Benchmarking Globalization to Boost Business Connections
Closer connections between countries can be a good thing / Illustration: Giulio Bonasera
Though global connectedness, which correlates with global growth, appears to be recovering since the global economic crisis, there is still a long way to go, as the latest issue of IESE Insight reveals.
Global strategist and professor Pankaj Ghemawat and research scholar Steven A. Altman unpack the findings of the latest DHL Global Connectedness Index, a comprehensive study that measures the depth, breadth and directions of trade, capital, information and people flows between countries. Greater international flows and deeper global connectedness correlate with faster growth and other benefits for countries, according to their research.
They discuss some of the implications for multinationals, analyzing the results for four Western economies worth watching: Spain, the United Kingdom, Germany and the United States.
Words of Warning
The majority of international interactions tracked by the authors have gone from being mainly between advanced economies to increasingly involving emerging economies. The authors see the declining breadth of global connectedness among Western multinationals as a worrisome trend. In their article, they suggest four things Western MNCs can do better to tap into growth in emerging economies.
The biggest mistake would be to opt for protectionism; in fact, they should do the opposite. "It is precisely when growth slows that the power of global connectedness is needed to accelerate economic recovery," say the authors.
"The future of globalization lies in the hands of a much broader collection of nations than was the case at any point in the recent past – a reminder, if ever one was needed, of the empowering and enriching benefits of globalization’s slow but onward march."
Members of the Alumni Association and subscribers to IESE Insight – a quarterly research-based magazine, published in separate English and Spanish editions – can read this and other articles using their membership credentials.
Read the article "Benchmarking Globalization to Boost Business Connections."