Today’s threats to globalization are real
The world has faced a series of shocks over the past decade, with the Covid-19 pandemic and the war in Ukraine coming on the heels of the US-China trade war and the UK’s withdrawal from the EU. These disruptions, along with gradually rising geopolitical tensions, have strained the ties that connect countries around the world. We’re hearing a lot of talk about greater national self-reliance, a shift from globalization to regionalization, geopolitical fracturing, and even the “end of globalization.”
But the numbers tell quite a different story. Drawing on more than four million data points, the latest edition of the DHL Global Connectedness Index (GCI) demonstrates that international flows are remarkably resilient. For example, trade, capital, and information flows are now well above pre-pandemic levels.
Nonetheless, today’s threats to globalization are real and demand serious attention. We can’t assume that globalization won’t shift into reverse. Now more than ever, our leaders must make decisions based on reliable facts and sound analysis.
We invite you to browse the key takeaways and topline results from the 2022 DHL Global Connectedness Index below and to download the report for a more in-depth analysis.
2022 GLOBAL CONNECTEDNESS INDEX - AT A GLANCE
- The DHL Global Connectedness Index measures globalization based on international flows in four domains: trade, capital, information, and people.
- The 2022 edition was calculated based on more than four million data points on country-to-country flows.
- The report provides a detailed analysis of global trends by examining three questions that go to the heart of the current debates:
1. Are global flows still growing?
2. Is geopolitical rivalry fracturing the global economy?
3. Are international flows becoming more regional?
- The 2022 GCI also ranks and profiles the international flows of 171 countries and territories, comprising 99.7% of the world’s gross domestic product and 96% of its population.
10 KEY TAKEAWAYS
Choose & compare the results
DHL Global Connectedness Index 2022
Please cite data source as: Steven A. Altman and Caroline R. Bastian, "DHL Global Connectedness Index 2022," Bonn: Deutsche Post DHL Group
Lessons from 10 Years of the DHL GCI
CONNECTING TO THE WORLD
International flows are remarkably resilient. Trade, capital, and information flows are now well above pre-pandemic levels.
Summary: Analysis of global trends
The steady drumbeat of global shocks in recent years has led to lots of talk about national self-reliance, widening gaps between rival geopolitical blocs, or increasing regionalization. But what does the data tell us?
Are global flows still growing?
The short answer is yes. International trade, capital, and information flows have all surpassed pre-pandemic levels, and the recovery of people flows accelerated in 2022. International trade in goods was 10% higher than before the pandemic in mid-2022, while trade in services exceeded pre-pandemic figures in early 2022 and foreign direct investment did so in 2021. In contrast, international travel in 2022 remained 37% below 2019, but more than doubled from 2021.
International trade in goods was 10% higher than before the pandemic in mid-2022, while trade in services exceeded pre-pandemic figures in early 2022 and foreign direct investment did so in 2021. In contrast, international travel in 2022 remained 37% below 2019, but more than doubled from 2021.
Most types of international flows are likely to continue growing in 2023, albeit at a slower pace. This is due mainly to weaker global economic growth following large interest rate increases aimed at curbing inflation.
Are geopolitical tensions fracturing the global economy?
US-China flows are declining, but the change is relatively small compared to total flows between the two countries and the world. Considering a sample of eleven types of trade, capital, information, and people flows, the share of US flows going to and from China was 9.3% in 2016 and is now estimated to be 7.3%, based on most recent data. Meanwhile, the share of China’s flows to and from the US fell from 17.8% to 14.3%. However, the US and China remain connected by far larger flows than any other pair of countries that do not share a border.
The decrease in flows between the US and China has also not led to a wider fracturing of the world economy into rival blocs – at least not yet. The share of flows for US allies to and from China and its close allies only was 8.8% in 2016 and is now estimated to be 8.2%, based on most recent data. Alternatively, the share of flows for China’s allies to and from the US and its close allies only declined from 40% to 38%.
Are international flows becoming more regional?
The latest data doesn’t suggest a trend toward more regional international flows. If regionalization was increasing, we would expect to see flows averaging shorter distances. Yet distances are mainly getting longer, with the exception of people flows, which is a lingering side effect of the Covid-19 pandemic.
International flows are already highly regionalized. Roughly half of international trade, capital, information, and people flows take place within major world regions. Whether international flows will become more regionalized in the future remains to be seen. Even though many companies have nearshoring strategies and governments support these efforts, there is a limit to how much higher it is likely to go. And the many benefits of long-distance flows are not going away. What’s more, companies are also adopting other strategies to boost resilience, such as digitalization and dual-sourcing.
Going forward: It’s time to “reglobalize”
The challenges to global connectedness must not be ignored. Instead, we hope they trigger a renewed initiative to make globalization work better, expanding its pool of beneficiaries and overcoming hurdles – which some have started to refer to as reglobalization. The 2022 GCI results suggest five key implications for efforts to improve globalization:
- Strong foundation
The resilience of international flows means we only need reforms to make globalization work better rather than rebuilding from the ground up.
- Untapped potential
The world is much less globalized than many presume, which implies vast untapped potential.
- No “one size fits all”
Countries can and should tailor policies based on their individual circumstances and flow patterns.
- Regional flows are not a threat
Regionalization is a longstanding and integral part of globalization. Even if dependence on faraway flows declines, the impact on global flow patterns could be smaller than many presume.
- Hard data over hollow predictions
Debates about the future of globalization must be grounded in hard data.
Why do we need the DHL Global Connectedness Index?
To make sound decisions, business leaders need solid information. Each year, the DHL GCI provides a grounded perspective on the state of globalization to help them do just that.
What is the DHL Global Connectedness Index?
Globalization is at the forefront of many trade and policy discussions around the world, but it remains difficult to quantify. Making it tangible and measuring its development calls for scrutinizing the data and separating facts from fiction. As a leading logistics company, DHL is uniquely positioned to provide orientation and contribute to the globalization debate.
The DHL Global Connectedness Index is a thorough examination of the state of globalization. It analyzes trade, capital, information, and people flows at the global, regional, and national levels. Each issue builds on the previous report as well as decades of globalization research. A team of scholars at the New York University Stern School of Business conducts the research and analysis. The GCI not only informs DHL’s decisions, but it also helps businesses, governments, journalists, and opinion-makers better understand the nature and trajectory of global connectedness.
Real data and actual flows
The DHL GCI report is based exclusively on hard data and measures the actual flows between countries. It encompasses more than four million data points in four flow categories: trade, capital, information, and people.
Each issue provides a worldwide, regional, and individual look at more than 170 countries and ranks them according to their level of connectedness. The reports also include summaries and analyses for key countries.
Tangible takeaways for sound decision-making
The DHL GCI also offers unique and specific takeaways. As debates about the merits of international openness continue, sound business and public policy decisions depend on accurate measures of globalization. The report is a go-to resource for this purpose. The data can enable better-informed discussions by providing a clearer picture of how globalized countries and the world already are today.
Driven by data, delivered by DHL
First published in 2011, the DHL Global Connectedness Index draws on more than four million data points on country-to-country flows covering 99.7% of global GDP and 96% of the world’s population.
To provide a solid research foundation for the GCI, DHL partnered with New York University’s Stern School of Business. The DHL Initiative on Globalization at NYU Stern houses a team of scholars that creates and authors all DHL GCI reports, striving to be a leading center of excellence for data-driven globalization research.
Due to its unique focus, the DHL GCI is regularly featured in international media outlets and national publications worldwide. It is also increasingly cited in scholarly journals, consultant reports, and general interest books.
Published: March 2023