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How ‘Flat’ Is The World? DHL Global Tracker Offers Answers

A new interactive tracker provides more timely, and surprising, answers about trade ‘connectedness’ around the world.

Is globalization reversing? Will US tariffs derail global trade? Is the world splintering into geopolitical trade blocs? Answers to these questions will now come faster—if not in real time, then at least quarterly—due to the new DHL Global Connectedness Tracker.

Unveiled on Tuesday by global logistics and shipping company DHL and New York University’s Stern School of Business, this web-based platform features interactive charts that track globalization levels and trends worldwide.

Some recent findings may come as a surprise: Global “connectedness,” measured across trade, capital, information, and people flows, remains robust as of mid-2024, despite geopolitical turbulence. The Tracker shows resilience in international flows even amid wars in the Middle East and Ukraine, immigration pressures, bottlenecks in the Panama and Suez Canals, and an ongoing US-China trade war.

This attests to “the resilience of international flows in the face of geopolitical tensions and uncertainty,” Global Connectedness Tracker reports.

“Currently available data indicate a stable level of globalization in 2024, with the balance of international relative to domestic activity,” Steven Altman, a Senior Research Scholar and Research Assistant Professor at the NYU Stern School of Business, and lead author of the Tracker and its affiliated DHL Global Connectedness Report, tells Global Finance. That is, it is holding roughly steady around the record high level set in 2022.

The Tracker scales globalization from 0% (no cross-border flows) to 100% (frictionless trade, with no border or distance effects). Projections for 2024 suggest little change across its four main categories, Altman adds.

How does one square this with all the turmoil in the world? “We might be focusing too much on the largest countries and economies. Many see the US and China interacting less, Europe and Russia decoupling, and the UK leaving the EU as signs of ‘the end’ of globalization,” says Tobias Meyer, CEO at the DHL Group, in the report’s introduction.

What If A Tariff War Breaks Out?

Still, maybe the election of Donald Trump in the US will change things? Trump has proposed tariff increases across all trade partners and especially large tariff increases on China.

If these tariffs are implemented, “they would put negative pressure on all US imports and exports, because trade partners are sure to retaliate,” answers Altman. “This implies especially great pressure on the 2.6% of world goods trade that takes place directly between the US and China, and some pressure more broadly on the 22% of all goods trade that is to or from the US,” i.e., 13% of world imports and 9% of exports.

Elsewhere, countries that are neither close allies of the US nor of China grew their share of world trade from 42% in 2016 to 47% in 2024, according to the Tracker, with the United Arab Emirates, India, Vietnam, Brazil, and Mexico seeing especially large trade share gains over this period.

Put another way, the vast majority of trade does not directly touch the US. “So what matters most for the global level of trade integration is whether a potential US-led escalation of trade barriers spreads further and begins to constrain trade between other countries,” Altman says.

He doesn’t foresee most countries retreating from cross-border trading. For one thing, most international trade is already between countries that are friends. Also, smaller countries, as a rule, are more dependent on trade than larger countries. “The US is actually the major advanced economy that relies the least on imports,” i.e., has the lowest imports-to-GDP ratio, says Altman. 

Nor is there much evidence yet that cross-border trade is becoming regionalized. Countries continue to trade with other countries far, far away. During the first seven months of 2024, “goods trade traversed the longest average distance on record (4,970 km),” according to the Tracker.

There is some evidence that trade between rival geopolitical blocs (e.g., US allies v. China allies) may be diminishing, however, mainly because of Russia’s international flows. According to the Tracker:

“The share of world trade crossing between close allies of the US and China and the opposing bloc fell from 13% in 2016 to 10% in 2024, but excluding Russia only from 11% to 10%.”

A Long-Run Rising Trend

What about the longer-term prognosis—beyond the next decade or two: Should one expect globalization to grow, retract, or remain about where it is today?

“I think the most likely scenario is that we will see modest increases in globalization,” says Altman. Globalization often advances by fits and starts, with temporary reversals, but the long-range trend is positive.

That said, “we’re still far from a ‘flat’ world and I don’t think we’ll come anywhere close to complete or unfettered globalization in the coming decades,” he adds.

The current “depth,” or connectedness on the Tracker’s scale (i.e., 0% to 100%) is 25%, where 0% would mean that no flows cross borders at all, while 100% means that borders, distance, and cross-country differences have ceased to matter, and interactions are just as likely to happen between countries as they are within them.

This means that most of the overall business conducted around the world is still overwhelmingly domestic.

“And it’s going to stay that way because people and companies naturally tend to have stronger roots at home, and very few manage to achieve equal levels of success all around the world,” he comments.

While the Tracker is highly unlikely to reach 100%, “I wouldn’t be surprised if we eventually get from 25% up to 30% or maybe even, perhaps several decades into the future, up to 35%,” Altman says. 

Global Finance

 

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