DHL Global Connectedness Index 2014

16 1. How Globalized is the World
Figure 1.4
Global Connectedness, Depth, and Breadth 2005 –2013
Figure 1.5
Global Connectedness Pillars, 2005 –2013
125%
110%
120%
115%
105%
110%
105%
100%
100%
95%
95%
2005 2006 2007 2008 2009 2010 2011 2012 2013 2005 2006 2007 2008 2009 2010 2011 2012 2013
Global Connectedness Depth Breadth Trade Capital
Information
People
Global connectedness was hit hard by the financial crisis in 2008 and
2009, but has since recovered most of its losses. It has, however, not yet
surpassed its 2007 peak.
Global connectedness on the information pillar continues to scale new
heights. The capital pillar also turned in a notable increase during 2013,
along with a more modest rise on the people pillar. Global connectedness
on the trade pillar declined during 2012 and 2013.
The people pillar, in contrast, is more stable than the other
pillars, partly because migration and international education
are measured based on the number of people outside
of their countries of origin at a given time (stocks) rather
than people who moved in a given year (flows). Its growth
is also restrained by visa and work permit requirements
that curb international mobility. That said, the depth and
breadth of the people pillar both exhibit modest rising
trends.
E&Y, and MGI all focus on depth, but basically missed
out on what many observers regard as the biggest drop-off
in the intensity of globalization in the last few decades,
raising questions about the methodologies that underlie
them. In regard to distribution/breadth, E&Y added one
simple measure—the share of main trading partners in
total trade—in its 2012 edition, but the other two indexes
incorporate no such measures at all. And directionality is
entirely ignored. Consider these points in a bit more detail.
Comparisons with Other Globalization Indexes
Increasing attention to globalization has led to the development
of several globalization indexes that aggregate
across multiple variables to calculate summary measures
of countries’ globalization levels that are then used to rank
them. The first such analysis to attract significant attention
was produced by the consulting firm A.T. Kearney in collaboration
with Foreign Policy magazine, and was released
in 2001. 24 But since that index has not been released since
2007, it will not be addressed further here. Rather, this section
will focus primarily on comparisons between the DHL
Global Connectedness Index and the three other globalization
indexes that have been published more than once and
continue to be updated: the KOF Index of Globalization, 25
the Ernst & Young (E&Y) Globalization Index (generated
in cooperation with the Economist Intelligence Unit), 26 and
the Maastricht Globalization Index (MGI). 27
Does it matter which globalization index you use We
would argue that it does, for reasons best explained in
terms of the 3-D approach to measuring globalization that
underlies the DHL Global Connectedness Index. KOF,
Depth
Figure 1.6 compares trends in the depth of globalization
reported by the DHL Global Connectedness Index and globalization
trends based on the other indexes. 28 Before the
onset of the financial crisis in 2007, when globalization was
unequivocally rising and the only question of interest was
“by how much” the differences between indexes were less
striking. But the DHL Global Connectedness Index was the
only index to register a significant drop in overall globalization
when the crisis hit. KOF registered a brief pause in
2008 and the other two indexes only registered slower rates
of increase. 29 The general sense of a significant drop-off—
former US deputy treasury secretary Roger C. Altman, for
example, penned a 2009 article in Foreign Affairs entitled
“Globalization in Retreat”—raises questions about the
relevance of indexes that merely stagnated or continued to
rise throughout the post-crisis period.
We also checked that this difference is not due to differences
in the schemes employed to aggregate data across countries.
Global trends reported by the other indexes reflect