Despite numerous challenges, global connections are not waning; on the contrary, they are at an all-time high.
The authors of the report highlight that globalisation is on the rise despite significant events that have occurred in recent years, potentially affecting international connections. These events include the COVID-19 pandemic, conflicts in Ukraine and the Gaza Strip, escalating trade tensions between China and the United States, and even Brexit.
“Deglobalisation is still a risk, not a current reality,” says Steve Altman, senior research scholar and director of the DHL Initiative on Globalisation at Stern’s Center for Future of Management at New York University. “Geopolitical threats and political changes have led to predictions of fractures in the global economy along geographic or geopolitical lines, and even a shift from international to domestic interests. However, the latest data shows that international flows are growing, and very few countries are cutting ties with their traditional partners,” Altman adds.
The Global Connectedness Index measures the extent of international connections in trade, capital flow, information, and people. The DHL globalisation index comprises approximately 9 million pieces of data across various categories of connections between countries.
The share of global production sold abroad rebounded to high levels in 2022 after a pandemic-induced slowdown. Although there was another decline in this field in 2023, DHL experts anticipate a resurgence in international trade in 2024.
Evidence of globalisation’s progression is reflected in the fact that the globalisation index increased for 143 countries while decreasing for only 38 countries. Although the most globalised country is in Asia (Singapore), the DHL ranking clearly indicates that European countries boast the most extensive international connections. The next regions with dense global networks are North America and the Middle East (including North Africa).
The weakening of connections between the world’s two largest economies has not led to a decline in globalisation. All types of flows between the United States and China decreased by approximately one quarter compared to 2016, according to DHL estimates. Nonetheless, the degree of mutual relations between the two powers still surpasses any connections between other entities.
Globalisation Remains Robust There is currently no indication that predictions of globalisation being supplanted by regionalisation will materialize. During the COVID-19 pandemic in 2020-2021, when supply chains were disrupted, there was talk about the need to shorten these chains.
This would entail, among other things, relocating industrial plants from distant Asia to regions closer to importing companies. A strengthening of regional trends was observed only in North America, likely due to American companies shifting production from Asia (from China and the Chinese “backyard”) to Mexico and Central American countries.
It’s worth noting, however, that according to DHL analysts, the level of globalisation remains relatively low. On a scale of 0-100 percent (where 0 signifies no flows beyond borders and 100 indicates complete lack of barriers and borders), the current state of global connections is estimated at 25%. While not substantial, it’s the highest in history.
Global connections are strongest and widest in the field of information and communication flow, estimated at approximately 40%. Capital flows follow at 30%, trade at 22%, and people at only 3% living outside their home country.
European Dominance In the latest DHL ranking, the most globalised country in the world, similar to last year’s classification, is Singapore. The Netherlands, Ireland, Luxembourg, Malta, Switzerland, Belgium, the United Arab Emirates, Great Britain, and China, along with the Special Administrative Region in Hong Kong, round out the top ten.
Most of these countries also featured prominently in the previous ranking. The most significant decline among the top 10 countries was recorded by China, which dropped from 6th place in 2023 to 4th, and Luxembourg, which fell from 2nd to 4th place.
Notably, most of the world’s largest economies fared poorly in the DHL ranking. Among the top ten countries, only Great Britain featured in the top 10 most globalised countries. Germany ranked 13th, followed by France (23rd) and Canada (29th). The United States and China, the world’s two largest economies, ranked 44th and 80th, respectively, in the DHL classification.
The latest ranking also underscores the extent of Russia’s economic isolation due to its aggression against Ukraine. Russia plummeted to 91st place globally, 31 places lower than in the previous ranking.
Photo by Eilis Garvey on Unsplash