The world today is less globally connected than it was five years ago, according to the second edition of DHL’s Global Connectedness Index.
While international trade, population, capital and the exchange of information — key measurements of global connectedness — experienced sharp growth from 2005 to 2007, these measures have dropped off due to the financial crisis. Connectedness has been getting stronger recently, but still hasn’t reached the pre-recession peak.
“Today’s volatile and uncertain business environment bears the lasting impact of the financial crisis,” DHL’s Chief Executive Officer Frank Appel said in a statement. “Especially in this period of slow growth, it’s important to remember the tremendous gains that globalization has brought to the world’s citizens and to recognize it as an engine of economic progress. Above all, governments must resist protectionist measures that hinder cross-border interactions.”
Global connectedness is thriving in some areas, though. The Netherlands is the world’s most-connected country, and nine of the top 10 finishers are located in Europe. Sub-Saharan African countries experienced the largest connectedness increases, according to the index.
Pankaj Ghemawat, author of the study, said the index shows that cross-border flows are lower than previously perceived and that every country has room for connectedness growth.
“At a time of economic weakness,” Ghemawat said in a statement, “(connectedness) represents one of the most powerful levers available for boosting growth.”
Expanding global connectedness by means of enhancing trade helped Vietnam and Mexico grow in the past year, the study found. The report aslo highlights the pharmaceutical, mobile phone and automobile industries, showing that consumption of these goods has migrated to emerging markets, thus affecting global connectedness. - Jon Ross