- Hong Kong ranks first on merchandise trade depth and FDI flows depth
- The city ranks fourth in terms of the scale of its international flows relative to domestic activity
- Globalization reached a record high, despite pandemic and geopolitical conflict
- Evidence points to robust intra-Asia trade flows and intercontinental trade demand between Asia and the West
HONG KONG SAR 14 March 2024 – DHL and New York University’s Stern School of Business today released the new DHL Global Connectedness Report 2024, the most comprehensive available analysis of globalization’s state and trajectory. This year’s DHL Global Connectedness Index ranks Hong Kong SAR, China 10th out of 181 economies, dropping four places since 2017.
Despite the drop, Hong Kong is listed fourth on the depth score among 181 economies with large international flows relative to domestic activity. Hong Kong also stands out most on merchandise trade depth (ranking 1st for both exports and imports) and FDI flows depth (ranking 1st for both inward and outward FDI flows). Its global connectedness reaffirms the city’s position as a gateway for flows between Mainland China and the rest of the world. It also signals the growing importance of the Greater Bay Area along with Macau’s advance in ranking.
At the launch of the DHL Global Connectedness Report, John Pearson, CEO DHL Express, said: “The most recent findings of the DHL Global Connectedness Report unequivocally dispel the notion of globalization reversing course. Far from being a mere buzzword, globalization is an influential force that has profoundly reshaped our world and has further great potential. Expanding markets and fostering opportunities empower individuals, businesses, and entire nations to flourish in unique ways. Embracing globalization allows us and our customers to forge a promising future, fostering an increasingly interconnected world, more prosperous for all – and poised for further growth.”
“Amid global challenges, Hong Kong remains resilient and continues to play a crucial role in facilitating trade between Asia and rest of the world, as evident from its high ranking on trade and capital pillars,” said Andy Chiang, Senior Vice President and Managing Director of DHL Express Hong Kong and Macau. “The recent expansion of our Central Asia Hub at the Hong Kong International Airport reaffirms our belief in the city’s important role as an international aviation hub to further trade flows. We will continue to leverage our global network and infrastructure to bolster interconnectivity and extend the market reach for our customers.”
The report also contains a ranking of economies that share Hong Kong’s international flow, with mainland China on top of the list with 61 percent. The rest of Hong Kong’s connections were spread throughout the world, although primarily with the large Asian economies. The United States (5%) and United Kingdom (2%) also feature prominently in Hong Kong’s connections.
Globalization remains despite world’s issues
The report reveals that globalization reached a record high in 2022 and remained close to that level in 2023 – despite a series of global shocks over the past decade, including the Covid-19 pandemic, wars in Ukraine and Gaza, the U.S. – China trade conflict, and the UK’s withdrawal from the EU. The evidence strongly rebuts the notion that the growth of global flows has gone into reverse.
Trade growth played a crucial role in boosting global connectedness. The share of global output traded internationally was back to a record high level in 2022. After a slowdown in 2023, trade growth is forecast to accelerate in 2024. The globalization of information flows has been especially strong over the past two decades, even though the latest data show a stall in their growth, partly due to less research collaboration between the U.S. and China. Corporate globalization is rising, with companies expanding their international presence and earning more sales abroad.
The report affirms the considerable potential to continue growing global flows. It pegs the world’s current level of globalization at only 25%, on a scale from 0% (meaning no flows cross national borders) to 100% (borders and distance have ceased to matter at all).
Intra-Asia trade flows remain strong while the West remain key trading partners of Asia
Evidence shows that markets in Asia Pacific are strongly connected with each other in the region. In fact, at least 70 percent of the countries in Asia Pacific have strong flows with their Asian counterparts. Looking at these countries’ top 10 connections, six or more are with an Asia Pacific market, citing robust intra-Asia trade. The Asian region is also closely connected with the West, with many of them having the United States or United Kingdom as their top 10 connections.
U.S. – China ties diminish, and Russia shows unprecedented decline in global connectedness, but no wider split of the world economy between rival blocs
The DHL Global Connectedness Report also shows that U.S.-China ties continue to diminish, with the shares of both countries’ flows involving each other decreasing by about one-quarter since 2016. However, both countries remain significantly connected, demonstrating larger flows than almost any other pair of countries. Russia and Europe have decoupled, resulting in Russia facing an unprecedented drop in connectedness, more than twice as much as any previous decline on record among the world’s 20 largest economies. At the same time, the data analysis demonstrates that there is no wider split of the world economy between rival geopolitical blocs.
Singapore ranks top as the most globalized countries, followed by the Netherlands and Ireland
Singapore achieves the number one spot. The Netherlands and Ireland rank the second and third. 143 economies became more globally connected, while only 38 saw their levels of connectedness decline. Further evidence shows that Europe is the world’s most globally connected region, followed by North America and the Middle East & North Africa.
Globalization has not given way to regionalization
Further, the report shows that predictions of a global shift from globalization to regionalization are not – at least yet – borne out in patterns of international flows. In fact, most international flows are taking place over stable or even longer distances, with a declining share happening inside major geographic regions. In the realm of trade, only North America shows a clear shift to more regionalized trade patterns.
The DHL Global Connectedness Report
Published regularly since 2011, the renowned DHL Global Connectedness Report (previously DHL Global Connectedness Index) provides reliable findings on globalization trends by analyzing 15 types of international trade, capital, information, and people flows. The 2024 edition is based on almost nine million data points. It ranks the connectedness of 181 countries, accounting for 99.7 percent of the world’s gross domestic product and 98.7 percent of its population. A collection of 181 one-page country profiles provides concise summaries of individual countries’ globalization patterns.
The report was commissioned by DHL and authored by Steven A. Altman and Caroline R. Bastian of New York University Stern School of Business.
