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
• Singapore leads the pack of six Asia
  Pacific countries ranked among the top
  30
• Five Asia Pacific countries dominated
  list of top 10 countries that “punch above their weight”

SINGAPORE�- Media OutReach - 3
December 2020 - Today, DHL 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.

In the seventh edition released today, the DHL Global Connectedness Index 2020 signals recovery of globalization from the COVID-19 setback

“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.”

Six Asia
Pacific countries ranked among top 30, Southeast Asia countries outperform
expectations

In
the report, six Asia Pacific countries are ranked in the top 30 for overall
connectedness — a measure of both their depth and breadth of connectivity —
with Singapore ranked second, Malaysia 16^th, Taiwan (China) 19^th,
South Korea 22^nd, Hong Kong S.A.R. 25^th, and Thailand at
30^th. Singapore took the top spot on the depth scale, which measures
international flow relative to domestic activity, followed by Hong Kong S.A.R.
at a close second. On the breadth dimension, which captures whether a country’s
international flows are spread out globally or more narrowly focused, Asia
Pacific countries also scored well, with South Korea and Japan coming in at fifth
and sixth respectively.

Of
particular note, the list of economies that have punched well above their
weight in terms of international flows are led by Cambodia, Singapore, Vietnam,
Malaysia, the Netherlands, Malta, the United Arab Emirates, Mozambique,
Hungary, and Thailand. Fully half of these top 10 countries are located in
Southeast Asia, a region where countries tend to have unusually high trade
depth. The report finds that Southeast Asian countries benefitted from linkages
with wider Asian supply chain networks as well as ASEAN policy initiatives promoting
regional economic integration.

“Over
the years, globalization and greater international connectedness have not only
raised the living standards and income levels of people all over Asia, it has
also helped to keep trade and critical supplies moving during challenging times
such as during this pandemic. Greater international connectedness drives
economic recovery and prosperity, and at DHL Express we have seen how the
growth of cross-border e-commerce has built great businesses and improved lives
across the region,” said Ken Lee, CEO of DHL Express Asia Pacific. “With the recent
signing of the RCEP, we are
confident that Asia Pacific countries will bounce back from this pandemic
stronger and become even more connected.”

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 www.stern.nyu.edu/globalization.

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 www.dhl.com/gci.

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