Executive Briefings

International Trade, Capital Flows Have Bounced Back from Economic Crisis, Index Shows

Global connectedness, measured by cross-border flows of trade, capital, information and people, has recovered most of its losses incurred during the financial crisis, according to the third edition of DHL's Global connectedness Index.

The depth of international interactions especially gained momentum in 2013 after its recovery had stalled in the previous year. Nonetheless, trade depth, as a distinct dimension of globalization, continues to stagnate and the overall level of global connectedness remains quite limited, implying that there could be gains of trillions of U.S. dollars if boosted in future years.

"In the aftermath of the financial crisis, globalization has increasingly come under pressure and international trade negotiations face growing resistance," said Frank Appel, CEO Deutsche Post DHL. "In this environment of uncertainty, the DHL Global Connectedness Index offers a comprehensive, fact-based understanding of globalization and demonstrates the huge potential for countries to further increase their connectedness. I am convinced that a prosperous world needs more, not less integration."

The index 2014 documents the substantial shift of economic activity to emerging economies that is pushing the world's economic center of gravity eastward. Emerging countries are now involved in the majority of international interactions whereas before 2010, the majority of international flows were from one advanced economy to another. Notably, the 10 countries where global connectedness increased the most from 2011 to 2013 are all emerging economies, with Burundi, Mozambique and Jamaica experiencing the largest gains.

Advanced economies have not kept up with this shift. This suggests that they may be missing out on growth opportunities in emerging markets. "Counteracting this trend would require more companies in advanced economies to boost their capacity to tap into faraway growth," said New York University Prof. Pankaj Ghemawat, co-author of the report and a globalization expert and business strategist. "This is particularly evident in light of the fact that a decades-long trend toward trade regionalization has gone into reverse." In fact, the GCI 2014 reveals that every type of trade, capital, information and people flow measured has expanded over greater distances in 2013 than in 2005, the report's baseline year.

The 2014 Index Results
In addition to a comprehensive overview on the state of globalization, the 2014 report also provides detailed insights into the connectedness of individual countries and regions. The Netherlands retained its top rank as the world's most connected
country and Europe is once again the world's most connected region.

All but one of the top 10 most globalized countries in the world are located in Europe, with Singapore as the one standout.

North America is the second-most globally connected region and leads on the capital and information pillars, with the United States as the most connected country in the Americas. Overall the U.S. is ranked 23rd place out of the 140 countries measured by the GCI. The largest average increases in global connectedness from 2011 to 2013 were observed in countries in South and Central America and the Caribbean.

Middle East and North Africa was the only region to experience a significant decline in connectedness.

The report and supplemental background information can be downloaded, click here.

Source: DHL

The depth of international interactions especially gained momentum in 2013 after its recovery had stalled in the previous year. Nonetheless, trade depth, as a distinct dimension of globalization, continues to stagnate and the overall level of global connectedness remains quite limited, implying that there could be gains of trillions of U.S. dollars if boosted in future years.

"In the aftermath of the financial crisis, globalization has increasingly come under pressure and international trade negotiations face growing resistance," said Frank Appel, CEO Deutsche Post DHL. "In this environment of uncertainty, the DHL Global Connectedness Index offers a comprehensive, fact-based understanding of globalization and demonstrates the huge potential for countries to further increase their connectedness. I am convinced that a prosperous world needs more, not less integration."

The index 2014 documents the substantial shift of economic activity to emerging economies that is pushing the world's economic center of gravity eastward. Emerging countries are now involved in the majority of international interactions whereas before 2010, the majority of international flows were from one advanced economy to another. Notably, the 10 countries where global connectedness increased the most from 2011 to 2013 are all emerging economies, with Burundi, Mozambique and Jamaica experiencing the largest gains.

Advanced economies have not kept up with this shift. This suggests that they may be missing out on growth opportunities in emerging markets. "Counteracting this trend would require more companies in advanced economies to boost their capacity to tap into faraway growth," said New York University Prof. Pankaj Ghemawat, co-author of the report and a globalization expert and business strategist. "This is particularly evident in light of the fact that a decades-long trend toward trade regionalization has gone into reverse." In fact, the GCI 2014 reveals that every type of trade, capital, information and people flow measured has expanded over greater distances in 2013 than in 2005, the report's baseline year.

The 2014 Index Results
In addition to a comprehensive overview on the state of globalization, the 2014 report also provides detailed insights into the connectedness of individual countries and regions. The Netherlands retained its top rank as the world's most connected
country and Europe is once again the world's most connected region.

All but one of the top 10 most globalized countries in the world are located in Europe, with Singapore as the one standout.

North America is the second-most globally connected region and leads on the capital and information pillars, with the United States as the most connected country in the Americas. Overall the U.S. is ranked 23rd place out of the 140 countries measured by the GCI. The largest average increases in global connectedness from 2011 to 2013 were observed in countries in South and Central America and the Caribbean.

Middle East and North Africa was the only region to experience a significant decline in connectedness.

The report and supplemental background information can be downloaded, click here.

Source: DHL