DHL Global Connectedness Index 2014

DHL Global Connectedness Index 2014
85
Distinctive Features
of the DHL Global Connectedness Index
Chapter 1 compared global depth trends from the DHL
Global Connectedness Index with those based on the KOF
Index of Globalization, the Ernst & Young (E&Y) Globalization
Index, and the Maastricht Globalization Index (MGI),
the three indexes that have released more than one edition
and continue to be updated. The DHL Global Connectedness
Index was the only one among the four that reflected—
in its overall results—the major drop-off in trade and capital
flows that accompanied the global financial crisis. The 3-D
approach described in Chapter 1 also highlighted how the
DHL Global Connectedness Index is the only index to
go beyond measuring depth to capture systematically the
distribution of countries’ international interactions (via its
breadth dimension) and their directionality.
Focus on Actual International Interactions,
not Enablers or Impacts
One reason why the DHL Global Connectedness Index
proved more sensitive to declining trade and capital flows
during the crisis is that it was designed to focus exclusively
on tracking actual international interactions. Other
indexes, as shown on Figure 5.3, allocate significant weight
to measures of enablers of globalization rather than actual
international interactions. In fact, more than half (56%) of
the weight on the KOF index lies on its coverage of (policy)
restrictions on economic globalization (e.g., tariffs),
measures of technological enablers (e.g., internet users per
capita), and measures of political globalization (e.g., number
of embassies in a country). 5
One motivation for focusing the DHL Global Connectedness
Index on actual international flows and stocks cumulated
from prior year flows is the prevalence of “globaloney”
mentioned in Chapter 1—the tendency for people to overestimate
levels of globalization. But more practically, mixing
up measures of causes and (supposed) effects gets in the way
of analyzing the relationships between them.
By making the DHL Global Connectedness Index as close
to a pure measure of actual globalization as we could, we
opened the way for analysis identifying policies countries
can employ to increase the depth of their global connectedness
(a subset of which are included in the country profiles at
the back of this report). One of the most intriguing findings
from policy research based on the DHL Global Connectedness
Index is that policies designed to improve countries’
domestic business environments can sometimes do even
more to deepen their connectedness than policies that focus
specifically on easing international interactions. 6
Based on the same reasoning that underlies our exclusion of
policy measures from the calculation of the index, we would
also have preferred to exclude all measures of technological
connectivity—another type of enabler of globalization that
is better analyzed in relation to the index rather than incorporated
within it. The only such measure we did include
was international internet bandwidth per internet user, as
a proxy for international internet traffic due to the lack of
country-level data on the latter. Nonetheless, international
internet bandwidth per internet user is—importantly—a
measure of international connectivity. Other indexes include
technological connectivity measures that are not specifically
international. All three of the other indexes include internet
users per capita, and televisions and mobile phones per
capita are also measured on one index each. As described in
Chapter 2, internet traffic, television news, and telephone
calls are all overwhelmingly domestic, raising questions
about the relevance of these metrics for a globalization
index.
Our focus on measuring actual international interactions
also leads—more subjectively—to the exclusion of attempts
to track globalization’s broader societal or cultural impacts.
While all of the other indexes feature a “cultural” pillar,
their attempts to measure cultural globalization vary. Both