The latest DHL Global Connectedness Report, released March 2024, strongly challenged the notion that the world has entered a period of deglobalization. Published every two years, the report is based on a detailed analysis of trade, capital, information, and people flows—both worldwide and at the level of individual countries.

This DHL Global Connectedness Tracker provides a shortened, downloadable format to stay updated on key trends between full reports, accompanied online by interactive charts with additional detail on specific flows and geographic areas. With the re-election of Donald Trump as U.S. President, this tracker provides an up-to-date baseline on the state of globalization and a platform to monitor changes moving forward.

We provide updates on four key questions: (1) Has the growth of global flows gone into reverse? (2) Is geopolitical rivalry fracturing the world economy? (3) Are international flows becoming more regional? (4) Are countries diversifying their international flows?

No. The DHL Global Connectedness Index depth dimension measures international relative to domestic activity (see Figure 1). It reached a record high of 25% in 2022 and remained at roughly the same level in 2023. Currently available data and forecasts also indicate no substantial change in 2024. The growth of international flows is keeping pace with the growth of domestic activity, with all four categories of flows—trade, capital, information, and people—showing substantial resilience.

The growth of international flows in the face of rising policy constraints and uncertainty may strike some as surprising. It suggests how valuable international flows are for countries and companies—and how costly deglobalization could be, not only for economic growth but also for other priorities such as combatting climate change, curbing inflation, and boosting economic resilience. Also, the recent growth of international flows would likely have been greater if the international environment had not been so turbulent.

A deeper look at the data shows that the growth of international flows varies across locations and types of activity. For example, in high income economies, the share of all value created domestically that is exported abroad has been on a rising trend over the past two decades (see Figure 3). By contrast, in low and middle income economies (excluding China), this measure of export intensity was still slightly below its 2008 peak level in 2023, with a rising trend only since 2016. China’s export intensity—which plummeted between 2006 and 2019—rose again during the Covid-19 pandemic, highlighting China’s renewed focus on exports.

Trade in services—especially digitally delivered services—has shown stronger growth than trade in physical goods. While export intensity is much lower for services (15% in 2023) than for goods (33%), it has been on a long-term rising trend.^[3] These data support the view that services offer promising opportunities for export-led growth, but they caution against giving up on export-led development in goods-producing sectors. Goods are still traded more intensively than services, and recent goods trade intensity data show a stable rather than a declining trend.

Here, the evidence is mixed. Countries at the center of current tensions have seen substantial geopolitically driven shifts in their international activity, but we are still far away from a split of the world economy into disconnected geopolitical blocs. To the contrary, some countries are cultivating new roles as “connecting economies” linking geopolitical rivals.

Most discussion of a potential fracturing of the world economy focuses on the possibility of a separation between rival U.S.-centric and China-centric blocs of countries. To be sure, we do see a clear reduction in U.S.–China ties. As shown in Figure 4, the share of U.S. trade, capital, and information flows involving China has fallen by about 26% since 2016, and the share of China’s flows involving the U.S. has fallen by roughly 20% over the same period.

While geopolitically driven shifts in international flows—such as those between the U.S. and China—naturally captivate the world, it is essential to keep their magnitudes in perspective. As shown in Figure 6, the share of world merchandise trade taking place directly between the U.S. and China has fallen from 3.5% in 2016 to 2.6% in 2024 (Jan–Jul).^[6] This is a large drop in U.S.–China trade, but only a small shift from a global perspective. Moreover, while there has been faster trade growth within as compared to between geopolitical blocs since Russia’s full-scale invasion of Ukraine in February 2022, the share of world trade taking place between blocs of close allies (excluding direct trade between the U.S. and China) has only fallen from 13.7% in 2021 to 10.5% in 2024.^[7] If we also exclude Russia’s trade with all countries, the decline in the share of trade crossing between blocs of close allies is even smaller (from 12.3% to 10.4%), leaving this measure close to its pre-Covid level of 11.4% in 2019.

Four times more trade already happens within groups of close allies than between them. Friendshoring is not a new phenomenon, and what we are seeing now is more consistent with reducing reliance on adversaries than substantially boosting reliance on friends. The share of trade happening among close allies has held fairly steady for more than a decade (with about 36.6% of world trade taking place among U.S. close allies in 2023 and about 4.0% among China’s close allies). Instead, modest declines in the share of trade happening between blocs of close allies have been matched by small increases in the share of trade involving countries that are unaligned geopolitically or that only “lean” toward one superpower or the other. The share of trade involving countries that are neither close allies of the U.S. nor of China rose from 42.2% in 2016 to 46.7% in 2024. The United Arab Emirates, India, Viet Nam, Brazil, and Mexico exemplify this trend, ranking among the countries with the largest recent increases in their shares of world trade. The share of trade involving countries that are not even classified as “leaning” toward one or the other superpower rose from 15.4% in 2016 to 17.3% in 2024.

As a final way of illustrating the limited extent of geopolitically driven realignments of international activity, we track the average “geopolitical distance” over which countries interact (calculated based on how countries vote in the UN General Assembly). If a rising share of international flows were taking place between countries with similar geopolitical alignments, we would see these geopolitical distance measures decline. The actual data (see Figure 7), however, show most international flows happening over stable or rising geopolitical distances since Russia’s full-scale invasion of Ukraine, especially if we exclude Russia and direct U.S.–China flows from the calculations.

Thus, even as countries at the center of current tensions do have major geopolitically driven shifts in their international flows, the world economy has not—at least yet—developed a major split between rival blocs of geopolitically-aligned countries. That is good news, because the IMF has warned that a bifurcation of world trade along geopolitical lines could cut world GDP by as much as 7%, and technological fragmentation could lead to even larger losses.

The return of Donald Trump to the White House is expected to lead to further realignments of international trade patterns. While actual policy changes remain uncertain, Trump’s campaign promises call for substantial tariff increases on U.S. imports from all countries and larger increases specifically on imports from China. If such tariffs are enacted, U.S. trade partners are expected to retaliate. This implies especially great pressure on the 2.6% of world goods trade that takes place directly between the U.S. and China, and some pressure more broadly on the 22%
of all goods trade that is to or from the U.S. (13% of world imports and 9% of exports).

In fact, most flows are taking place over stable or longer distances. There was a small decline in the average distance traveled for goods trade in 2023, but this indicator rebounded to a record high level during the first seven months of 2024, and the share of trade happening inside major world regions fell to a new low. There were also large increases in 2022 and 2024 (year to date) in the average distance between companies’ home countries and the countries where they announced greenfield FDI projects. In short, the current data does not support a general pattern of rising regionalization.

While we do not see rising levels of regionalization, it is important to recognize that international activity is already highly regionalized. On average, about half of the world’s trade, capital, information, and people flows take place inside roughly continent-sized regions, roughly three times more than one would expect if international flows were not constrained by geographic distance and other types of cross-country differences. Most countries interact far more intensively with their neighbors than they do with more distant countries.

A growing focus on de-risking countries’ international activity has drawn attention to diversification of international flows across origin/destination countries. Policymakers and business leaders alike aim to avoid excessive reliance on any specific partner, especially those that could prove unreliable, e.g. due to geopolitical tensions. To monitor the diversification of international flows, we track both a diversification index (one minus the widely-used Herfindahl Hirschman Index of concentration) and the share of flows with countries other than a country’s top 5 partners (origin/destination countries for a given flow) (See Figure 9).

At the broad level of total flows of trade, capital, information, and people, we do not currently see large shifts in the diversification of countries’ international activity across origin/destination countries. The diversification of many types of international flows dipped during the Covid-19 pandemic and then rebounded with the return to more typical patterns of activity.

The diversification of goods trade began a rising trend in 2016, and the share with countries other than a country’s top 5 partners reached a new high in 2023. However, that indicator has remained stable in 2024 (year to date), and the diversification index for goods trade declined very modestly in 2023 and 2024. Thus, we do not see strong evidence of an ongoing diversification trend for goods trade.

More striking is the decline in the diversification of information flows, which was driven by a drop in the diversification of payments for the use of foreign intellectual property in 2020 and 2021 (the most recent year with data available on this indicator). The surge of online activity during the Covid-19 pandemic may have led to an increase in the world’s reliance on a small number of intellectual property exporters.

These data also highlight the limited diversification of countries’ international flows in absolute terms. Only 49% of trade flows, 38% of capital flows, 44% of information flows, and 36% of people flows extend to countries beyond the five countries each country interacts with the most for each type of flow. In other words, more than half of all international flows are between countries and just five partners. Most countries do not maintain substantial ties to countries all over the world. Instead, they primarily interact with their immediate neighbors and with large countries located farther away.

Despite much talk about deglobalization and a potential fracturing of the world economy along geopolitical or regional lines, the latest data confirms that global flows remain highly resilient. There has been no shift from international to domestic activity. Realignments of international flows along geopolitical lines are still most prominent between countries at the center of current conflicts. We see neither a global pattern of rising regionalization, nor a substantial change in the diversification of countries’ flows across partner countries. Deglobalization remains a risk, not a current reality.  

For public policy, the resilience of global flows has several important implications. First, it creates strong incentives for countries to work together to preserve and expand the benefits they derive from globalization. Second, it calls for leaders to redouble efforts to address public concerns about globalization, since the resilience of global flows is matched by the persistence of anti-globalization movements in many countries. Third, it implies that de-risking policies, where required, should consider a holistic view of global value chains. Otherwise, shifts from direct trade to indirect trade (via third countries) can exacerbate risks by reducing visibility. When more countries are involved, it becomes harder to monitor each country’s role and its sensitivity.

For business, the key implication is that it is essential to analyze the competitive implications of potential reshoring, nearshoring, or friendshoring moves. The risk of deglobalization means that companies should conduct stress-tests to understand their exposure to disruptions to global flows. But the resilience of international flows means that companies that unilaterally retreat from international opportunities could place their competitive positions at risk.

As decision-makers contemplate implications of the second Trump presidency, they should keep in mind that the recent resilience of international flows was sustained through Brexit, the U.S.–China trade war, the Covid pandemic, and wars in Ukraine and Gaza. The future is unknown, but recent history suggests a cautious view of predictions that new shocks will reverse globalization.

The bottom line is that we continue to live in a partially globalized world, creating opportunities and challenges for countries and companies. As DHL Global Connectedness Index co-creator Pankaj Ghemawat has emphasized in his Laws of Globalization, international flows will continue to be too big to ignore, even as they will continue to be constrained by the distances and differences between countries. While the contours of this complex landscape remain in flux, the fundamental drivers and benefits of international engagement endure.