Ranking the economic importance of countries and industries

In the current era of worldwide market interdependencies, the global financial village has become increasingly vulnerable to systemic collapse. The global financial crisis has highlighted the necessity of understanding and quantifying the interdependencies among the world’s economies; developing new, effective approaches for risk evaluation; and providing mitigating solutions. We present a methodological framework for quantifying interdependencies in the global market and for evaluating risk levels in the worldwide financial network. The resulting information will enable policy and decision makers to better measure, understand and maintain financial stability. We use this methodology to rank the economic importance of each industry and country according to the global damage that would result from its failure. Our quantitative results shed new light on China’s increasing economic dominance over other economies, including that of the United States, as well as the global economy.