Significant untapped potential for economic growth
- New study focuses on the flows that integrate a country with the rest of the world
- Expanding connectedness likely to provide global GDP gains
- Of the 125 countries, India ranks 49th, and is among the top ten countries to significantly improve connectedness in the last five years
DHL, the global logistics leader, released the first DHL Global Connectedness Index (GCI), a detailed country-by-country analysis of the flows that connect the world. The GCI ranks 125 countries and examines the depth and breadth of a country’s integration as manifested by its participation in international flows of products and services, capital, information, and people. The study documents that global connectedness has enormous room to expand, even among the most “connected” countries and that continued economic integration could spur global gross domestic product gains of five percent or more.
India ranks 49th
The overall GCI places equal weight on both depth and breadth. While India was a top scorer its breadth of coverage, ranking #12, in terms of depth the country is far less connected at #110. Overall, India ranks #49 in the study.
India is also among the top ten countries which most increased its level of global connectedness between 2005 and 2010. R. S. Subramanian, India Country Manager, DHL Express India said, “The GCI study clearly indicates that the opportunity for future growth among the countries that promote globalization through public policy and business strategies is huge.” India has moved up significantly in its ranking from #110 in 2005 to #49 in 2010. “Further emphasis on a more liberal investment regime and creating world-class infrastructure capacity will support India to rise higher in the international landscape,” added Subramanian.
India’s increase in overall connectedness came entirely from outward connectedness, and the largest specific source was a surge in outward FDI, reflecting the much greater prevalence of Indian companies investing abroad relative to foreign companies investing in India, contributing to the weaker depth score. This trend of higher breadth than depth scores is prevalent for each of the BRIC countries (Brazil, Russia, India and China).
Overall, the top 10 ”most connected“ countries as per the 2011 GCI study are the Netherlands, Singapore, Ireland, Switzerland, Luxembourg, the United Kingdom, Sweden, Belgium, Hong Kong (China) and Malta.
The study was commissioned by DHL and conducted by world-renowned global business strategist and economist, Pankaj Ghemawat, Professor of Global Strategy at the IESE Business School, Barcelona. “The positive impact of global connectedness on world prosperity will continue to be of great importance. The misgivings some political leaders have about increasing global integration are misplaced; its benefits far outweigh the potential downsides,” said Ghemawat.
Key takeaways from the index include:
- The actual level of connectedness today is much lower than commonly believed; its potential for positive growth, therefore, is significant.
- The Netherlands ranks No. 1 in terms of overall connectedness, Hong Kong scores the highest regarding the depth of its international connections, and the United Kingdom tops the list for the breadth of its connections.
- Despite increasing its trade interaction in recent years, the United States ranks No. 25 overall. The United States is a leader in term of breadth (#3), but as is expected for a country with a very large internal market, it lags on depth (#84).
- The lion's share of international connections are still concentrated among countries that share borders (such as in Northern Europe) as well as cultural and historical ties, which indicates that much of today’s globalization is actually regionalization.
- Larger countries score higher on the global breadth of their connections; smaller countries excel in the depth of their connectedness.
- Countries that pursue public policies that directly encourage greater international flows, as well as policies that improve the domestic business environment, can enhance their global connectedness.
Pankaj Ghemawat, who conducted the study for DHL, was on the faculty of the Harvard Business School until 2008, where he was the youngest person in the school's history to be appointed a full professor. The business newspaper “The Economist” chose him as the youngest "guru" included in the guide to the greatest management thinkers of all time, published in 2008. He has published several bestselling books on global economic issues, most recently World 3.0: Global Prosperity and How to Achieve It and over 100 articles and case studies.
The full DHL Global Connectedness Index 2011 as well as further background information can be downloaded at http://www.dhl.com/gci