DHL Global Connectedness Index 2014

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22 1. How Globalized is the World 1. How Globalized is the World – Notes 1 Arvind Subramanian and Martin Kessler. “The Hyperglobalization of Trade and Its Future.” Peterson Institute for International Economics Working Paper, no. No. 13-6 (July 24, 2013). Available at SSRN: http://ssrn. com/abstract=2297994 or http://dx.doi.org/10.2139/ssrn.2297994. 2 James Manyika, Jacques Bughin, Susan Lund, Olivia Nottebohm, David Poulter, Sebastian Jauch, and Sree Ramaswamy. “Global Flows in a Digital Age: How Trade, Finance, People, and Data Connect the World Economy.” McKinsey Global Institute (MGI) (April 2014). http://www.mckinsey.com/ insights/globalization/global_flows_in_a_digital_age. 3 Joachim Fels, head of global economics at Morgan Stanley, issued the following warning in a note to his clients in 2013: “In short, I wonder whether just as 1913 marked the end of first Golden Age of globalization that had begun in 1870, 2013 may mark the end of our age of globalization, which accelerated since the 1980s and 1990s after many emerging markets opened up to international trade and capital flows…To be sure, I’m not predicting the world wars, mass sufferings and economic depressions of the three dark decades following 1913, but I do worry about a creeping trend towards a de-globalization of economic activity and capital flows.” 4 Unless otherwise stated, advanced economies throughout this report refer to economies classified as advanced in the IMF’s World Economic Outlook and emerging economies refer to economies classified as emerging and developing in the same source. 5 The Hong Kong Special Administrative Region (SAR) of the People’s Republic of China, as well as Taiwan (China), are treated as separate economic areas from Mainland China. China, throughout this report, refers to Mainland China. This treatment reflects the way data on these areas are covered in our primary data sources, i.e., with data for Hong Kong SAR and Taiwan reported separately from Mainland China in light of their maintenance of distinct economic systems and economic statistics, separate customs areas, separate immigration controls, etc. These territories were also deemed important to include in the index due to the sizes of their economies: Taiwan ranks 27th globally on GDP at market exchange rates (between Belgium and Austria) and Hong Kong ranks 39th (between Chile and the Philippines). For compactness, the term “countries” as used throughout this report is meant to refer to countries as well as other territories that are included in the index, thus encompassing also Hong Kong and Taiwan. 6 Trade (gross exports of goods and commercial services as percentage of world GDP, 2013) comes from World Trade Organization and World Development Indicators; FDI (Outward Foreign Direct Investment Flows as percentage of Gross Fixed Capital Formation, 2013) comes from UNC- TAD World Investment Report 2014; Portfolio equity stocks (inward portfolio equity stock as percent of market capitalization of listed companies, weighted average across available countries, 2013) comes from IMF Balance of Payment Statistics and Euromonitor Passport; Internet traffic (international share of total Internet traffic, 2012) is an estimate based on data from Cisco Visual Networking Index and Telegeography; Telephone calls (international share of total telephone call minutes, including calls placed over the Internet, 2013 estimate) is based on data from International Telecommunication Union and Telegeography (note that this estimate includes calls between telephones using voice over IP technology, calls between telephones and computers, and calls directly between computers via Skype but does not include calls directly between computers using other services); Migrants (immigrants’ share of total world population, 2013) is based on data from United Nations Department of Economic and Social Affairs, “Trends in International Migrant Stock: Migrants by Destination and Origin,” 2013 (United Nations database, POP/DB/MIG/Stock/Rev.2013) and World Development Indicators; Students (university students enrolled in degree programs outside their home countries as share of total tertiary education enrollment, 2012) is based on data from Euromonitor Passport, UNESCO Institute for Statistics, and Ministry of Education of the Republic of China (Taiwan); Tourists (international share of total international and domestic tourist arrivals, 2013) taken from United Nations World Tourism Organization, “UNWTO Tourism Highlights,” 2014 edition. 7 We measure the depth of trade in both goods and services but the breadth only of trade in goods, due to insufficient data on services trade at the country-pair level. 8 For a review of benefits and risks associated with multiple forms of international equity and debt flows, see M. Ayhan Kose, Eswar Prasad, Kenneth Rogoff, and Shang-Jin Wei. “Financial Globalization: A Reappraisal.” IMF Working Paper, no. WP/06/189 (August 2006). http://www.imf.org/ external/pubs/ft/wp/2006/wp06189.pdf. 9 International internet bandwidth, like services trade, is excluded from the breadth analysis due to data limitations. 10 These distinct time frames and their implications for the selection of measures on the people pillar are elaborated in Chapter 5. 11 David Held, Anthony G. McGrew, David Goldblatt, and Jonathan Perraton. Global Transformations: Politics, Economics and Culture (Stanford, CA: Stanford University Press, 1999), Introduction, pp. 32–86. 12 Weighted average by across countries within Europe (according to the region classifications provided in Appendix B), aggregated again as a weighted average using DHL Global Connectedness Index pillar and component weights (enumerated in Chapter 5). 13 Kevin H. O’Rourke, and Jeffrey G. Williamson. Globalization and History: The Evolution of a Nineteenth-Century Atlantic Economy (Cambridge, Mass.: MIT Press, 1999), p. 220. 14 Harvard Business Review online globalization survey launched on April 25, 2007. 15 The regionalization calculations shown on this figure, for consistency with regionalization charts displayed in Part II, were generated based on combined flow values, where available, from both outward and inward directions. If the same flow was reported in both directions, the two reported values were averaged. 16 This term was reportedly first used by US Representative Clare Booth Luce in 1943. 17 According to the 2009 UN Human Development Report, “A report by the ILO counted 33 million foreign nationals in 1910, equivalent to 2.5% of the population covered by the study (which was 76% of the world population at the time).” 18 Johan Ugander, Brian Karrer, Lars Backstrom, and Cameron Marlow. “The Anatomy of the Facebook Social Graph.” arXiv:1111.4503 [cs.SI] (November 2011). http://arxiv.org/abs/1111.4503.
DHL Global Connectedness Index 2014 23 19 Yuri Takhteyev, Anatoliy Gruzd, and Barry Wellman. “Geography of Twitter Networks.” Social Networks 34, no. 1 (January 2012): 73–81. doi:http:// dx.doi.org/10.1016/j.socnet.2011.05.006. 20 Thomas L. Friedman, The Lexus and the Olive Tree: Understanding Globalization. (New York: Farrar, Straus, Giroux, 2000), p. 8. 21 See Chapter 4 of the DHL Global Connectedness Index 2011 for an extended discussion of this topic and specific statistical analyses. 22 The distance calculations shown on this figure, for consistency with distance charts displayed in Part II, were generated based on combined flow values, where available, from both outward and inward directions. If the same flow was reported in both directions, the two reported values were averaged. 23 For a summary of how the gains can exceed 8% of world GDP, see Pankaj Ghemawat, “Quantifying the Gains from Increased Global Integration,” Blog Post, March 5, 2012, available at http://www.ghemawat.com/Blog/ post/2012/03/05/Quantifying-the-Gains-from-Increased-Global-Integration.aspx. Additional details are described in Pankaj Ghemawat. World 3.0: Global Prosperity and How to Achieve It (Boston, Mass.: Harvard Business Review Press, 2011). set according to countries’ shares of world total flows or stocks on each index component. 32 Our directionality measures on the information pillar, however, should not be viewed as reflecting countries’ projection of influence abroad (or absorption of foreign influences). The larger part of the weight among the directional measures on the information pillar is allocated to telephone calls (rather than trade in printed publications), and which party places (and pays for) a telephone call may not be indicative of the direction of the information actually communicated. 33 Refer to Pankaj Ghemawat, Redefining Global Strategy (Boston, Mass.: Harvard Business School Press, 2007) for more details on the CAGE Framework. The online CAGE Comparator TM can also help facilitate the process of ranking and mapping countries in terms of their CAGE Distance from your home base. 34 The German Marshall Fund of the United States. “Transatlantic Trends: Mobility, Migration, and Integration.” (2014). http://trends.gmfus.org/ files/2014/09/Trends_Immigration_2014_web.pdf. 24 A.T. Kearney Inc., and Foreign Policy Magazine. “Measuring Globalization.” Foreign Policy, no. 122 (2001): 56-65. doi:10.2307/3183226, Available at: http://www.jstor.org/stable/3183226. 25 See http://globalization.kof.ethz.ch/. 26 See http://www.ey.com/gl/en/issues/driving-growth/globalization---looking-beyond-the-obvious---2012-index. 27 Lukas Figge, and Pim Martens. “Globalisation Continues: The Maastricht Globalisation Index Revisited and Updated.” Globalizations (2014). http:// dx.doi.org/10.1080/14747731.2014.887389. 28 The trend data shown for KOF are taken from the KOF index website. E&Y included overall global trend charts in its 2009, 2010, and 2011 reports, but its latest (2012) edition contained only pillar level trend charts. Therefore, the trend shown is based on country-level data reported on the E&Y index website, and the calculation method has been checked for consistency versus trends reported in E&Y reports. MGI provides a textual description of trends in globalization but not a graphical or numerical summary. The trend shown for MGI is therefore constructed based on MGI country-level data and is consistent with the qualitative pattern described in the MGI’s text. 29 Trend charts in E&Y’s 2009, 2010, and 2011 reports did reflect a significant drop-off around the crisis, but that disappeared with E&Y’s latest (2012) methodological revision. 30 This analysis is based on correlations of ranks among the 56 countries covered in common on the GCI as well as KOF, E&Y, and MGI. 31 International internet bandwidth is excluded from this analysis because— as a (non-directional) connectivity measure—it does not permit analysis of imbalances. Imbalances were calculated for this table by first calculating, for each country and each index component, the ratio of the absolute value of the difference between outward and inward flows or stocks divided by the absolute value of outward flows or stocks plus the absolute value of inward flows or stocks. Those country-level ratios were then aggregated up to the world level using weighted averages with weights
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