ISSN 2348-3156 (Print) International Journal of Social Science and Humanities Research ISSN 2348-3164 (online) Vol. 10, Issue 3, pp: (210-219), Month: July - September 2022, Available at: www.researchpublish.com
MODELLING THE INFLUENCE OF THE UNITED STATES DOLLAR ON THE RESILIENCE OF PRODUCT SPACE NETWORK DURING COVID-19 PANDEMIC Herick Laiton Kayange *1 College of Mathematics and Computer Science Zhejiang Normal University, 688 Yingbin Ave, Jinhua 321004, China DOI: https://doi.org/10.5281/zenodo.6948335
Published Date: 01-August-2022
Abstract: An international trade network system is crucial for developing Countries' Economies. Countries Export products not far from their Product Space Network, as they will require the same technology, skills, and institutions. The exportation of products can be affected by disruptions in the global Economic system, Such as COVID -19 recently. During the pandemic, Country lockdown and Import restriction policies led to a decline in Global products export. There is a requirement to have a resilient system in such a way it would withstand disruptions in the economy. Most studies were done to determine whether the Global trade system is resilient. Determination of critical transition values, which mark the points at which the system will lose or gain resilience, is not well covered yet. In this study, we developed the Lotka-Volterra model to determine critical values for the United States dollar index and proximity Index for four years, from 2018 to 2021. The critical transition values show that the significant effect of the pandemic on the global exportation of products was prominent in the year 2020 compared to the other three years Keywords: Export; Product space Network; COVID-19; Lotka-Volterra; United states dollar Index (USDX); Proximity Index.
1. INTRODUCTION The exportation of products is essential in generating income in economies. Hidalgo et al. [1] defined product space as the Network of relatedness among products. Most countries export products that do not vary away from their current structure of products since it is easier to encompass the same skills, technology, and institution than to introduce a different product. As countries change their export mix, there is a strong tendency to move towards related goods rather than goods farther away [2]. The proximity between any pair of products is defined according to the relative frequency with which they are jointly exported by countries having a revealed comparative advantage in those specific product categories [3]. Mathematically proximity can be explained as the probability of exporting one product with a comparative advantage given that you can export the other product. The United States (U.S.) dollar is unquestionably the most dominant international currency and functions as the foundation of the current global monetary system [4]. The U.S dollar index (USDX) is a geometrically averaged of six currencies (the Canadian Dollar, the Euro, the British Pound, the Japanese Yen, the Swedish Krona, and the Swiss Franc) against the U.S dollar [5]. Initially, the DYX was developed by the U.S Federal Reserve in 1973 to provide an external bilateral tradeweighted average value of the U.S. dollar as it freely floated against global currencies [5].therefore, the devaluation of the United States dollar index led to the rise of Price of commodities. Mena et al. [6] Defined Resilience in International trade as the ability of a country to both resist disruptions to international trade and recover after disorders occur. In this study, the definition is further extended for the case of Product space Network
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