Globalization hits record high: DHL Global Connectedness Index
DHL has released the fifth edition of the DHL Global Connectedness Index (GCI) - a detailed analysis of globalization, measured by international flows of trade, capital, information and people.
The latest edition of the GCI saw the United Arab Emirates (UAE) surge to fifth place in the world for global connectedness.
The country’s rank stood at 18th in 2004. It entered the top 10 in 2012 (ranking 9th), and continued rising all the way to its present 5th position, a record rank for the country and the highest rank achieved yet by a country from the Middle East and North Africa region.
The UAE has proactively supported connectedness by, for example, fostering vibrant activity in free trade zones such as the Abu Dhabi Airports Free Zone (ADAFZ) that focus on non-oil products as part of the government’s economic diversification strategy.
Bahrain, Mauritius, Qatar, Saudi Arabia, Seychelles and Lebanon all made it into the Index’s Top 50, while Sub-Saharan African countries like Nigeria, Sierra Leone and Guinea on the West African coastline showed remarkable improvements in connectivity.
The 2018 index measures the current state of globalization, as well as individual rankings for each country, based on the depth (intensity of international flows) and breadth (geographical distribution of flows) of countries’ international connections.
The world’s top five most globally connected countries in 2017 were the Netherlands, Singapore, Switzerland, Belgium and the United Arab Emirates.
Middle East and North Africa is the world’s third-most connected region, behind Europe and North America.
Said Nour Suliman, CEO Middle East and North Africa, DHL Express: “While oil exports continue to underpin the Emirates’ connectedness to the global economy, the establishment of free trade zones like the ADAFZ has attracted businesses worldwide, serving as a strategic hub and gateway to Abu Dhabi, the UAE and the wider region.
“Increased trade from companies based in these zones have directly contributed to the rise in the UAE’s non-oil foreign trade in sectors like aviation, pharmaceuticals, technology and e-commerce, accounting for 62% of total trade.
“Over the past few years, deals with key partners like Saudi Arabia have reached US$10 billion, while UAE-India trade partnerships are expected to cross US$100 billion by 2020.
“The region continues to face geopolitical headwinds as well as issues around quality and reliability of infrastructure, but things are changing thanks to new policies and investments from government and industry alike.
“DHL Express recently opened a US$5.8 million logistics facility in Jordan as part of the company’s commitment to invest US$170 million in infrastructure developments across Middle East and Africa as we continue to drive greater regional and global connectedness with innovative, high-quality end-to-end logistics services.”
The new GCI report represents the first comprehensive assessment of developments in globalization across 169 countries and territories since the Brexit referendum in the United Kingdom and the 2016 presidential election in the United States.
In spite of growing anti-globalization tensions in many countries, connectedness reached an all-time high in 2017, as the flows of trade, capital, information and people across national borders all intensified significantly for the first time since 2007.
Strong economic growth boosted international flows while key policy changes such as US tariff increases had not yet been implemented.
A central theme of research by GCI co-authors Steven A. Altman and Pankaj Ghemawat is that at the global level, the world is still less connected than most people think it is, even after globalization’s recent gains.
For example, just about 20% of economic output around the world is exported, roughly 7% of phone call minutes (including calls over the internet) are international, and only 3% of people live outside the countries where they were born.
The report also debunks the belief that distance is becoming irrelevant. Most countries are much more connected to their neighbors than to distant nations.
The GCI continues to reveal vast differences between levels of globalization in advanced versus emerging economies.
Emerging economies trade almost as intensively as advanced economies, but advanced economies are more than three times as deeply integrated into international capital flows, five times for people flows, and almost nine times with respect to information flows.
Additionally, while leaders from large emerging markets have become major supporters of globalization on the world stage, emerging economies’ progress in terms of global connectedness has stalled.