The global economy could be boosted by “trillions of dollars” by an increase in global connectedness, according to the latest study by DHL.
This is the third edition of DHL’s global connectedness index, which measures cross border flows of trade, capital information and people. It suggests that while most of the losses incurred during the financial crisis have now been made up, trade depth as a distinct dimension of globalisation continues to stagnate.
The ten countries where global connectedness increased the most from 2011 to 2013 are all emerging economies, with Burundi, Mozambique and Jamaica experiencing the largest gains.
Top countries (GCI)
1. Netherlands (0)
2. Ireland (+1)
3. Singapore (-1)
4. Belgium (+2)
5. Luxembourg (-1)
6. Switzerland (+1)
7. United Kingdom (-2)
8. Denmark (+2)
9. Germany (0)
10. Sweden (-2)
23. United States (+2)
69. Russia (+1)
71. India (-3)
84. China (-6)
Advanced economies have not kept up with this shift. This suggests that they may be missing out on growth opportunities in emerging markets. Professor Pankaj Ghemawat, co-author of the report, argues that: “Counteracting this trend would require more companies in advanced economies to boost their capacity to tap into faraway growth.”
The index highlights the importance of expanding global supply chains to economic growth. In fact, Deutsche Post DHL chief Frank Appel says: “I am convinced that a prosperous world needs more, not less integration.”
Nevertheless, important lessons have been learnt over the past five years about the problems of trying to manage supply chains that extend across continents. That knowledge will be vital to future supply chain globalisation.
