Covering 12 types of international flows across 169 countries and territories, the DHL Global Connectedness Index offers a clear, up-to-date view of how the world is connected today and where new trade opportunities are emerging. So, which countries are leading the way, and which ones are starting to fall behind?
Now in its seventh edition, the GCI explores global 'connectedness' – the extent to which any given country is connected to others globally, measured based on actual interactions that take place between its citizens and other countries. It does this by considering depth (how much of their activity is domestic versus international) but also breadth (how many countries the international activity is shared among).
It's about more than just international trade; it's also about communication and migration. This update of the DHL Global Connectedness Index was calculated based on more than 3.5 million data points on country-to-country-flows. It provides full coverage from 2001 to 2020, along with partial analysis of the first half of 2021. The report also features a deep dive into the U.S.-China trading relationship, tracing the sharp decline in U.S.-China trade, as well as an examination of recent claims that globalization is giving way to regionalization.
“International exchange empowers people and businesses around the world to collaborate and seize new opportunities,” comments John Pearson, CEO of DHL Express. “While current geopolitical tensions could seriously disrupt global connectedness, this 2019 update finds that most international flows have remained surprisingly resilient so far. Ultimately, what we’re seeing today is the evolution of globalization, not its decline. Decision-makers need to be careful to not overreact to strong rhetoric or headlines.”
Trade and capital flows: slowing down, but still moving
Global trade hasn’t stopped, but it has eased off the accelerator a bit. During the early days of the U.S.–China trade tensions in 2018, trade was still gaining momentum. However, things cooled in 2019, with a smaller share of global goods being traded across borders. Trade is still growing, just not as fast as the overall global economy. The good news? There’s no dramatic drop, just a slight dip expected in the near term.
When it comes to capital flows, 2018 saw a noticeable decline, mainly due to reduced foreign direct investment and portfolio investments. Early signs in 2019 suggest things are stabilizing, even if a strong rebound hasn’t fully kicked in yet. A big reason for the dip was changes in U.S. tax policies, which encouraged companies to bring money back home. So while the numbers might look a bit worrying at first glance, the bigger picture suggests global business connections are still holding strong.
Global information and people flows: still on the rise
On the brighter side, the movement of information and people across borders continues to grow. While international communication is still expanding, it’s now increasing at a pace closer to domestic communication than in previous years.
Meanwhile, global travel is booming. More people from emerging markets are traveling abroad, and easier visa policies are helping fuel international tourism. Even with ongoing debates around migration policies, the number of people moving across borders continues to rise, showing that global connectivity is far from slowing down.
Domestic business activity still dominates
Looking ahead, the 2019 update notes that all four flows measured by the DHL Global Connectedness Index— trade, capital, information and people—are currently running up against powerful headwinds. Rising barriers and uncertainty about future openness are starting to carry significant costs. At the same time, a survey on globalization perceptions reveals that many people do not realize how limited global connectedness actually is. While the world is more connected than at almost any previous point in history, most business still takes place within rather than across national borders. The report highlights how such exaggerated perceptions of globalization can lead to distorted decision-making in business and an underestimation of the significant potential available from further increases in global connectedness.
To explore the GCI in full and see how your country stands up in relation to the rest of the world, click here.
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