DHL’s Global Connectedness Index Shows Exceptional Resilience Despite Rivalry Between China and the U.S.

DHL and the Stern School of Business at New York University today released the new DHL Global Connectedness Index for 2022, a detailed report on the state of globalization and its forecasts. Analyzing data from 171 countries and territories, the report provides insights into the movement of trade flows, people, capital, and information around the world.

The report shows exceptional resilience of international flows in the face of recent adversities such as the COVID-19 pandemic and the war in Ukraine. After a slight decline in 2020, the consolidated DHL Global Connectedness Index returned to pre-pandemic levels in 2021. Currently available data indicate further growth in 2022., despite slower growth in certain flows. International merchandise trade in mid-2022 was 10 percent above pre-pandemic levels. International travel in 2022 remained 37 percent below 2019 levels but doubled compared to 2021.

– The latest data from the DHL Global Connectedness Index clearly debunks the perception of globalization going backward – concludes John Pearson, CEO of DHL Express.

– Globalization is not just a buzzword; it is a powerful force that has transformed our world for the better. By breaking down barriers, opening markets, and creating opportunities, it has enabled individuals, businesses, and entire nations to grow and prosper like never before. As we continue to embrace globalization wholeheartedly, we are building a brighter future for all of us, creating a world that is more interconnected, advanced, and peaceful than ever before – says Pearson.

No Shift Towards Regionalization

The DHL Global Connectedness Index is evidence of the separation between the U.S. and China in many areas. Looking at 11 types of flows of trade, capital, information, and people (such as goods exports, merger and acquisition transactions, and scientific research collaboration), the share of U.S. flows with China has recorded a decline in 8 out of 11 areas since 2016. During the same period, the share of Chinese flows with the U.S. has recorded a decline in 7 out of 10 areas based on data available for China. Some declines have been significant.

Despite this, the U.S. and China are still connected by far larger flows than any other two countries that do not share a border. Furthermore, data shows that so far, the separation of these two countries has not caused broader fragmentation of global flows between rival blocks of countries.

Analyses of the DHL Global Connectedness Index also show that predictions of a shift from globalization to regionalization – at least for now – have not materialized. The average distance of trade, capital, information, and people flows has increased over the last two decades, and trade flows even covered greater distances during the COVID-19 pandemic. The only category showing a clear recent shift towards regionalization is the flow of people, thanks to a dramatic change in travel patterns during the COVID-19 pandemic.

– It remains to be seen whether trade patterns will become significantly more regionalized in the future – says Steven Altman, senior researcher and director of DHL’s globalization initiative at the NYU Stern Center for the Future of Management.

Netherlands Most Connected

– Many companies and governments are focused on so-called nearshoring to regionalize supply chains, and regionalization can bring significant business benefits. On the other hand, more than half of total trade already occurs within regions, and the advantages of long-distance trade remain important, especially as inflation remains high, economic growth slows, and a decline in container shipping rates is recorded – concludes Altman.

In the ranking of countries according to the DHL Global Connectedness Index for 2022, the Netherlands was again the most globally connected country. Singapore ranked second overall and first when it comes to the size of international flows relative to domestic flows. The United Kingdom has the most globally widespread flows. Among the 55 most globally connected countries, representatives from all world regions are present.

The reputable DHL Global Connectedness Index, which has been published regularly since 2011, provides reliable information on globalization trends by analyzing 13 types of flows of international trade, people, capital, and information. The 2022 edition is based on over four million data points from 171 countries, which account for 99.7 percent of the world’s gross domestic product and 96 percent of the population. A collection of 171 country profiles on one page provides summaries of the globalization patterns of individual countries.

The report was commissioned by DHL and compiled by Steven A. Altman and Caroline R. Bastian from the Stern School of Business at New York University.