An Interdependent Multi-Layer Model: Resilience of International Networks

Trade flows are characterised by interdependent economic networks such as the global supply chain, international bilateral agreements, trans-national credit, and foreign direct investments, as well as non-economic components (i.e. infrastructures, cultural ties and spatial barriers). We construct an Interdependent Multi-layer Model (IMM), which is rooted in the theoretical concept of spatial interaction, in order to identify the links within these networks and trace their impacts on trade flows. In our aim to investigate horizontal and vertical interdependency among networks we calibrate the interaction model (IMM) for a set of 40 countries, and thereafter examine the influence of shocks such as economic downturns upon the interdependent networks, which in our model are represented as economic, socio-cultural and physical layers. Most importantly, the model allows us to understand the propagation of cascading effects (both positive and negative) at national and global scales.