Netherlands Tops Globalization Ranking
The Netherlands, Ireland and Singapore have emerged as the most globally connected countries in the world, according to the DHL Global Connectedness Index 2014.
The Index, authored by IESE Professors Pankaj Ghemawat and Steven A. Altman, finds that globalization has picked up since 2012, but that we still have some way to go to recover to pre-crisis levels of capital flow and trade depth.
The world is still not as connected as it could – or should – be, and this should be of concern to governments. Global connectedness, says Prof. Ghemawat, has the potential to boost global growth and add "trillions of dollars to the world GDP."
Europe - Most Globally Connected
The Netherlands takes top spot globally for connectedness, followed by Ireland and Singapore. The Index also finds that Europe is the most globally connected region with nine of the top 10 ranked countries.
Southeast Asia also stands out in terms of the surprising ratio between global connectedness and economic development. Five "outperformers" in the region are Malayasia, Vietnam, Cambodia, Hong Kong SAR and Singapore.
Emerging Markets Driving a Big Shift
Although Europe tops the rankings, the Index finds that emerging economies continue to advance, stretching cross-border interactions over greater distances.
"Emerging economies are reshaping global connectedness and are now involved in the majority of international interactions," Ghemawat and Altman report.
Advanced economies are not keeping pace with this big shift. The breadth of their international flows across partner countries, in relation to the global distribution of the same type of flows, is decreasing.
Trade Regionalization in Decline
The Index finds that a decades-long trend towards trade regionalization has gone into reverse. Cross-border flows are being observed over greater geographical distances, with the largest increases in global connectedness in South and Central America and the Caribbean.
The only drop in connectedness between 2011 and 2013 were found in the Middle East and North Africa.
The world economy is projected to grow faster between in the next five years than over any of the past three decades. And threats to globalization won’t come from macroecomic fundamentals, per se, say the authors; but from protectionist policies.
"While adversity often leads to hunkering behind borders, it is precisely when growth slows that vocal reminders of the power of global connectedness to accelerate recovery are most needed."
More information in IESE Insight