Thresholds

From QED

Thresholds Table

The Thresholds table contains computed trade volume thresholds for commodities by year.

The Trade portion of the Mapping Globalization Database has over 1.5 million records. Even with the help of visualizing tools, this is simply too much data to display at once. One useful way of limiting the amount of data is to create thresholds. Thresholds are cut-off values that allow the user to select a subset of countries based on whether a country's trade volume falls within a specified threshold range. Three different methods are employed to compute thresholds that facilitate comparisons and help detect emerging patterns. (For discussion of the original proposed algorithms, see Thresholds Memo.)

Method 1: Threshold as Percent of Total Traded Volume

The first method to create thresholds separates out all transactions larger than a certain percent of the total traded value using 1980 percent value as a constant dollar term for 1980, 1990 and 2001. To compute this threshold, first the total value of trade in a commodity in 1980 was found by adding up all of the monetary values reported in all cells across countries. This total, $Tc80, is the total value ($T) for commodity c in 1980. The threshold value for 1980 is calculated using the following formula.

(THIS SECTION MUST BE UPDATED TO REFLECT THAT THE 0.1% is actually 0.3% and how/when this was corrected.)

$P.1c80 = .001 x $Tc80

This is the dollar value of 0.1% of the total trade value in 1980 of commodity c. Then thresholds for 1990 and 2001 are determined using the CPI inflator by multiplying $P.1c80 by 1.59 for the 1990 value ($P.1c80_90) and by 2.15 for the 2001 value ($P.1c80_01). Values are rounded-up to the nearest 1,000 value in each cell to calculate inclusion.

Method 2: Threshold as defined by the Fifty Largest Trade Volumes

The second method for creating a threshold focuses attention on the fifty largest trade volumes in a commodity-year. This method is particularly useful when looking at trade within one region. This method is the simplest: extract the trade volumes in a commodity-year among the countries of interest, then sort them in descending order from largest to smallest. The value of the fiftieth volume is the threshold limit.

Method 3: Threshold as a Percentile of the Cumulative Trade Volume

The third threshold is useful because it helps demonstrate how concentrated or diversified trading partners are in a particular commodity-year. This threshold limits trade to the largest volume that when added together account for 25%, 50%, 75% or 90% of the total world trade in that commodity-year. To determine the thresholds at each of these levels, extract sort the country-to-country trade values in a commodity-year in descending order. Next, calculate a cumulative sum and the percent of the total for each trade link. The value of the country-to-country relationship that pushes the cumulative percent over 25%, say, is the threshold for that level. When this value is entered into Netmap, the resulting image shows only the trade volumes that make up the top 25% of total trade. A very small number of countries and trade relationships indicates highly concentrated trade within that particular commodity-year.