Regional blocs or global markets? A world accounting approach to analyze trade and financial linkages

Do we live in a world of globalized capital and commodity markets or do regional networks dominate trade and financial linkages between economies? This paper addresses the question, using an integrated and consistent data system of trade and financial flows, called the World Accounting Matrix (WAM). This framework overcomes many of the data discrepancies and shortcomings in official statistics sources. Simple descriptive parameters are derived from the WAM to define the degree of trade and financial linkages between countries and regions. It is found that regional ties continue to be a predominant feature of the structure of the world economy.