The geopolitical tensions of 2020 have compounded the toll of the worst pandemic in a century, but a measure of globalization released today by Deutsche Post DHL shows that international trade is far from dead, with global flows proving more resilient than many expected.
The lightning fast spread of Covid-19 has prompted countries to close their borders, pause global travel, and disrupt international supply chains, according to the seventh annual “DHL Global Connectedness Index” (GCI).
But the study found that globalization has endured in the forms of four variables—trade, capital, information, and people. Of those four, the flow of people has suffered the worst, leading to an unprecedented collapse in global travel during 2020, DHL said. For example, that trend has dealt a crippling blow to commercial airlines, which have been forced to ground their fleets and furlough their workers in the absence of paying passengers.
However, that impact has been muted by a recovery already beginning to boost trade and capital flows, and an absolute surge in digital information flows, as people and companies have rushed to stay connected online. The impact of that effect can be seen in sky-high e-commerce rates leading to peak logistics activity even before the traditional winter holiday buying season begins.
All in all, the DHL Global Connectedness Index is set to decline in 2020, but it is unlikely to fall below where it stood during the 2008-09 global financial crisis, DHL found.
“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” John Pearson, CEO of DHL Express, said in a release. “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.”
Looking at specific countries, the index showed that The Netherlands held on to its title as the world’s most globally connected country, followed by Singapore, Belgium, the United Arab Emirates, and Ireland. The U.S. fell two spots to number 37, lagging behind the U.K. (8), Germany (13), Taiwan (19), Korea (22), Hong Kong (25), and Canada (32) on the full list of 169 entrants. Europe claimed the top spot as the world’s most globalized region, with 8 of the 10 most globally connected countries located there, and leading on trade and people flows. In turn, North America was the top region for information and capital flows.
The results conclude that Covid-19 may have disrupted business and life around the world, but it has not severed the fundamental links that connect nations, according to GCI lead author Steven A. Altman, senior research scholar and director of the DHL Initiative on Globalization at the NYU Stern School of Business.
“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,” Altman said. “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.”