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Gray, Julia and Philip B.K. Potter. (2012) Trade and Volatility at the Core and Periphery of the Global Economy. International Studies Quarterly, doi: 10.1111/j.1468-2478.2012.00748.x © 2012 International Studies Association

Researchers typically assume that economic openness increases volatility. But the conventional empirical shorthand for economic openness (trade as a share of overall income) fails to account for crucial distinctions in the way that states trade. States that are deeply incorporated into the core of the international trading network have very different experiences than states at the periphery with fewer, more marginalized trading partners. This article demonstrates that a position at the core of the international trading system rather than the periphery actually diminishes volatility. Thus, a country’s position in the world economy can, independently of its overall volume of trade, moderate the risks of exposure to international markets. To demonstrate how this distinction might impact political outcomes and future scholarship, we show that this reduction in volatility allows governments to minimize compensation to their domestic publics.