Does Global Trade Help of Hinder Economic Equality?
Author:Ariel Kelly ’22
Faculty Mentor(s):Mihai Banciu, Analytics and Operations Management
Funding Source:Program for Undergraduate Research
The issue of globalization and its perceived winners and losers has recently come to the forefront of international conversation. In this project, we seek to answer the following question: has global trade helped decrease economic inequality? To address this problem, we created a tool that could be used to quantify the effect of global trade over time. Using a graph-theoretical approach, we adapt the Page Rank algorithm to account for a country’s importance in the trade network when considering financial flows that go in both directions, that is, both exports and imports. We then use the relative importance scores to quantify the economic inequality by computing the Gini coefficient of the world’s economy, as well as the associated Lorenz curve. By measuring the evolution of the Gini coefficient over time, we can estimate whether international trade helped or hindered addressing economic inequality among the participants in the global trade network.