THE STATE OF GLOBALIZATION IN A DISTANCING WORLD

Even if the world feels uncertain, a remarkable degree of continuity remains. Supply chains around the world continue to keep doors open and business flowing, driven by state-of-the-art logistics networks. Digital technology continues to connect people, allowing us to share ideas and solve problems, even at a distance.

As this year comes to a close, we can now look back at the data and put it all into much-needed perspective. And that’s precisely what we’ve done, in partnership with a team of researchers at New York University’s Stern School of Business. The 2020 DHL Global Connectedness Index, now in its seventh edition, shows that globalization is far from dead, with most international flows proving more resilient in 2020 than many expected.

Resilience, recovery, and resurgence

The DHL Global Connectedness Index measures globalization based on international flows of trade, capital, information, and people. Predictably, people flows have suffered an unprecedented collapse in 2020. However, all other types of flows have held up surprisingly well. Trade and capital flows plunged at the onset of the pandemic but have already started to recover. And digital information flows have surged as people and companies have rushed to stay connected online. 

All in all, the DHL Global Connectedness Index is set to decline in 2020. Still, it is unlikely to fall below where it stood during the 2008-09 global financial crisis, based on our analysis of preliminary data and forecasts. COVID-19 has disrupted business and life worldwide, but it has not severed the fundamental links that connect us across national borders. Our report shows a world of people, companies, and countries still prepared to join up and do business with each other. That’s good news because a more connected world still offers the best prospects to restore health and prosperity. 

To make sound decisions, business leaders need solid information. Each year, the DHL Global Connectedness Index (GCI) provides a grounded perspective on the state of globalization to help them do just that.

An essential piece of the puzzle

Globalization is at the forefront of many trade and policy discussions around the world, but it remains a difficult concept 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 (GCI) 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. The research and analysis is conducted by a team of scholars at the New York University Stern School of Business. 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 3.5 million data points in four flow categories: trade, capital, information, and people.

Each issue provides a worldwide, regional, and individual look at more than 150 countries and ranks them according to their level of connectedness. The reports also include summaries and analysis for key countries. 

Tangible takeaways for sound decision-making

The DHL Global Connectedness Index 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. DHL's GCI aims to be 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. 

Each DHL GCI examines the latest data on trade, capital, information, and people flows and then puts recent developments into historical context. But over the years, some more general findings have proven to be valid over the longer term:

1. Globalization holds up, even under intense pressure
   Despite strong headwinds in global geopolitics and trade, the GCI has shown surprising resilience in recent years. The Covid-19 pandemic put people flows on pause, but trade, capital, and information flows have helped to keep the world connected.
   
2. The world is less globalized than many presume
   Overall, the world is not as globalized as many think. Surveys consistently show that people believe international flows are more extensive than they actually are. Every country has untapped opportunities for increased connectedness, with potential gains into the trillions of U.S. dollars.
   
3. The Netherlands is the most globally connected country
   While the GCI country ranking has changed frequently over time, one country has consistently stayed at the top: The Netherlands. Due to a combination of unique traits, this country is a globalization champion, which isn’t likely to change.