DHL Global Connectedness Index 2014

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62 4. The Breadth of Global Connectedness Figure 4.4. Breadth, Concentration, Distance, and % Intra-regional Trends, World and Advanced vs. Emerging Economies, 2005 – 2013 Breadth 1.10 1.00 0.90 0.80 0.70 0.60 0.50 0.40 0.30 Concentration 0.24 0.22 0.20 0.18 0.16 0.14 0.12 0.20 2005 2006 2007 2008 2009 2010 2011 2012 2013 0.10 2005 2006 2007 2008 2009 2010 2011 2012 2013 Distance (kilometers) 5,400 5,200 5,000 4,800 4,600 4,400 Percent Intra-regional 58% 56% 54% 52% 50% 48% 46% 44% 42% 4,200 2005 2006 2007 2008 2009 2010 2011 2012 2013 40% 2005 2006 2007 2008 2009 2010 2011 2012 2013 World World Constant Shares Advanced Economies Emerging economies Changes in measures of the global distributions of international interactions are smaller when holding countries’ shares of world total interactions constant to isolate only changes in countries’ individual distributions. This adjustment (shown in the dotted lines) nearly eliminates changes in the geographic distribution measures (distance and regionalization). Figure 4.2 presents both absolute (top panel) and relative (bottom panel) perspectives to draw attention to how international interactions are both growing and shifting. In advanced economies, there is sometimes a great deal of consternation about declining relative shares of world activity. Opponents of globalization latch on to such statistics and attach the (usually false) implication that growth in emerging economies is leading to absolute decline in advanced economies. Over the period since 2005, international interactions of both advanced and emerging economies grew in absolute terms. The relative shifts displayed are the result of faster growth in emerging economies, not absolute decline in advanced economies. 4 Figure 4.3 shows how the rise of emerging economies varies across the components of the index. In 2005, emerging economies were already the sources of the majority of the world’s emigrants and international students and the destinations of the majority of the world’s international phone calls. Emerging economies grew their shares as sources and destinations of all of the flows and stocks covered in the index except immigrants (for which the share living in emerging economies declined slightly from 48% in 2005 to 46% in 2013). 5 Emerging economies’ shares as sources of international interactions grew fastest on printed publications and telephone calls, and their shares as destinations grew fastest on portfolio equity and merchandise imports.
DHL Global Connectedness Index 2014 63 Figure 4.5 Breadth Pillar Trends, 2005 – 2013 110% 105% 100% 95% 90% 2005 2006 2007 2008 2009 2010 2011 2012 2013 Trade Information Capital People The rising participation of emerging economies in international interactions influences the shape of global connectedness through both changes in the distributions of individual countries’ international interactions across partners and changes in countries’ shares in the world’s total interactions. Figure 4.4 summarizes the effects of these two channels by showing measures at the world level alongside world measures holding countries’ shares constant (to isolate the first channel only) and measures that separately cover advanced and emerging economies. Note that the changes due only to the first channel—corresponding to the dotted lines—are (generally) more limited than those that incorporate both channels. The geographic measures (distance and regionalization) were influenced especially strongly by the second channel, i.e., by the rising share of interactions involving emerging economies. The increasing distance across which interactions are taking place reflects the rising proportion of interactions involving countries that already interacted over longer distances rather than individual countries, on average, interacting over greater distances. This trend—which reversed a decades-long pattern of rising regionalization— is elaborated in greater detail later in this chapter. The general patterns described here vary across the components of the DHL Global Connectedness Index. The following sections use component-level analysis to examine more closely each of the four measures of distribution that have been presented above. In order to simplify the treatment, they focus only on the changes between 2005 and the most recent year with data available (2013 or in its absence 2012). While depth—especially on the trade and capital pillars—often responds quickly to macroeconomic cycles, the breadth trends on which this chapter focuses relate to the shift of activity to emerging economies taking place over a much longer time-frame. Global breadth scores were lower in 2013 than in 2005 across all of the pillars of the index, with the largest decline on the information pillar. Declining Breadth across Most Index Components Breadth declined between 2005 and 2013 across all four pillars of the DHL Global Connectedness Index, as shown in Figure 4.5. The largest decline took place on the information pillar followed by smaller declines on the trade and capital pillars. People pillar breadth declined only marginally, and increased from 2010 to 2013. Figure 4.6 compares component level breadth scores in 2005 versus 2013. Breadth declined across all the components of the index except inward FDI stock and migration (emigration and immigration). The components on which breadth did not decline help illustrate the link between the changing breadth of globalization and the shift of economic activity to emerging economies. Those same components were also the only components where the proportion of flows and stocks directed into to emerging economies declined since 2005. 6 The breadth scores of advanced economies were higher than those of emerging economies across all of the components of the index, with large differences on all of them except merchandise trade, where the breadth scores of advanced and emerging economies have almost converged. The pattern described in Chapter 3 regarding the depth of globalization also holds true for its breadth: advanced economies are more broadly globalized than emerging economies on the capital, information, and people pillars of the index, but are about equally globalized on the trade pillar. The implication of the general trend toward declining breadth—especially in advanced economies—is that countries’ international interactions are being outpaced by the shift of economic activity toward emerging economies. To more effectively tap into growth opportunities in emerging
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Pankaj Ghemawat and Steven A. Altma
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DHL GLOBAL CONNECTEDNESS INDEX 2014
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286 Appendix B - Data Sources, Regr
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288 Appendix B - Data Sources, Regr
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Praise for the DHL Global Connected
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DHL Global Connectedness Index 2014

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