Transformations  in
Business & Economics

COOPERATION OF GLOBAL VALUE-ADDED TRADE NETWORK：AN EVOLUTIONARY GAME ANALYSIS ⁶
Shan Ju, Jin Zhang, Sheng Li

ABSTRACT. With the growing trend of reverse globalization after the 2008 international financial crisis, how protectionist policies influence the overall cooperation level in global value chains (GVCs) becomes an important problem of the world economy. However, relevant systematic studies remain lacking. To determine the influences of the strategic selection of hub countries on the cooperation level of GVCs under different situations, a global value-added trade network was constructed on the basis of inter-country input-output data in 2014, which is the latest year in the World Input-Output Database (WIOD 2016). The topological features of this global value-added trade network, such as node degree, degree distribution, and centrality, were analysed. Moreover, the influences of the strategic selection of hub countries (e.g., the US, China, and Germany) at the initial game moment on network cooperative behaviors were investigated through an evolutionary game simulation of the global value-added trade network. Results demonstrate that under low temptation to betray in prisoner's dilemma (PD) and snowdrift game (SG) conditions and high temptation to betray in stag hunt (SH) conditions, the noncooperation of the US at the beginning of the game significantly reduced the cooperation level of the network. Under the PD, SH, and SG conditions, whether the temptation to betray was low, middle, or high, and even if the US chose noncooperation, the cooperation level of the network would have significantly improved if China and Germany cooperated. In 2014, China's node degree and out-degree centrality ranked second in the network. As an important node in the global value-added trade network, China must facilitate other hub countries in the network to continuously select a cooperation strategy through various methods while insisting on opening up and cooperation, aiming to increase the overall cooperation level of the network and realise a win-win situation. This study provides theoretical references to understand the future evolution of the global value-added trade network and promote extensive cooperation in global value-added trade .

KEYWORDS:  value-added trade network, topological features of the network, network evolutionary game.

JEL classification:  F4, F5, F6, F17.

⁶ Acknowledgment: This study was supported by the National Social Science Fund of China, "On the Status and Influences of China in the Evolution of Global Value Chains with the Perspective of Complex Network" (No. 17BJL114).