DHL released the third edition of its Global Connectedness Index (GCI), a detailed analysis of the state of globalization around the world. The latest report, authored by internationally acclaimed globalization expert Professor Pankaj Ghemawat together with Steven A. Altman, shows that global connectedness, measured by cross-border flows of trade, capital, information and people, has recovered most of its losses incurred during the financial crisis. Especially the depth of international interactions – the proportion of interactions that cross national borders – 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 US dollars if boosted in future years.
The DHL Global Connectedness Index aims to provide the most comprehensive and timely account of the world’s global connectedness, backed up by regional and country level analysis covering 140 countries that encompass 99% of the world’s GDP and 95% of its population. It focuses on 12 types of trade, capital, information, and people flows (or stocks cumulated from past flows) and is generated based entirely on hard data to separate the facts about global connectedness from fiction or “globaloney.”
Depth measures countries’ international flows relative to the size of their domestic economies. While all the established globalization indexes devote some attention to depth, the DHL Global Connectedness Index is the only one to register the steep drop-off in trade and capital flows that accompanied the global financial crisis.
In addition to depth, the DHL Global Connectedness Index also looks—unlike other globalization indexes—at breadth as well as several other measures of the distribution of international interactions. Breadth measures how closely a country’s distribution of international flows across its partner countries matches the global distribution of the same type of flows.
Source of data: DHL, Global Connectedness Index