DHL Global Connectedness Index 2014

DHL Global Connectedness Index 2014
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4. The Breadth of Global Connectedness – Notes
1 The breadth trend displayed here varies slightly from the trend displayed
in Chapter 1. The breadth trend in Chapter 1, for consistency with the
depth trend, was calculated using the same percentiles normalization
process and subtraction from 1 used to generate country level breadth
scores. Here, for comparability with the other measures used in this chapter,
raw breath scores are simply subtracted from 1.8 to so that higher
scores reflect higher breadth. No other transformations are performed.
2 The measure used is the sum, for each focal country and component,
of all partner country shares of the focal country’s interactions. This
Herfindahl-type measure differs from the traditional Herfindahl measure
used for industry concentration in that the calculation is not limited
to the shares of the top 50 participants. However, this formulation has
been used before for the analysis of the country-level concentration of
merchandise trade. See Salvatore J. Babones and Robin M. Farabee-Siers.
“Indices of Trade Partner Concentration for 183 Countries, 1980–2008.”
Journal of World-Systems Research 18, no. 2 (2012): 266–77. http://www.
jwsr.org/wp-content/uploads/2012/08/Vol18n2_Babones.pdf.
3 This chart is based only on data that could be classified into the categories
shown. As indicated on Figure 4.3 at the component level, for some
components there are also some flows that cannot be classified.
4 To simplify the presentation, this chart presents data reported from
only one direction of each component, except FDI Stocks. FDI Stocks are
reported based on both inward and outward data because the limited
sample of countries reporting these data (mainly OECD countries) implies
that the inward and outward data reflect different actual interactions
rather than only inconsistency across datasets reporting the same interactions.
5 The charts also indicate a declining share of inward FDI stocks but that
reflects the limited sample of emerging economies reporting inward FDI
stocks split out by origin country. Data that are not split out by origin
country indicate a rising share of inward FDI stocks into emerging economies.
6 Note, again, that the declining share of inward FDI stocks into emerging
economies (and its implications on breadth scores) reflect the limited
sample of emerging economies reporting inward FDI stocks split out by
origin country (leaving us with a sample that primarily reflects advanced
economies’ inward FDI stocks).
7 The decline from 2005 to 2007 and then partial reversal of that decline
since 2007–08 in the concentration of international interactions conforms
to the broader trend in the overall concentration of economic activity as
measured by countries’ shares of GDP (measured at purchasing power
parity, PPP). The rising concentration of economic activity since 2008
reflects, in large part, China’s faster growth than other major economies
over that period. Removing China from the analysis produces a concentration
trend that continues downward through 2011.
8 IMF World Economic Outlook, April 2014.
9 World Trade Organization (WTO). “World Trade Report 2013: Factors
Shaping the Future of World Trade.” (2013), p. 79. http://www.wto.org/
english/res_e/booksp_e/world_trade_report13_e.pdf.
10 Danny Quah. “The Global Economy’s Shifting Centre of Gravity.” Global
Policy, vol. 2, issue 1 (January 2011); McKinsey Global Institute. “Urban
world: Cities and the rise of the consuming class.” (June 2012).
11 IMF World Economic Outlook, April and October 2014.
12 Data on importance of work and on levels of trust are drawn from World
Values Survey (last wave 2005–2008). Data on hierarchy based on Hofstede’s
Power Distance.
13 Data on ethnic and cultural diversity drawn from James D. Fearon. “Ethnic
and Cultural Diversity by Country.” Journal of Economic Growth 8, no. 2
(June 2003): 195–222. doi:10.2307/40215943.
14 Shang-Jin Wei. “How Taxing Is Corruption on International Investors”
The Review of Economics and Statistics 82, no. 1 (February 2000): 1 –11.
15 World Value Survey (last wave 2005 –2008); Fearon, “Ethnic and cultural
diversity by country,” (2003); The Hofstede Centre; World Bank World
Development Indicators; GMI Ratings Women on Boards Survey (2012);
World Bank Worldwide Governance Indicators; Heritage Foundation Economic
Index of Freedom (2013); World Economic Forum Global Enabling
Trade Report (2012); World Bank Ease of Doing Business; HumanFreedom.
org (2006); Centre d’Etudes Prospectives et d’Informations Internationales
(CEPII) Geography Database; IMF World Economic Outlook Database
(April 2013), United Nations Development Program HDI (2012); Ricardo
Hausmann, César A. Hidalgo, et al. The Atlas of Economic Complexity:
Mapping Paths to Prosperity. (Cambridge, Mass.: Harvard’s Center for
International Development (CID); Harvard Kennedy School; MIT Media
Lab, 2011), http://www.atlas.cid.harvard.edu/book/.
16 Min-max normalization rescaled values to lie between 0 and 1 without
changing the shapes of the relevant distributions. Variables from World
Governance Indicators and Economic Complexity Index were normalized
to avoid incorporating negative values into the ratio calculations; variables
from World Values Survey were coded based on answers to individual
survey questions and made comparable via normalization; World
Bank’s Ease of Doing Business ranks were normalized in order to reverse
order and improve comparability with other data components.
17 Estimates based on gravity model analysis elaborated in Pankaj Ghemawat
and Tamara de la Mata. “Globalization, Gravity, and Distance.”
unpublished Working Paper, (September 2013).
18 Yuval Atsmon, Peter Child, Richard Dobbs, and Laxman Narasimhan.
“Winning the $30 Trillion Decathlon: Going for Gold in Emerging Markets.”
McKinsey Quarterly (August 2012). http://www.mckinsey.com/
insights/strategy/winning_the_30_trillion_decathlon_going_for_gold_in_
emerging_markets.
19 See Chapters 4 and 5 of the Pankaj Ghemawat and Steven A. Altman.
“DHL Global Connectedness Index 2011.” (2011). http://www.dhl.com/
en/about_us/logistics_insights/studies_research/global_connectedness_
index/global_connectedness_index_2011/gci_results.html; and Chapter 4
of Pankaj Ghemawat and Steven A. Altman. “DHL Global Connectedness
Index 2012.” (2012). http://www.dhl.com/en/about_us/logistics_insights/
studies_research/global_connectedness_index/global_connectedness_
index_2012/gci_results.html.
20 Pankaj Ghemawat and Tamara de la Mata. “Globalization, Gravity and
Distance.” unpublished Working Paper, (September 2013).
21 Pankaj Ghemawat and Herman Vantrappen. “Natives vs. Non-Natives on
Top.” unpublished Working Paper, (September 2014).