New Delhi: Globalisation reached a record high in 2022 and remained close to that level in 2023 despite a series of severe shocks over the past decade, according to a report released on Wednesday. It states that India will play a larger role in the development of globalisation, and contradicts the idea that global flows are declining.
The DHL Global Connectedness Report 2024, put together by DHL and New York University’s Stern School of Business analysed around nine million data points and ranked the connectedness of 181 countries, accounting for 99.7% of the world’s gross domestic product. It is being touted as the most comprehensive analysis of globalisation’s state and trajectory.
India ranks 9th worldwide on the breadth of its merchandise trade
As the world’s fastest-growing major economy, India stands poised to play an increasingly central role in the development of globalisation over the coming decades, the report says. It ranks India 62nd out of 181 economies, based on 2022 data tracking global flows of trade, capital, information and people.
According to the researchers, this overall rank reflects both the geographic reach of India’s international flows (the “breadth” dimension of the index, on which India ranks 16th) and the size of India’s international flows relative to its domestic activity (the “depth” dimension, on which India ranks 161st). India ranks 9th worldwide on the breadth of its merchandise trade, reflecting the reach of India’s exports and imports across global markets.
“India’s current level of connectedness is consistent with what our statistical models predict based on India’s size, level of economic development, proximity to foreign markets, and other structural characteristics. As expected, India ranks much higher on breadth than depth,” the report says, adding that large countries naturally have a higher share of their activity happening within their national borders (resulting in low depth scores). At the same time, they have the scale required to support direct ties with a wide variety of countries around the world (leading to high-breadth scores). Thus, for example, the US ranks 2nd on breadth but only 122nd on depth (and 44th overall). Similarly, China ranks 23rd on breadth and 171st on depth (leading to an overall 80th place rank).
The report says India is the largest partner for the combined trade, capital, information and people flows for 10 countries, including economies such as the United Arab Emirates and Bangladesh. It is already among the 10 largest partners for the combined flows of 60 countries. As India continues to grow, it will become a key partner for a growing circle of countries. The continued growth of India’s international flows holds great promise not only for India’s global reach but also for its domestic economic development, it says.
‘Corporate globalisation is rising’
The DHL Global Connectedness Report states trade growth played a crucial role in boosting global connectedness.
“The share of global output traded internationally was back to a record high level in 2022. After a slowdown in 2023, trade growth is forecast to accelerate in 2024. The globalisation of information flows has been especially strong over the past two decades, even though the latest data show a stall in their growth, partly due to less research collaboration between the US and China. Corporate globalisation is rising, with companies expanding their international presence and earning more sales abroad.”
At the launch of the report, John Pearson, CEO of DHL Express, said: “The most recent findings of the DHL Global Connectedness Report unequivocally dispel the notion of globalisation reversing course. Far from being a mere buzzword, globalisation is an influential force that has profoundly reshaped our world and has further great potential. Expanding markets and fostering opportunities empower individuals, businesses, and entire nations to flourish in unique ways. Embracing globalisation allows us and our customers to forge a promising future, fostering an increasingly interconnected world, more prosperous for all – and poised for further growth.”
The report affirms the considerable potential to continue growing global flows. It pegs the world’s current level of globalisation at only 25%, on a scale from 0% (meaning no flows cross national borders) to 100% (borders and distance have ceased to matter at all).
According to the report, Singapore is in the number one spot. The Netherlands and Ireland rank second and third. It states that 143 countries have become more globally connected, while only 38 have seen their levels of connectedness decline. Europe is the world’s most globally connected region, followed by North America and the Middle East & North Africa, it states.
US-China ties diminish, but no wider split of the world economy between rival blocs
The report reveals that US-China ties continue to diminish, with the shares of both countries’ flows involving each other decreasing by about one-quarter since 2016. However, both countries remain significantly connected, demonstrating larger flows than almost any other pair of countries.
Russia and Europe have decoupled, resulting in Russia facing an unprecedented drop in connectedness, more than twice as much as any previous decline on record among the world’s 20 largest economies. At the same time, the data analysis demonstrates that there is no wider split of the world economy between rival geopolitical blocs.
Globalisation has not given way to regionalisation
The report shows that predictions of a global shift from globalisation to regionalisation are not visible in patterns of international flows. In fact, most international flows are taking place over stable or even longer distances, with a declining share happening inside major geographic regions. Only North America shows a clear shift to more regionalised trade patterns.
“Deglobalisation is still only a risk, not a current reality,” says Steven Altman, Senior Research Scholar and Director of the DHL Initiative on Globalization at NYU Stern’s Center for the Future of Management.
“Geopolitical threats and public policy shifts have led many to predict a fracturing of the world economy along geographic or geopolitical lines, or even a retreat from international to domestic business. But the latest data still show that international flows are growing and very few countries are cutting ties with their traditional counterparts. It is important to recognise the resilience of global flows because a lopsided focus on the threats to globalisation could make deglobalisation a self-fulfilling prophecy.”
The DHL Global Connectedness Report, published since 2011, monitors global movements of trade, capital, information, and people. This report was commissioned by DHL and authored by Steven A. Altman and Caroline R Bastian of New York University Stern School of Business.
DHL is a German multinational that offers a comprehensive range of parcel, express, freight transport and supply chain management services, besides e-commerce logistics solutions.
