DHL Global Connectedness Index 2014

DHL Global Connectedness Index 2014
45
Figure 3.1
Depth Pillar Trends, 2005 – 2013
150%
140%
130%
120%
110%
100%
90%
80%
2005 2006 2007 2008 2009 2010 2011 2012 2013
Trade Capital Information People
Information pillar depth extended a strong multi-year growth trend, and capital pillar depth is also trending upward. Trade depth declined over the past two
years, and people pillar depth increased very modestly such that it is best characterized as stable.
The depth of global connectedness measures how much
of any given type of activity that could take place either
domestically (within a country’s borders) or internationally
(across them) is international. This chapter examines the
depth of global connectedness on each of the four pillars
of the DHL Global Connectedness Index: trade, capital,
information, and people. Within each pillar, it covers
both how deeply connected the world is today as well as
whether recent trends indicate movement toward or away
from deeper global connectedness. After the pillar-bypillar
coverage, the chapter concludes by comparing the
depth of global connectedness in advanced versus emerging
economies.
While it has become popular in recent years to think
of borders as an anachronism in a supposedly globalized
world, political and military maneuvering to revise
national borders has multiplied since the publication of
the last edition of this report: from Scotland to Ukraine to
Iraq to the periphery of a resurgent China. Without taking
a perspective on the placement of individual borders, this
chapter does unequivocally reaffirm the fact that borders
still matter. Across all of the types of flows measured in
this chapter, far more activity takes place within national
borders than across them. The depth of global connectedness
is limited in absolute terms.
During 2013, the overall depth of globalization began to
grow again after remaining stagnant in 2012. Figure 3.1
summarizes depth trends along the four pillars of the
DHL Global Connectedness Index. The information pillar
continues a strong multi-year growth trend, and capital
pillar depth also contributed to deepening global connectedness
over the past two years. Gains on the information
and capital pillars were partially offset by declining trade
pillar depth since 2011. People pillar depth expanded very
modestly in 2013, but is best characterized as stable.
Trade Pillar Depth
Of all the goods and services produced around the world,
what proportion cross international borders on the way
to their final end customers In 2013, total gross exports
summed to 31.7% of global output (GDP). This ratio—
gross exports as a percentage of GDP—is the best available
indicator of trade depth across a broad sample of countries
and the only option for historical comparisons (and so will
be used throughout the rest of this report). However, at the
global level and for selected countries, further refinement
is possible to correct for the double- and triple-counting
of goods that are exported multiple times at various stages
of their production processes. In 2010, which is the most
recent year with data available, such double-counting
accounted for an estimated 28% of gross global exports. 1
Applying that proportion to the 2013 gross exports to GDP
ratio implies that exports really accounted for only 23% of
all value added around the world in 2013. 2
Is 23% a high or a low share of global output to be generated
by exports From a historical perspective, trade depth
is close to its record high level, but relative to what it could
potentially rise to, it remains surprisingly low. To examine
historical trends we must return to gross exports data.
The ratio of global (gross) exports of goods and commercial
services to GDP rose marginally in 2013 from 31.6%
to 31.7%, just shy of its all-time peak of 32.3% recorded
in 2008, as shown in Figure 3.2. Nonetheless, if national
borders and cross-country distances and differences had no
impact at all on buying patterns—if the world really were
flat 3 —buyers in a particular country would theoretically