Spatiotemporal Evolution and Determinant Factors of the Intra-Regional Trade Community Structures of the Indian Ocean Region

Abstract

The Indian Ocean Region (IOR) has become one of the main economic forces globally, and countries within the IOR have attempted to promote their intra-regional trade. This study investigates the spatiotemporal evolution of the community structures of the intra-regional trade and the impact of determinant factors on the formation of trade community structures of the IOR from 1996 to 2017 using the methods of social network analysis. Trade communities are groups of countries with measurably denser intra-trade ties but with extra-trade ties that are measurably sparser among different communities. The results show that the extent of trade integration and the trade community structures of the IOR changed from strengthening between 1996 and 2014 to weakening between 2015 and 2017. The largest explanatory power of the formation of the IOR trade community structures was the IOR countries’ economic size, indicating that market remained the strongest driver. The second-largest explanatory power was geographical proximity, suggesting that countries within the IOR engaged in intra-regional trade still tended to select geographically proximate trading partners. The third- and the fourth-largest were common civilization and regional organizational memberships, respectively. This indicates that sharing a common civilization and constructing intra-regional institutional arrangements (especially open trade policies) helped the countries within the IOR strengthen their trade communities.