DHL study: Globalization not so pervasive

   A new study released Friday by DHL indicates that globalization is still not as advanced as most people believe and that continued economic integration could spur global gross domestic product gains of five percent or more.
   The first DHL Global Connectedness Index (GCI), a detailed country-by-country analysis of trade flows, was unveiled last week at the APEC CEO Summit and Leaders’ Week in Honolulu.
   The study was conducted by global business strategist and economist, Pankaj Ghemawat, professor of global strategy at the IESE Business School, Barcelona.
   “Our research shows that global economic integration is not as deep as perceived,” Ghemawat said. “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 global gross domestic product.”
   The CGI report examines data on 10 different types of international flows, covering the categories of trade, capital, information and people, from 2005 to 2010.
   “Unlike existing indices, the GCI analyzes not only the depth of countries’ cross-border interactions but also their geographic breadth – distinguishing countries that are truly connected across the globe from those with deep ties only to a small set of partner countries,” DHL said. “Additionally, it is based exclusively on hard quantitative data.”
   The 2011 GCI found that the 10 most connected countries are the Netherlands, Singapore, Ireland, Switzerland, Luxembourg, the United Kingdom, Sweden, Belgium, Hong Kong, and Malta. The diversity of the leading countries is even greater in the top 50 list, which includes representatives from all six continents. DHL said 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,” said Ghemawat. The misgivings some political leaders have about increasing global integration are misplaced; its benefits far outweigh the potential downsides.”
   Despite increasing its trade interaction in recent years, the United States ranks No. 25 overall. The United States is a leader in term of breadth (#3), but as is expected for a country with a very large internal market, it lags on depth (#84).
   The study found that the lion’s share of international connections are still concentrated among countries that share borders (such as in Northern Europe) as well as cultural and historical ties, which indicates that much of today’s globalization is actually regionalization.
   The full DHL Global Connectedness Index 2011 can be downloaded here.