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Sails Lunch Time Seminar Carolina Mattsson
24 October 2022 @ 12:00 - 13:00 CEST
Functional structure in production networks
The financial connections underlying modern economies are often largely unseen; data on company-company trade is rarely collected, and mostly proprietary. Here we situate so-called production networks within a wider space of networks that are different in nature, but similar in local connectivity structure. Through this lens, we study a regional and a national network of inferred trade relationships reconstructed from Dutch national economic statistics and re-interpret prior empirical findings. We find that company-level production networks have “functional” local connectivity structure, as previously identified in protein-protein interaction (PPI) networks. Functional networks are distinctive in their over-representation of closed squares, which we quantify using an existing measure called spectral bipartivity. Shared local connectivity structure lets us ferry insights between domains: PPI networks are shaped by complementarity, rather than homophily, meaning that companies are especially similar to their close competitors, not to their trading partners. Our findings have practical implications for downstream machine learning tasks involving financial connections among companies, such as link prediction and network embeddings. Moreover, production networks are integral to economic dynamics and our findings are of particular relevance to industrial climate policy.