In today’s turbulent times, business and government leaders must distinguish between predictions and actual shifts in international activity. The latest DHL Global Connectedness Index (GCI) strongly rebuts the notion that a major retreat from globalization is underway and underscores the potential of a more connected world.
Global flows show no signs of a shift from globalization to deglobalization
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.
Global connectedness rebounded in 2021 and currently available data point to another increase in 2022.
Despite fewer US-China flows, no broad fracturing of the world economy into rival blocs.
Most flows contradict predictions of a shift from globalization to regionalization.
World trade reached 10% above pre-pandemic level in mid-2022.
After rebounding in 2021, foreign direct investment weakened in Q2 2022.
The globalization of information flows continued in 2021.
Cross-border people flows doubled in 2022 but remained below pre-pandemic levels.
The Netherlands was the most globally connected country in 2021.
With 8 of the 10 most globally connected countries, Europe leads in trade and people flows.
The public policy climate has become less favorable for globalization.
Please cite data source as: Steven A. Altman and Caroline R. Bastian, "DHL Global Connectedness Index 2022," Bonn: Deutsche Post DHL Group
CONNECTING TO THE WORLD
International flows are remarkably resilient. Trade, capital, and information flows are now well above pre-pandemic levels.
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.
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%.
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.
Published: March 2023
