DHL today released the first DHL Global Connectedness Index
(GCI), a comprehensive study of geo-political trade data.
The study indicates that economic globalization is still
not as deep as perceived and the potential for continued
economic integration could represent global gross domestic
product gains of five percent to 10 percent per year. GCI
ranks 125 countries according to the depth and breadth of
integration into the world economy and examines the
connections between global connectedness and welfare. The
study documents that global connectedness has enormous room
to expand, even among the most "connected"
The GCI study was unveiled against the backdrop of the APEC
CEO Summit and Leaders' Week in Honolulu, a global
summit where heads of state and business leaders meet
annually to discuss international economic issues. The
study was commissioned by DHL and conducted by
world-renowned global business strategist and economist,
Pankaj Ghemawat, Professor of Global Strategy at the IESE
Business School, Barcelona.
"This research provides evidence that a connected
world is a better world, in terms of global welfare and
individual development. The free trade of products and
services contributes significantly to global
prosperity," said Roger Crook, chief executive
officer, DHL Global Forwarding, Freight. The data findings
of DHL's study will likely be of benefit to corporate
as well as political and economic leaders as they shape
business and trade strategies, Crook said. "By
calibrating how truly connected we are countries can
identify opportunities and the channels through which they
can improve their prosperity."
"Our research shows that global economic integration
is not as deep as perceived. Therefore, we see untapped
potential for growth for each country and globally.
Increasing global connectedness is likely to spur further
growth by adding trillions of dollars to the economic
turnover," added Ghemawat.
The DHL Global Connectedness Index 2011 examines data from
125 countries and territories across 10 different types of
flows, covering the categories of trade, capital,
information and people, and covers the years between 2005
and 2010. Unlike existing indices, the GCI analyzes not
only the depth of countries' cross-border interaction
but also their geographic breadth, seeking to quantify the
economic impact of connectedness for a country.
Additionally, it is based exclusively on quantifiable data.
Further information on the methodology of the study can be
found at www.dhl.com/gci.
The benefits of connectedness
The 2011 GCI found that the 10 most connected countries are
the Netherlands, Singapore, Ireland, Switzerland,
Luxembourg, the United Kingdom, Sweden, Belgium, Hong Kong
(China) and Malta. The diversity of the leading countries
is even greater in the top 50 list, which includes
representatives from all six continents. These patterns
indicate that the benefits of connectedness are accessible
to a broad range of countries, not just trading hubs that
lead many other globalization indices.
"The positive impact of global connectedness on world
prosperity will continue to be of great importance. The
misgivings some political leaders have about increasing
global trade are unfounded; its benefits far outweigh any
potential downside," said Ghemawat.
Key takeaways from the index include:
The actual level of connectedness today is much lower
than commonly believed; its potential for positive
growth, therefore, is significant.
The Netherlands rank No. 1 in terms of overall
connectedness, Hong Kong scores the highest regarding the
depth of its international connections, and the United
Kingdom tops the list for the breadth of its connections.
Despite increasing its trade interaction in recent years,
the United States ranks No. 25 overall, relative to the
size of its economy.
The lion's share of international connections is
still concentrated among countries that share borders
(such as Northern Europe) as well as cultural and
historical ties, which concludes that much of today's
globalization is actually regionalization.
Larger countries score higher on the global breadth of
their connections; smaller countries excel in the depth
of their connectedness.
Countries that pursue public policies that directly
encourage greater international flows, as well as
policies that improve the domestic business environment,
can enhance their global connectedness.
Pankaj Ghemawat, who conducted the study for DHL, is
lectured at Havard Business School until 2008, where he was
the youngest person in the school's history to be
appointed a full professor. Business Newspaper "The
Economist" chose him as the youngest "guru"
included in the guide to the greatest management thinkers
of all time published in 2008. He has published several
leading and bestselling books and over 100 articles and
case studies on global economic issues.