and 8.5%, respectively. However, short time horizons significantly increase the costs of secondary impacts of cyclones, those costs associated with the propagation of the effects of damage and associated production reductions on prices through the trade network, by 37%. These quantitative findings are interpreted within a qualitative policy framework for discussing climate change impacts by identifying resilience with secondary impacts and direct impact damage with exposure. Within this interpretation, international climate adaptation agreements both reduce exposure to cyclones and increase global resilience to anthropogenic climate change. Additionally, the global economic production and trade network has limited tolerance to short-time-horizon driven adaptation, and as a result, postponing climate change adaptation planning might narrow possibilities for maintaining global resilience.

Chris Shughrue and BT Werner, Is the global industrial and trade network structurally racist?

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