  We study the ever more integrated and ever more unbalanced trade
relationships between European countries. To better capture the complexity of
economic networks, we propose two global measures that assess the trade
integration and the trade imbalances of the European countries. These measures
are the network (or indirect) counterparts to traditional (or direct) measures
such as the trade-to-GDP (Gross Domestic Product) and trade deficit-to-GDP
ratios. Our indirect tools account for the European inter-country trade
structure and follow (i) a decomposition of the global trade flow into
elementary flows that highlight the long-range dependencies between exporting
and importing economies and (ii) the commute-time distance for trade
integration,which measures the impact of a perturbation in the economy of a
country on another country, possibly through intermediate partners by domino
effect. Our application addresses the impact of the launch of the Euro. We find
that the indirect imbalance measures better identify the countries ultimately
bearing deficits and surpluses, by neutralizing the impact of trade transit
countries, such as the Netherlands. Among others, we find that ultimate
surpluses of Germany are quite concentrated in only three partners. We also
show that for some countries, the direct and indirect measures of trade
integration diverge, thereby revealing that these countries (e.g. Greece and
Portugal) trade to a smaller extent with countries considered as central in the
European Union network.
