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DHL Global Connectedness Index 2020 signals recovery of globalization from COVID-19 setback

DHL Global Connectedness Index 2020 signals recovery of globalization from COVID-19 setback

Global trade has rebounded strongly, sustaining economies around the world; ‘Digital globalization’ raced ahead as people flows plummeted; Country ranking led by The Netherlands, Singapore, Belgium, the United Arab Emirates and Ireland; Four Sub-Saharan Africa countries among top 10 countries with the largest gains in connectedness.

Today, DHL (https://www.DPDHL.com) and the NYU Stern School of Business released the DHL Global Connectedness Index 2020 (GCI). The report, now in its seventh edition, is the first comprehensive assessment of globalization during the spreading COVID-19 pandemic. It tracks international flows of trade, capital, information and people across 169 countries and territories. After holding steady in 2019, current forecasts imply that the index will fall significantly in 2020 due to the distancing effects of COVID-19 on societies, such as closed borders, travel bans and grounded passenger airlines. Nonetheless the pandemic is unlikely to send the world’s overall level of connectedness below where it stood during the 2008 – 09 global financial crisis. Trade and capital flows have already started to recover and international data flows surged during the spreading pandemic as in-person contact migrated online, boosting international internet traffic, phone calls and e-commerce.

“The current crisis has shown how indispensable international connections are for maintaining the global economy, securing people's livelihoods and helping companies strengthen their trading levels,” says John Pearson, CEO of DHL Express. “Connected supply chains and logistics networks play an essential role in keeping the world running and stabilizing globalization especially at a time of a crisis that spans our globe. This reminds us of the need to stay prepared for any challenge. The recent vaccine breakthrough has put a spotlight on the systemic importance of fast and secure medical logistics dependent on a worldwide interconnected network that effectively ensures international distribution.”

While COVID-19 has disrupted business and life around the world, it has not severed the fundamental links that connect nations. “This report shows that globalization did not collapse in 2020, but that the pandemic did transform – at least temporar­ily – how countries connect. It also demonstrates both the dangers of a world where critical linkages break down and the urgent need for more effective cooperation in the face of global challenges,” comments GCI lead author Steven A. Altman, Senior Research Scholar and Director of the DHL Initiative on Globalization at the NYU Stern School of Business. “Stronger global connectedness could accelerate the world’s recovery from the COVID-19 pandemic, as countries that connect more to international flows tend to enjoy faster economic growth.”

Four SSA countries amongst top 10 largest gains

Sudan, Niger, the United Republic of Tanzania, and Gambia are among the top 10 countries with the largest gains in their connectedness scores. In fact, Sudan tied Uzbekistan with the highest score increase of +10 from the previous index, due to its increasing import depth, inward portfolio equity stock and Foreign Direct Investment depth. In contrast, Angola, Malawi, Guinea, Madagascar, and Seychelles were cited amongst the countries with the largest absolute declines in global connectedness since the last GCI report in 2017.

At 48th, Mauritius is the highest ranked country in the Sub-Saharan Africa region, followed by Seychelles at 52nd. South Africa is the highest ranking country on the African continent itself, with a ranking of 57.

“Globalization and digitalization have broken down many barriers to better education, business opportunities and a higher quality of life for millions of people across Sub-Saharan Africa. We look forward to the upcoming ratification of the African Continental Free Trade Agreement (AfCFTA), which has the potential to boost the region’s global connectedness, facilitating the movement of people, investments and businesses across the region. There are still many opportunities for the region to improve its connectedness, and DHL will continue to invest in the region to connect people and improve lives,” said Hennie Heymans, CEO of DHL Express Sub-Saharan Africa.

The COVID-19 stress test for globalization: Digital flows surging, trade and capital flows recovering, people flows plummeting

Predictably, lockdowns and travel bans to curb the spread of the virus have led to an unprecedented collapse of people flows in 2020. The number of people traveling to foreign countries is on track to fall 70% in 2020, according to the latest UN forecast. International tourism may not return to its pre-pandemic level until 2023. In contrast, trade, capital, and information flows have held up surprisingly well. International trade has rebounded strongly after a sharp plunge at the onset of the pandemic and remains a vital backbone for economies worldwide.

Capital flows were hit harder. Foreign direct investment (FDI) flows, which reflect companies buying, building or reinvesting in operations abroad, could fall 30-40% this year, as also projected by the UN. However, strong policy responses by governments and central banks have helped to stabilize markets. Digital information flows have surged as the pandemic has sent work, play and education online. People and companies rushed to stay connected digitally, driving double-digit increases in global internet traffic.

The DHL Global Connectedness Index employs more than 3.5 million data points to track the globalization of 169 countries over the period from 2001 to 2019. It measures each country’s global connectedness based both on the size of its international flows relative to the size of its domestic economy (‘depth’) and the extent to which its international flows are distributed globally or more nar­rowly focused (‘breadth’).

This year's GCI report also marks the start of the new DHL Initia­tive on Globalization at New York University’s Stern School of Business. The new research initiative aims to create a leading center of excellence for data-driven glo­balization research. To learn more about its work, visit the website at https://bit.ly/3qs09hc.

Distributed by APO Group on behalf of Deutsche Post DHL.

Note to Editors:
The report was commissioned by DHL and authored by Steven A. Altman and Phillip Bastian of the New York University Stern School of Business. The methodology used to calculate the 2020 DHL Global Connectedness Index is largely unchanged from previous editions of the index. The only significant methodological change introduced in this edition is the addition of international scien­tific research collaboration as a component mea­sure within the information pillar of the index. The data used to compute the index have been com­pletely updated both to extend the results up to 2019 as well as to incorporate revised source data for prior years. They document and dissect levels of globalization, both at the global level and for 169 countries and territories that together account for 99% of the world’s GDP and 98% of its population.

The report and additional background information can be downloaded at https://DHL.com/GCI.

Media Contacts:
DHL Asia Pacific & EEMEA
Communications, Sustainability & Brand
Jenny Yeo / Moses Mok
Phone: +65 9003 0147 / +65 9186 2794
E-mail: apeemeamediarelations@dhl.com

NYU Stern School of Business
Office of Public Affairs
Carolyn Ritter & Jeff Piascik
Phone: +1 212.998.0624 or +1 212.998.0906
E-mail: critter@stern.nyu.edu or jpiascik@stern.nyu.edu

About DHL – The logistics company for the world:
DHL (https://www.DPDHL.com) is the leading global brand in the logistics industry. Our DHL divisions offer an unrivalled portfolio of logistics services ranging from national and international parcel delivery, e-commerce shipping and fulfillment solutions, international express, road, air and ocean transport to industrial supply chain management. With about 380,000 employees in more than 220 countries and territories worldwide, DHL connects people and businesses securely and reliably, enabling global sustainable trade flows. With specialized solutions for growth markets and industries including technology, life sciences and healthcare, engineering, manufacturing & energy, auto-mobility and retail, DHL is decisively positioned as “The logistics company for the world”.

DHL is part of Deutsche Post DHL Group. The Group generated revenues of more than 63 billion euros in 2019. With sustainable business practices and a commitment to society and the environment, the Group makes a positive contribution to the world. Deutsche Post DHL Group aims to achieve zero-emissions logistics by 2050.

About New York University Stern School of Business:
New York University Stern School of Business (https://www.Stern.NYU.edu/), located in the heart of Greenwich Village and deeply connected with the City for which it is named, is one of the nation’s premier management education schools and research centers. NYU Stern offers a broad portfolio of transformational programs at the graduate, undergraduate and executive levels, all of them enriched by the dynamism and deep resources of one of the world’s business capitals. NYU Stern is a community that fosters inclusion, belonging, diversity and equity, and inspires its members to embrace change in a globally changing world. Visit https://www.Stern.NYU.edu/.


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DHL GCI 2020 Infographic – Far less globalized
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