The Proposition and Construction of Industrial Network Theory _Based on the View of Complex Network

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The Proposition and Construction of Industrial
Network Theory _Based on the View of Complex
Network

• Speaker Jingjing Wang
• (Graduate School. of The Chinese Academy of
  Social Science)
• Collaborator Xiaoyun Yang
• (China Agricultural University)

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• Only a very minority of the economists has
  embraced this approach. (Mauro Gallegati)

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Outline

• Introduction
• (1) The constraints of mainstream economics
• (2) The thought of complex network
• The explanation of industrial network
• (1) The proposition of industrial network
• (2) The topological properties of industrial
  network
• (3) The value of research on industrial network
• The following research work
• Summaries and conclusions

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Introduction The constraints of mainstream
economics

• Main methodology
• ?Equilibrium analysis
• Research subjects
• ?Micro-economics representative agent
• ?Macro-economics aggregation
• ?Meso-economics simple structure

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IntroductionThe thought of Complex Network

• Two new theoretic discoveries are
• Small-World effect (Watts and Strogatz, 1998)
• Scale-Free feature (Barabási and Albert, 1999)
• Deep insights yielded by complex network
• WWW, biological networks, ecological networks,
  social networks, financial networks
• Universal law of complex system

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IntroductionIntegration is imperative

• Newly-emerging economic phenomena
• diverse enterprises, global competition and
  cooperation,
• complex and multi-scale connections, changing
  every day
• New and advanced methods
• Agent-based model, Complex network
• What we have done is to integrate industrial
  system and complex network.

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The explanation of industrial networkIndustrial
system

• What is industrial system?
• Industrial system is a group of enterprises,
  connected during the process of division of
  labor.
• How do we study industrial system?
• (1) the structure
• (2) the function
• (3) the dynamics

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Industrial networkDefinition

• The definition of industrial network
• Industrial network is a model to analyze
  industrial system, taking micro enterprises as
  vertices and competitive or cooperative
  connections between them as edges.
• Vertice
• The enterprises are the most alive, active,
  adaptive parts they allocate resources and
  factors, sustain their running, and supply goods
  or service their metabolisms guarantee the
  working of industrial system.
• Edge
• buyer-seller, the equity investment, joint
  development, sharing key resources,
  complementary/ substitute goods or service

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Industrial Network StructureTopological
properties

• Though qualitative analysis are not competent to
  describe the topology of complex network, it is
  an initial attempt to explain why we need measure
  the following index and what they mean to the
  economic system.
• Degree distribution
• Path length
• Clustering coefficient

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Topological propertiesDegree distribution

• How does an enterprise establish and develop?
• ?Choose an industry and a region
  simultaneously
• ?Enter an industry based on its comparative
  advantage
• ?Cluster within a particular geographical
  area
• ?There is no enterprise isolated.
• All partners of an enterprise is its preferential
  choices.
• Industrial network is an open system. New
  enterprises are entering.
• Growth and preferential attachment is similar to
  the evolving mechanism of scale-free network.
• Conclusion What the degree distribution of
  industrial network follows is like a power law,
  but not equal to.

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Topological propertiesPath length

• In inner sub-network
• ?The emergence of new vertices increases the
  path length.
• ?Human relationships decrease path length
  directly, because industrial network is embedded
  in social network.
• In inter sub-networks
• ?Building new or more connections between
  sub-networks
• ?Long-range or short-cut edges are the key of
  small world.
• On average, the path length is shortened with the
  entering of new enterprises.
• Conclusion Path length of industrial network is
  short.

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Topological propertiesClustering coefficient

• Community or Local world
• ?From the perspective of industry, similar
  enterprises form a sub-industry. Industrial
  agglomeration describes the densely connected
  enterprises of sub-industry.
• ?From the perspective of region, enterprises
  need to share particular resources,
  infrastructure, and etc. Geographic agglomeration
  describes the enterprises clustering in a certain
  region.
• Industrial network has significant characteristic
  of community, whose clustering coefficient is
  high.
• Conclusion Clustering coefficient of industrial
  network is high.

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Topological propertiesShort conclusion

• The topological structure of industrial network
  is similar to small world network and scale free
  network, but not equal to.
• The topology reflects particular functions
  efficiency, fragility, robustness
• More specific and clear characterizing needs a
  proper model. --cooperation badly needed?

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Industrial Network Evolution and Model

• A local-world evolving network model (Li Xiang,
  Chen Guanrong) may be applicable to industrial
  network.
• Local-world evolving network (mechanism)
• ?Based on local information
• ?Choose in a local world
• ?Preferential choice
• Topological properties of local-world evolving
  network lie between those of random network and
  scale-free network.

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The value of research on industrial network

• Reveal ups and downs of regions and countries
• Reveal the development prospect of some
  industries
• Reveal the risk/crisis propagation
• How to lift backward areas out of poverty
• How to combat crisis systematically
• Carry out policies appropriately and globally

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The following research work

• Empirical research, to examine the topology of
  industrial network quantitatively.
• Dynamics, which bridges topological structures
  and functions, is a root of understanding the
  running mechanism of industrial system
  (simulation and quantitative analysis).

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Summaries and conclusions

• It is exploratory and initiative to propose
  industrial network theory, calling for a new
  paradigm of economic research.
• The key is to integrate and cooperate.
• It is just a start and a conceptual framework,
  and more work needs to be done.

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• Thanks for your time and patience!
• Welcome any comments and questions!