Are Preferential Agreements Significant for the World Trade Structure? A Network Community Analysis

Summary We assess the impact of preferential trade agreements (PTAs) on the structure of world trade by looking for communities in the world trade network (WTN), and allowing the presence of preferential trade patterns to emerge endogenously. The finding of significant communities (as defined in the topology of the networks) would imply that trading countries are organized in groups of preferential partners. We use different approaches to analyze communities in the WTN between 1962 and 2008, but all methods agree in finding no evidence of a significant partition, supporting the view that the existing PTAs are not strongly distorting the geography of trade patterns, at least at the aggregate level.