International trade and financial integration: a weighted network analysis”, LEM Working Paper 2007/16

In this paper we compare the degree and patterns of trade and financial integration exploiting network analysis. We start from a simple binary analysis and then move to a more appropriate weighted approach, presenting a detailed overview of interna-tional goods and financial markets integration, and compare their main characteris-tics. Moving from binary to weighted analysis changes considerably the properties of the networks, and with them the picture of the integration process. Limiting to a binary approach can thus lead to a misrepresentation of the underlying economic phenomena. We find that the trade network is almost fully connected while inter-national financial integration is less pervasive. Also, regional links continue to play a relevant role