DHL Global Connectedness Index 2014

30 2. How Globalized are Individual Countries and Regions
On the depth dimension, as shown in Figure 2.2, the top
ranks are held by Hong Kong SAR (China), 3 Singapore,
Luxembourg, Belgium, Ireland, the Netherlands, Estonia,
Hungary, Austria, and the United Arab Emirates. The lowest
ranked countries on the depth dimension are Islamic
Republic of Iran, Ethiopia, Pakistan, Bangladesh, Syrian
Arab Republic, Burundi, Myanmar, Central African
Republic, Venezuela, and Nepal. Casual observation of Figure
2.2 suggests that economies with higher depth scores
tend to be both wealthy and relatively small, as exemplified
by the top 3: Hong Kong SAR (China), Singapore, and
Luxembourg. Naturally, advanced economies with relatively
small internal markets will have a larger share of
their trade, investment, communications, and even people,
outside of their own borders.
Such patterns are indeed found to be statistically significant,
with higher depth scores positively associated with
countries’ GDP per capita but negatively associated with
their populations. Depth is also positively associated
with linguistic commonality and negatively impacted by
remoteness and landlockedness.
Figure 2.3 ranks countries according to their breadth
scores. The top 10 countries on the breadth dimension of
global connectedness are the United Kingdom, the United
States, the Netherlands, France, Switzerland, the Republic
of Korea, Japan, Germany, Israel, and Ireland. The lowest
ranked countries on breadth are Botswana, Syrian Arab
Republic, Kyrgyz Republic, Tajikistan, Central African
Republic, Namibia, Zambia, Bosnia and Herzegovina,
Uzbekistan, and Albania. The countries with the highest
breadth scores are both large and wealthy. The top 8
countries on breadth are all among the world’s 20 largest
economies based on GDP in US dollars at market exchange
rates. Israel and Ireland are relatively smaller but still rank
among the world’s 50 largest economies. Thus, while the
same country characteristics used to describe depth scores
are also significant factors for explaining breadth, the main
contrast is that breadth is positively—rather than negatively—associated
with countries’ having larger populations.
The pattern of larger economies exhibiting higher breadth
scores and lower depth scores holds up even in the extreme
cases of the largest emerging markets, which helps explain
why those countries are so globally significant even though
their economic activity is disproportionately domestic.
Each of the BRIC countries (Brazil, Russia, India, and
China), have higher breadth than depth scores, with an
average difference of 24 points (and an even higher difference
of 28 points when Russia is excluded). The magnitude
of these differences is considerable, especially when one
recalls that both depth and breadth are scaled from 0 to 50,
so the maximum possible difference is 50 points, and the
largest observed difference is 34 points.
Consider the example of China, which ranks 127th (out
of 140 countries) on depth and 28th on breadth. As the
world’s second largest economy and as a country ranked in
the upper quartile on breadth (and with stronger outward
than inward connectedness), China’s global impact is very
large. But China’s depth rank provides a useful reminder
that even in China, the overwhelming majority of flows are
domestic, as they are in all other large economies. China
ranks 81st in terms of the depth of its merchandise exports,
a rank that is high only in comparison to other very large
economies: the United States, Japan, and India rank 133rd,
119th, and 111th, respectively, on this metric. Of course,
China’s rank in terms of the depth of its merchandise
imports, 118 th , is much lower.
Segmenting the DHL Global Connectedness Index scores
based on the directions of the flows that are measured
yields further insight into the patterns of global connectedness.
4 Among 131 countries with sufficient data to conduct
directional analysis, 61 countries are more connected