Economic Research and Perspectives

Economic Research and Perspectives

International Economic Zones and Integration of Global Economy

Author
mostafa heidari haratemeh
Associate Professor Department of Economics, Islamic Azad University, Naragh Branch, Naragh, Iran.
10.22034/24.3.169
Abstract
Introduction

In international trade network, countries are classified into different societies. These societies are formed based on commercial relations. Countries that are in the same society have close trade relations, while countries that are in different societies have much weaker trade relations, which shows that classification phenomenon has a meaningful effect on the field of international trade of resources. These societies also significantly promote free trade and improve commercial security and create favorable business conditions. For countries that rely heavily on foreign resources, establishing trade zones or joining a trade zone for their long-term development is of paramount importance. The division of societies in the trade network is based on geographical location or gross domestic product, not regional trade agreements. Some researchers have investigated the evolutionary characteristics of societies and analyzed the sustainability of international trade. In addition, some researchers argue that societies increase their commercial power by stabilizing the flow of resources in international trade, and their international position improves through cooperation with other countries. Several studies have provided a lot of knowledge about the society and the structural features of the international trade network, but few studies have dealt with the formation of trade areas and what promotes the formation of a trade area. The formation of trade communities/regions can be a strategy to reduce restrictions and increase trade interactions and its security through close communication between countries. Therefore, the current study can become more necessary in the situation where the current international business cooperation has become more and more important. Therefore, two main questions arise that need to be answered: 1) How are business areas formed, and 2) What factors influence the formation of business areas? Based on the studies, resource dependence theory and complex network theory can explain these questions well. Resource dependence theory states that if a firm is highly dependent on the target market, then it will be constrained by the actors in that market. Complex network theory is also a useful tool for systematically analyzing interactions between countries, especially when there are many countries involved and strong links between them exists. The purpose in fact was to investigate and recognize the influence of the resource dependence theory and the complex network theory in the formation of international trade areas in line with the integration of global economy.

Methodology

The data were extracted from the 22 countries active in international trade and based on the availability of the data of the official COMTRADE database of the United Nations in the period of 2011-2021. They account for the entire international trade. In order to analyze the data and estimate the models, negative binomial regression was used because when there are countable and discrete data as the response variable, simple linear regression is not a suitable fitting method. So, Poisson regression was applied, which is considered a method in "generalized linear models" where the probability function for the "response variable" is considered to be "Poisson distribution" and suitable for count data.

Findings

The trade partner factor has a positive effect on the formation of international trade communities, that is, when a country cooperates with a large number of trade partners or has a superior position in the international trade network, it is more likely that other countries will form the same pattern. Therefore, when a country considers itself dependent on the resources of other countries, the possibility of forming a similar society will increase. Finally, network position plays a positive role in moderating the relationship between resource dependence and international trade areas.

Discussion and Conclusion

Based on resource dependence and complex network theory, and analyzing the decisive factors affecting the accession process of a country to the same trade zones, the dependence of the country's imports on the external environment is an integral factor in joining a country to the same trade zones. In fact, in choosing partners for the formation of commercial zones, countries attach great importance to the ability to provide resources of commercial partners. On the other hand, position of the network plays a positive role in the formation of a business community. Countries with a higher network position can not only access resources or reach the target market faster, but also have more control over the flow of resources. Therefore, it is more likely that countries will establish closer trade relations with countries that have a higher network position in order to increase their economic power. The more central a country's network position is, the easier it is to choose to join larger trade areas with other countries. Also, according to the resource dependence theory, the more central a country's network position is, the more likely it is to join the same trade areas as other countries. Network and resource considerations both simultaneously play a role in the strategic choice of national trade. In the case of countries that have the same resource abundance, a country can choose to form the same society as countries that have a more central network position. Finally, due to the development of export markets for domestic products, countries are easily affected by the network position. This will enable them to choose other countries that are in a more central network position to form the same society, rather than trying to trade among them. Based on the economic freedom factor and the diversity of the importing country, countries that can strengthen resource trade, can reduce or manage their dependence on other countries. In addition, they can balance the inventory and production of global resources.
Keywords
Complex Network Theory
Economic Zones
International Trade
Resource Dependence Theory

Subjects

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Economic Research and Perspectives
Volume 24, Issue 3
Autumn 2024
Pages 169-196