The Impact of Country Risks on the Dependence Patterns of International Cobalt Trade: A Network Analysis Method

Abstract

Cobalt is a key resource for the global energy transition, and the differences in the natural endowment of cobalt have led to frequent cobalt trade among countries. This study aims to reveal the dependence patterns of cobalt trade among countries and the impact of country risks (including political and economic risks) on the patterns. First, a cobalt import dependence network (CIDN) and a cobalt export dependence network (CEDN) are established using the network analysis method. Furthermore, this study uses network indicators to reveal the dependence patterns of cobalt trade among countries, and construct diversification indices of trade relations to further analyze the import source risk and the market concentration of cobalt trade. The results indicate that most cobalt importers have a high import source risk, and most cobalt exporters have a high market concentration. Finally, based on the panel regression methods, we reveal an interesting result showing that the dependence patterns of cobalt trade are significantly influenced by country risks. Specifically, on the one hand, for importers, an increase in political risk or economic risk has a negative impact on their dependence patterns of cobalt trade. On the other hand, for exporters, an increase in political risk or economic risk has different effects on their dependence patterns of cobalt trade. This study suggests that countries should pay more attention to the role of country risks in driving the dependence patterns when making cobalt trade policies.

The Impact of Geopolitical Risk on Portuguese Exports

“…The country risk (LogRISK) showed a reduction of country costs at 1%, promoting the performance of the Portuguese export in (0.693%) and (0.911%) with OLS and the random effect estimator, respectively. Previous studies by Shi et al (2022), Wang et al (2021), Hassan (2022), and Goswami and Panthamit (2022) also found similar results.…”

“…Several articles about the gravity model, such as those by Moser et al (2008), Gupta et al (2019), Wang et al (2021), andShi et al (2022), studied the impact of country risk on trade flows. The literature on international economics states that the country's risk of an economy can affect the flows of international trade and investment, particularly if this economy has a high country risk.…”

“…The cobalt trade was investigated by Shi et al (2022), who considered exports and imports. The variables of political and economic risk are negatively correlated with imports.…”

“…According to the literature review, risk control or reduction reduces trade costs, promoting bilateral international trade. Thus, according to Hassan (2022), Sun et al (2022), Shi et al (2022), Goswami and Panthamit (2022), Wang et al (2021), Moser et al (2008), and Gupta et al (2019), a negative association is expected between the country's risk and Portuguese exports: α5 < 0.…”

“…The insecurity and instability of countries, measured as a function of country risk, and its impacts on international trade have been evaluated by several studies, such as Anderson and Marcouiller (2002), Moser et al (2008), Gupta et al (2019), Wang et al (2021), and Shi et al (2022). Economic theory argues that countries with lower country risk stimulate bilateral trade and consequently reduce trade costs.…”