Globalisation remains at a "record level" despite geopolitical tensions and uncertainties, according to the latest DHL Global Connectedness Tracker.
An extension to the DHL Global Connectedness Report, the DHL Global Connectedness Tracker—released by DHL and New York University's Stern School of Business—examines how flows of trade, capital, information, and people move around the world. It measures international relative to domestic activity on a spectrum from 0% to 100%.
"Currently at 25%, it shows that globalization is holding steady at a record high, highlighting the resilience of international flows in the face of geopolitical tensions and uncertainty," the report found.
It noted that this level also indicates that "despite decades of globalization, the world is far from being completely connected."
Global trade remains a central pillar of world economy
"The Global Connectedness Tracker shows that there are still countless opportunities for countries and businesses to expand their markets across the globe," said John Pearson, CEO of DHL Express.
"While the outlines of this complex landscape remain in flux, the fundamental drivers and benefits of international engagement endure. Global trade enhances international exchange and fosters opportunities to empower individuals and businesses, and allows entire nations to flourish," he added.
Further, the latest data underscore the crucial role of global trade.
The report said in 2023, 21% of the value of all goods and services produced around the world was traded internationally—just shy of the all-time high of 22% first reached in 2008 and matched in 2022.
The DHL Global Connectedness Tracker noted that geopolitically "unaligned" countries benefit from trade shifts.
It said that ties between the US and China also continued to diminish with direct trade between the two countries falling from 3.5% of global goods trade in 2016 to 2.6% in 2024 (January to July).
"At the same time, these numbers reflect that direct trade between the US and China accounts for only a small part of world trade," DHL pointed out.
The DHL Global Connectedness Tracker also reveals that "unaligned" countries that are neither close allies of the U.S. nor of China are conducting a growing share of world trade, developing new roles as connecting economies bridging geopolitical rivals.
The report said the share of trade involving countries that are not close allies of either superpower rose from 42% in 2016 to 47% in 2024, with the United Arab Emirates, India, Vietnam, Brazil, and Mexico seeing especially large trade share gains over this period.
Impact of potential new US tariffs
DHL noted that given the potential for tariff increases on US imports and possible new trade conflicts after Donald Trump's return to the White House, the analysis suggests caution regarding predictions that such developments would reverse globalization.
It added that while actual policy changes in the US remain uncertain, international trade has remained resilient through Brexit, the US-China trade war, the Covid pandemic, and conflicts in Ukraine and Gaza.
"In turbulent times, it is essential to look beyond the political crossfire about globalization to make informed decisions based on how international flows are actually developing," said Steven A. Altman, senior research scholar and director of the DHL Initiative on Globalization at NYU Stern's Center for the Future of Management.
"While there is no guarantee that the recent resilience of global flows will continue, it highlights how companies and countries often find creative ways to preserve the benefits they derive from globalization."
Altman added: "As long as markets stay connected, a company that unilaterally retreats from globalization can put its competitive position at risk."
Looking at how globalization levels and trends vary across types of activity, the DHL Global Connectedness Tracker noted that information flows are the most globalized and – due to digitization – show the largest increase in globalization over the past two decades.
People flow, such as migration and travel, by contrast, stand out for very low levels of globalization.
Regionalization "not overtaking" globalization
The report found that despite increased interest in producing goods closer to customers in recent years, the analysis indicates that regionalization is not overtaking globalization.
"In fact, most flows are taking place over stable or longer distances – which speaks against a broad shift towards regionalization," DHL said in a statement.
During the first seven months of 2024, traded goods even traversed the longest average distance on record (4,970 km).
In line with this, the share of goods trade taking place inside major world regions fell to a new low of 51%.
The November 2024 version of the DHL Global Connectedness Tracker analyzes more than eight million data points on international flows of trade, capital, information, and people.
