DHL Global Connectedness Index 2014

DHL Global Connectedness Index 2014
39
Figure 2.10 World map with countries sized based on Germany’s exports to them and
colored based on their projected real GDP growth rates from 2013 to 2019.
4
2
10
3
GERMANY
9
6
1
8
5
1. France 10%
2. U.K. 7%
7
3. Netherlands 7%
4. U.S.A. 6%
5. Austria 5%
6. China 5%
7. Italy 5%
8. Switzerland 5%
Projected Real GDP Growth Rate 2013 –19
6% 5% 4% 3% 2% 1%
9. Poland 4%
unknown
10. Belgium 4% © 2014 Pankaj Ghemawat
70% of Germany’s merchandise exports in 2013 were destined for advanced economies, the large majority of them to slow-growth economies within
Europe. Most of the world’s fastest growing economies are both more distant from Germany geographically and also more different from it culturally,
administratively/politically, and economically than its traditional trade partners.
elaborated in Chapter 4. At the pillar level, Europe’s gains
on the capital, information, and people pillars offset a
decline on the trade pillar.
Given the emphasis on intra-regional integration in the
discussion above, Europe’s leading position on this aspect
of global connectedness should also be underscored.
Europe had the highest proportion of intra-regional flows
across all pillars. More specifically, European countries
average 78% intra-regional exports (considering the whole
region; members and non-member countries of the EU).
A similar pattern also holds for capital flows, with 76% of
outward foreign direct investment stock from European
countries, on average, remaining within the region.
Without forsaking the benefits of continued intra-regional
integration, however, projections for European economies
to grow relatively slowly over the near-to-medium term
suggest that European business executives and policymakers
should also seek to increase Europe’s connections to
faster growing, more distant economies. To illustrate this
point, consider the example of Germany’s merchandise
exports. Figure 2.10 presents a map in which countries are
sized based on Germany’s exports to them and colored
based on the their projected real GDP growth between 2013
and 2019. While Germany is Europe’s leading exporter, its
reliance on European markets for 70% of its merchandise
exports constrains its exports growth.
North America holds the second place ranking in overall
global connectedness, leading by a wide margin on
breadth while ranking in the middle on depth. This reflects
both the overall high level of economic development in
North America (defined here as the members of the North
American Free Trade Agreement or NAFTA: the United
States, Canada, and Mexico) as well as the fact that all three
countries in this region have relatively large populations.
Recall that countries with larger populations tend to have
higher breadth scores and lower depth scores. The United
States, Mexico, and Canada rank 3 rd , 11 th , and 33 rd globally
in terms of the sizes of their populations.
North America is the leading region on the capital and
information pillars, ranks second on the people pillar, and
lags near the bottom on the trade pillar (where it ranks last
on depth). North America’s poor showing on trade depth
in particular should provide impetus to renewed efforts
both to strengthen NAFTA as well as to promote exports
beyond NAFTA (exports being emphasized for this region
in particular given persistent trade deficits in the region’s
largest economy, the United States).