Agent-based modelling for international trade

Abstract EN

The system of the world economy has recently become more efficient and integrated due to the globalization effect.

This effect results in driving the progression of both the technology and the liberalization of trade and capital markets.

The technological improvements reduce the costs of transportation and communication between the countries.

On the other hand, liberalization of trade and capital markets reduces the forms of unfair foreign competition.

The main objective of this study is to design an agent-based modeling that unravels the role of technological improvement in changing the international trade structure between the developed and developing countries.

The study also tackles the effect of capital mobility on the structure of international trade.

These two objectives are achieved through proposing different scenarios.

Furthermore, the proposed agent-based modeling is based on two assumptions, the Samuelson's analysis of outsourcing between the developed and developing countries assumption and the capital mobility assumption.

Traditionally, technological progress is considered the cornerstone of international trade flows.

The general pattern of trade flows is from the developed country, to the developing country.

Applying a set of ABM scenarios on the international trade schemes revealed a general pattern of trade flows from the developing country to the developed country.

This was attributed to the gradual technological shocks introduced to the developing country's industrial sector.

Furthermore, the results showed that the developing countries possess the capability of turning into new economic powers in all fields shall they properly invest in technological progress.