Globalisation proves resilient during Covid-19 crisis: DHL

December 1, 2021: The DHL Global Connectedness Index is on track to rise in 2021 as trade in goods surged to above pre-pandemic levels. Now in its tenth year, the DHL Global Connectedness Index report looked at the impact of the pandemic on globalisation by analysing international flows of trade, capital, information, and people.

The key takeaways include:

• Globalisation has not given way to regionalisation

• Low-income countries lag behind in globalisation recovery; and 

• Positive relationship between global connectedness and economic prosperity.

“Many feared that the global crisis would jeopardise the progress of globalisation,” said John Pearson, CEO, DHL Express. “We have been analysing the various international flows worldwide for years and after 1.5 years of the pandemic, we can now safely assure that the pandemic has not caused globalisation to collapse. After initial dips in 2020, the DHL Global Connectedness Index is already on the rise again this year. Trade has provided a lifeline for countries around the world, and DHL Express has played a key role in areas ranging from vaccine distribution to e-commerce.”

Trade, capital, information, people flows affected in different ways 

After declining steeply early during the pandemic, trade rebounded to above its pre-pandemic level before the end of 2020 and has set new records in 2021. Foreign direct investment flows shrunk more than trade in 2020 but are on track for a full recovery in 2021, the report said.

“International data flows surged in 2020 as in-person interactions went online but this did not break a longer-term slowdown in the globalisation of information flows. Finally, international flows of people were hit the hardest by the pandemic, and they are recovering slowly. International travel fell 73% in 2020 but there are glimmers of a recovery starting in mid-2021.”

Steven A. Altman, senior research scholar and director of the DHL Initiative on Globalisation, NYU Stern, said: “The resilience of global flows is good news because a connected world offers the best prospects for a strong and sustainable recovery from the Covid-19 pandemic. When a crisis strikes, many of us naturally feel a strong impulse to hunker down behind borders. But the more extreme the challenge, the more urgent it becomes to draw upon the best ideas and resources from at home and abroad.” 

The world’s poorest countries, however, are still lagging behind in the globalisation recovery. “Even as global trade was setting new records in early 2021, the countries with the lowest per-capita incomes were still trading less than they did in 2019. Likewise, foreign direct investment into low-income countries fell over the same period while it grew strongly in middle- and high-income countries. The world’s poorest countries are still dangerously disconnected, and stronger links to the wider world could help accelerate their recoveries from the Covid-19 pandemic.” 

A special report on the 10th anniversary of the DHL Global Connectedness Index highlights strong links between global connectedness and prosperity. Five key areas for improving a country’s connectedness are:

• peace and security,

• attractive domestic business environment, 

• openness to international flows, 

• regional integration, and 

• societal support.
  
  “Remarkably, an attractive domestic business environment may boost a country’s global connectedness even more than traditional pro-globalisation policies.” 

Opportunities galore for nations, businesses

Both reports also show that globalisation is still limited with large untapped opportunities available for countries and companies. “Most business activity still takes place inside national borders, and the flows that do cross national borders mainly take place between neighboring countries. Prevailing trends still point to a future with large opportunities to gain from stronger links to the wider world.”