Netherlands, Singapore lead DHL’s global connectedness index

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singaporecbd_from_carlsberg_sky_towerGlobal connectedness finally surpassed the 2007 pre-crisis peak during 2014, but international trade remained under pressure in 2015 and the future of globalization is shrouded in ambiguity, according to the 2016 edition of the DHL Global Connectedness Index (GCI).

In 2015, globalization’s expansion slowed, but preliminary data indicated it did not go into reverse, said the newly released study.

Emerging economies traded as intensively as advanced economies, but advanced economies are four to nine times as deeply integrated into international capital, information, and people flows, it was further revealed.

The GCI is a detailed analysis of the state of globalization around the world, measured by cross-border flows of trade, capital, information and people.

The information pillar—measured by international internet traffic, telephone call minutes and trade in printed publications—showed the strongest growth over the reporting period (2013-2015).

The gains in capital and people flows have been more modest, while the decline in the proportion of goods traded across borders—which began in 2012—accelerated in 2015.

“Globalization has served as the world’s engine of progress over the past half century,” said Deutsche Post DHL Group CEO Frank Appel. “The GCI documents that globalization has finally recovered from the financial crisis, but faces an uncertain future.”

He underscored the need for policymakers and business leaders to “support an environment in which globalization can continue to flourish and improve the lives of citizens around the world.”

The research further highlighted how emerging economies still lag behind in global connectedness. “Advanced economies are about four times as deeply integrated into international capital flows, five times as much on people flows, and nine times with respect to information flows.”

The GCI also noted that if emerging economies become more similar to advanced economies in connectedness levels, this would provide a powerful boost to overall connectedness.

The 2016 edition also documented a rising proportion of internet traffic crossing national borders, even as international trade and information flows lag their potential. “This underscores the tremendous headroom available for international e-commerce to boost business activity and expand the options available to consumers around the world,” said the paper.

The Netherlands retained its top ranking as the world’s most connected country. It is followed in the top 20 list by Singapore, Ireland, Switzerland, Luxembourg, Belgium, Germany, United Kingdom, Denmark, United Arab Emirates, Sweden, Hungary, Malta, France, Israel, Norway, Hong Kong, South Korea, Malaysia, and Austria.

In the Asian region, Japan is in 38th place, China is No. 68, and India is No. 78.

As for the rest of the countries in the ASEAN, Thailand is in 22nd spot, Vietnam 36th, Cambodia 44th, Philippines 59th, Brunei 83rd, Indonesia 108th, Laos 128th, and Myanmar 137th.

By region, Europe is once again the world’s most connected region. All but two of the top 10 most globalized countries in the world are located in Europe.

North America is the second most globally connected region and leads on the capital and information pillars, with the United States as the most connected country in the Americas. Overall the U.S. is ranked 27th out of the 140 countries measured by the GCI. North America had the largest gain in overall global connectedness during the past two years, followed by South & Central America & the Caribbean.

Countries in South & Central Asia and Sub-Saharan Africa suffered a drop in their average levels of global connectedness.

The twin trends of globalization and urbanization have prompted rising interest in global cities. The 2016 edition of the index introduced two new city indices. The “Globalization Giants” index compares the size of cities’ international interactions. The “Globalization Hotspots” index ranks the cities with the most intense international flows of trade, capital, people, and information compared to their internal activity.

Singapore leads both of the new city-level globalization indices. “Even after controlling for Singapore’s structural advantages, the Lion City still outperforms on the depth of its international flows. “Credit must be given to policies aimed at growing Singapore’s connections beyond its immediate neighborhood,” said the study.

London and New York, perennial leaders on rankings of global cities, place third and fourth on the Globalization Giants index, but only 47th and 76th on the Globalization Hotspots index. Many smaller cities are far more intensively focused on international activity than these two megacities, according to the report. Unexpected high performers in the Hotspots index include Manama (2nd), Tallinn (6th), and Mumbai (13th).

Photo: See Hoy Kim