World input-output network: applications, implications, and future directions

The world economy has been increasingly characterized by Global Value Chains (GVCs), which involve production fragmentation and relocation across countries and international trade in intermediate goods and services. A good understanding of the phenomenon of GVCs at the macroeconomic level calls for an integrated data set of Inter-Country Input-Output (ICIO) tables across countries and over time. This chapter uses the latest available of such a data set, the World Input-Output Database (WIOD) 2016 release, to construct the so-called World Input-Output Network (WION) where the nodes are the individual sectors in different countries and the links are the input-output relationships between them. As a result, the methods actively developed in the field of network science can be readily applied to the WION to produce fresh results, ranging from summary statistics to more sophisticated community detection and network pruning visualizations, which enrich and complement traditional input-output analysis. In this chapter, we demonstrate the network methods with the WIOD data for the years 2000 and 2014. The network perspective enables us to detect the presence and significance of GVCs, to trace the evolution of GVCs, and to evaluate the competitiveness and risk of GVCs at the sectoral, national, or regional levels. Finally, we suggest directions for future research