Doing business in a globalised economy is not as complex or challenging as some economists and analysts would have us believe.
University of Queensland Business School research shows that despite technology advances and rising giants such as China and India, the structure of the world’s trade networks has remained almost unchanged over the last six decades.
UQ international trade PhD student Tim Kastelle made this finding after two months collecting and sorting International Monetary Fund data from 1938 to 2003.
He counted the number of trade links between countries and then used network analysis in an effort to measure globalisation.
“Most economies trade with eight to 12 Organisation for Economic Co-operation and Development (OECD) nations and with their close neighbors,” Mr Kastelle said.
“And that pattern hasn’t changed substantially since 1938.
“People have a perception that there have been dramatic changes in the nature of international trade in recent years, but this is view is not supported by the data.
“Businesses don’t need a completely different rule book since globalisation, they just might need to add a page or two.”
The United States, Germany, France, United Kingdom, Italy, the Netherlands, Spain, China, Japan, and Belgium are the most well connected trading nations.
“Canada and Mexico are the least connected, reflecting their reliance on the United States under the North American Free Trade Agreement.”
Mr Kastelle, a 42-year-old from The Gap, said old trade and seafaring routes were still valuable.
“Antwerp is still Europe’s major port, leaving Belgium much better connected than might be expected. Even the trading patterns of ex-colonies in Africa look almost exactly the same as they did prior to independence. International trade connections appear to be remarkably persistent.
"1938, just prior to World War II, was the least globalised time in the last 150 years.
“That’s probably because trade links had shrunk along geo-political lines and the shadow of the Great Depression was still being felt by the US economy.
"While the overall structure of the trade networks had stayed the same, the ability to communicate and diffuse ideas through these networks had improved greatly.
“This suggests the popular vision of globalisation reflects increasing access to information more than it does a fundamental restructuring of the world’s economy.”
Media: Cathy Stacey on 0434 074 372 or (07) 3365 6179.
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