The Role of the Domestic Market Scale in Enhancing Self-Resilience: Analysis based on the PageRank centrality of RCEP and G7 Countries

ABSTRACT

How emerging economies could improve their self-resilience is our focus. This paper employs the hypothetical extraction method, PageRank algorithm and the 2005–2019 Comtrade database to analyse the impacts of domestic market scale on the economy’s resilience in the value chains and conditions under which it is affected. The empirical results show that expanding the scale of the domestic market would significantly improve the economy’s resilience in both the RCEP and G7 value chains. Our conclusions support the enrichment of pathways for economies with relatively backward technologies to cope with unexpected shocks and gradually restore economic vitality.

KEYWORDS:

• Domestic market scale
• resilience
• PageRank centrality
• RCEP
• Global Value Chains

Disclosure Statement

No potential conflict of interest was reported by the author(s).

Notes

1 The RVCs referred to in this paper is composed of 15 RCEP member countries, including Japan, South Korea, China, Australia, New Zealand, Singapore, Vietnam, Thailand, Indonesia, Brunei, Malaysia, Myanmar, Laos, the Philippines and Cambodia. Because data involving Myanmar and Laos are difficult to obtain, this paper only selects data from 13 economies in RCEP. The criteria for RCEP members as economies within RVCs are based on two reasons. First of all, RCEP members are geographically close and trade frequently, and most countries are difficult to complete cross-regional trade activities on a large scale, which is in line with the characteristics of RVCs (Baldwin and Lopez–Gonzalez 2015). What’s more, the huge economic aggregates and trade volumes of RCEP members ensure that the empirical results are not biased by country selection. RCEP covers nearly half of the world's population and nearly one-third of the world's trade volume, which is the largest and most important free trade agreement negotiation in the Asia-Pacific region and the largest free trade area in the world. We also compared the GVCs of G7 countries plus China with RCEP RVCs as a control group to ensure the robustness of the empirical results.

2 It should be noted that Japan exists in both the G7 Group and RCEP RVCs.

Additional information

Funding

This work was supported by National Planning Office of Philosophy and Social Sciences of China [grant number 21CJY015].