More globalisation and international economic integration will help the world economy to get out ofthe current crisis more quickly, according to the first DHL Global Connectedness Index (GCI) that
was released today at an Asian leaders summit.The world is not as globalised as many think and many economies still trade mostly withregional neighbours or a relatively small group of long-standing trading partners, the study said.But globalisation generates economic growth and continued economic integration could spur globalGDP gains of 5 per cent or more.
The DHL Global Connectedness Index (GCI) is a detailed country-by-country analysis of theflows that connect the world. It ranks 125 countries according to the depth and breadth of theirintegration into the world economy and also examines the relationship between global connectednessand welfare.
The study found that the actual level of connectedness today is much lower than commonlybelieved; its potential for positive growth, therefore, is significant. The lion’s share ofinternational connections are still concentrated among countries that share borders (such as inNorthern Europe) as well as cultural and historical ties, which indicates that much of today’sglobalisation is actually regionalisation. Larger countries scored higher on the global breadth oftheir connections, while smaller countries excelled in the depth of their connectedness.
The world’s 10 most ‘connected’ economies in terms of breadth and depth are the Netherlands,Singapore, Ireland, Switzerland, Luxembourg, the United Kingdom, Sweden, Belgium, Hong Kong (China)and Malta, the 2011 GCI found. The Netherlands was the overall No. 1, Hong Kong scored the highestfor the depth of its international connections, and the UK topped the list for the breadth of itsconnections. The USA, however, despite increasing its trade interaction in recent years, onlyranked No. 25 overall, and while it was a leader in terms of breadth (#3) it lagged on depth (#84),due mostly to its very large internal market.
The GCI study was unveiled against the backdrop of the APEC CEO Summit and Leaders’ Week inHonolulu, a global summit where heads of state and business leaders meet annually to discussinternational economic issues. The study was commissioned by DHL and conducted by world-renownedglobal business strategist and economist, Pankaj Ghemawat, Professor of Global Strategy at the IESEBusiness School, Barcelona.
“Our research shows that global economic integration is not as deep as perceived. Therefore,we see untapped potential for growth for each country and globally. Increasing global connectednessis likely to spur further growth by adding trillions of dollars to global GDP,” Ghemawat said.”Thepositive impact of global connectedness on world prosperity will continue to be of greatimportance. The misgivings some political leaders have about increasing global integration aremisplaced; its benefits far outweigh the potential downsides,” he added.
The DHL Global Connectedness Index 2011 examined data on 10 different types of internationalflows, covering the categories of trade, capital, information and people, over the years from 2005to 2010. Unlike existing indices, the GCI analysed not only the depth of countries’ cross-borderinteractions but also their geographic breadth – distinguishing countries that are truly connectedacross the globe from those with deep ties only to a small set of partner countries. Additionally,it was based exclusively on hard quantitative data.
“This research provides evidence that a connected world is a better world, in terms of globalwelfare and individual development. The free trade of products and services contributessignificantly to global prosperity,” said Roger Crook, CEO, DHL Global Forwarding, Freight. Thedata findings of DHL’s study will likely be of benefit to corporate as well as political andeconomic leaders as they shape business and trade strategies, Crook said. “By calibrating how trulyconnected we are, countries can identify opportunities and the channels through which they canimprove their prosperity.”
The full DHL Global Connectedness Index 2011 as well as further background information can bedownloaded at http://www.dhl.com/gci.
