DHL Global Connectedness Index 2014

72 4. The Breadth of Global Connectedness
Conclusion
The international interactions of advanced economies
have lagged behind the shift of economic activity
to emerging economies, as evinced by the falling
breadth of their global connectedness. This finding,
based on country-level analysis, accords with firmlevel
research indicating that multinationals from
advanced economies are struggling to keep up with
growth in emerging economies. One hundred of the
world’s largest companies headquartered in advanced
economies derived just 17% of their total revenue in
2010 from emerging economies—even though those
markets accounted for 36% of global GDP and were
projected to contribute more than 70% of global
GDP growth through 2025. Analysis over time frames
from 1999 to 2008 indicates that emerging economy
companies not only grew 10 percentage points faster
annually at home than companies from developed
economies (18% versus 8%) but also enjoyed a similar
edge (22% versus 12%) in advanced economies and an
even bigger one in other (foreign) emerging economies
(31% versus 13%)! 18
Countries and companies, however, can take action
to reduce their sensitivity to such distances and
differences. Research on how to increase the depth
of global connectedness 19 is more advanced than
research on how to expand its breadth. However,
the implementation of policies that deepen global
connectedness can sometimes be tailored to expanding
its breadth. A common language, for example has been
shown to ease interactions of all of the types measured
on the DHL Global Connectedness Index. 20 Shifting
focus from depth to breadth implies paying greater
attention to which foreign languages are taught
rather than only how much language competency is
developed.
members of the top management teams of Fortune
Global 500 corporations currently hail from outside
the country where their company is based, and among
them 60% are from outside the firm’s home region. 21
Are those depth and regionalization levels appropriate
or do they need to be adjusted Breadth-type measures
at the firm level can help provide an answer. Firms can
assess the composition, for example, of their leadership
teams relative to their targeted sales distributions
across countries 5–10 years into the future.
At the country level, depth research indicates that
improving the domestic environment can do a great
deal to improve international connectedness, a
pattern that probably also holds true for breadth.
However, breadth can be targeted more directly via
policies that specifically seek to ease interactions with
more distant partners. Multilateral efforts to remove
barriers to international trade and investment beyond
regional boundaries could be prioritized to increase
breadth. While global efforts—including advanced and
emerging economies—would yield the largest benefits,
the WTO’s failure to ratify its Bali package suggests that
other avenues may be more promising. The involvement
of major emerging economies in the Trans-Pacific
Partnership (Malaysia, Mexico, Peru, Vietnam) alongside
the world’s largest and third largest economies (United
States and Japan) suggests it could offer some potential
along these lines.
At the firm level, efforts at boosting diversity can also
focus on breadth as well as depth. Roughly 15% of the