DHL’s Global Connectivity Index 2022, published in collaboration with New York University’s Stern School of Business, shows that globalization is resilient despite the growing decoupling between the United States and China. The data from the study, which can be downloaded in its entirety here, indicates that global flows of trade, capital and information are already above pre-pandemic levels, while flows of people are recovering.
The DHL Global Connectivity Index 2022 is an in-depth report that, calculated from more than 4 million pieces of data on flows between countries, gives visibility to the state of globalization on a world scale and its prospects. Through the analysis of data from 171 countries, the study illustrates the movements of goods, people, capital and information around the world.
The report indicates that international flows have been remarkably resilient in the face of recent shocks, with the Covid-19 pandemic and the war in Ukraine as the main protagonists. Analyzing the last years, after a small decline in 2020, the Global Connectivity Index showed a rebound in 2021, standing above pre-pandemic levels. The new data points to a new increase despite the slowdown in growth in some flows. By way of example, in mid-2022, international merchandise trade was 10% above pre-pandemic levels. Another indicator of interest is that, in 2022, international travel remained 37% below 2019 levels, although it was double the figures for 2021.
«The latest data from the DHL Global Connectivity Index clearly refutes the perception that globalization is losing ground», concludes John Pearson, CEO of DHL Express. «Globalization is not just a buzzword, but a powerful force that has transformed the world for the better. By overcoming barriers, opening markets and creating opportunities, this phenomenon has allowed individuals, companies and entire countries to advance and prosper in unprecedented ways. By continuing to foster globalization, we can build a better future that benefits us all, creating a world that is more interconnected, prosperous, and peaceful than ever before.».
The situation in Spain
In the 2022 Global Connectivity Index, Spain occupies position number 26 out of a total of 171 economies. Spain’s total score, which reflects its absolute level of connectivity, has remained more or less constant over the last two years, although, since 2019, our country has dropped 4 places in the ranking.
According to the Index data, it is relevant to highlight that Spain made considerable progress in its connections within the European continent and its global connectivity experienced a strong upward trend between 2009 and 2017, but since then it has fallen slightly. Movements in the capital pillar forced Spain’s connectivity down in 2018 and 2019, while the fall between 2020 and 2021 was mainly due to the global decline in tourism during the Covid-19 pandemic.
For a country to be considered globally connected, it must have large international flows relative to the size of its national economy (what is called depth in the report) and, in addition, its international flows must be distributed throughout the world (what is called called breadth in the report) instead of concentrating on a small area. Spain ranks 61st in terms of depth (down one spot from 2019), and 21st in breadth (here, too, down one spot since 2019).
The Global Connectivity Index is made up of four pillars that quantify the depth and breadth of the flows of trade, capital, information and people. Spain ranks 32nd in the trade pillar (out of 171 countries), 25th in the capital pillar (out of 67 countries), 13th in the information pillar (out of 159 countries) and 32nd in the pillar of people flows (out of 110 countries).
United States and China: geopolitical rivalry undermines contacts
The Global Connectedness Index presents data showing that the United States and China are decoupling in many areas. Analyzing eleven types of flows of trade, capital, information, and people (such as merchandise exports, transactions in the area of Mergers and Acquisitions, or scientific research and collaboration, among others), it is found that the percentages of flows from the United States to China fell by eight of those 11 rates from 2016. During the same period, the percentage of flows from China to the United States fell by seven of 10 rates, according to available data for China. In several cases, the declines were considerable. Even so, the United States and China continue to be linked by far greater flows than any other pair of countries without common borders. In addition, the data shows that, for the moment, the disassociation between these two countries has not generated a broader fragmentation of world flows between blocks of rival countries.
There are no data showing a trend towards regionalization, and the average distance of international flows is increasing
Analyzes of the Global Connectivity Index also show that the predictions of a shift from globalization to regionalization have not come true, at least for now. The average distance traveled by trade, capital, information and people flows has increased in the last two decades, with trade flows even covering greater distances during the Covid-19 pandemic. The only category that recently shows a clear trend towards regionalization is the flow of people. This is due to a radical change in travel patterns that occurred during the Covid-19 pandemic.
«It remains to be seen whether trade patterns will experience a clear regionalization in the future.», says Steven Altman, senior fellow and director of the DHL Initiative on Globalization at the Center for the Future of Management at the NYU Stern School of Business. «Many companies and governments focus on nearshoring to regionalize supply chains, and regionalization can bring significant business benefits. On the other hand, more than half of all commercial exchanges are now carried out within the same region, and the advantages of long-distance trade remain important, especially since inflation remains high, economic growth has slowed and the container shipping rates have dropped again».
Ranking of the most connected countries globally: The Netherlands tops the list
In the country classification of the Global Connectivity Index 2022, the Netherlands was once again the most connected country globally. Singapore ranked second overall, scoring top marks for the size of its international versus domestic flows. The United Kingdom presents the most distributed flows globally. Among the 55 most connected countries globally there are countries from all regions of the world.