HOW “GLOBAL” ARE WE REALLY?

THE DEPTH INDEX IS BASED ON FOUR ”PILLARS” – BROAD

CATEGORIES OF INTERNATIONAL FLOWS:

TRADE PILLAR

OVERALL DEPTH OF GLOBALIZATION, 2005 - 2012

The proportion of goods and services exported across national borders dipped from 32.1% in 2011 to 31.6% in 2012.

CAPITAL PILLARForeign direct investment dropped 18% in 2012, but international portfolio equity investment rebounded.

INFORMATION PILLARInternational internet bandwidth soared; average person spent 140 minutes on international phone calls, up from 88 in 2005.

PEOPLE PILLARInternational tourist arrivals crossed 1 billion for the first time ever. Migration and international education grew modestly.

TOP10

BOTTOM 10

HONG KONG SAR (CHINA)

SINGAPORE

LUXEMBOURG

IRELAND

BELGIUM

NETHERLANDS

MALAYSIA

MALTA

BAHRAIN

ESTONIA

139. IRAN, ISLAMIC

REPUBLIC

BRAZIL

VENEZUELA, RB

ETHIOPIA

NEPAL

CENTRAL AFRICAN REPUBLIC

BURUNDI

PAKISTAN

BANGLADESH

MYANMAR

02

03

04

05

06

07

08

09

10

01

138

137

136

135

134

133

132

131

130

139

BIG SHIFT TO EMERGING ECONOMIES The rise of emerging economies is reshaping these

international flows and driving most of their growth.

Exports

0% 10% 20% 30% 40% 50% 60%

FDI Outflows

Int’l Internet Bandwidth

Int’l Tourist Arrivals

Emerging Economies’ Share of World Totals

2000

2000

2012

2000 2012

2012

2000 2012

Emergingeconomies

Healthy Fundamentals and Room to GrowDespite recent downward forecast revisions, the world economy is still projected to grow faster between 2012 and 2018 than in the 1980s, the 1990s or the first decade of this century. This implies that the largest threat to globalization actually comes from policy fumbles rather than macroeconomic fundamentals.

In advanced economies, the average person takes an international trip every 1.7 years. In emerging economies, people have to wait 14 years on average to travel abroad.

People in Hong Kong SAR (China) spent more time than people anywhere else talking on international phone

calls in 2012: 53 hours (versus only 6 minutes in Rwanda, which ranks last on phone calls depth).

Emerging economies’ share of the world’s economic output has nearly doubled since 2000. Emerging economies contributed 77% of growth from 2008-2012 and are expected to contribute 53% from 2012 to 2018.

Western Europeans guess immigrants make up 25% of their countries’ populations, about twice the correct

answer of 12%. Americans are even further off, guessing 42% (versus correct answer of 14%).

25% of Twitter followers, 10-15% of Facebook friends and less than 5% of phone calls (including calls placed over the internet) cross national borders.

Advancedeconomies

2008-2012

77% 53%2012-2018

© 2013 Pankaj GhemawatFull report, 139 country profiles, and complete source references at www.ghemawat.com/dig DOWNLOAD THE REPORT

BUT EMERGING ECONOMIES ARE MUCH LESS GLOBALIZED THAN ADVANCED ECONOMIES.

If emerging economies become more globalized as they grow wealthier, the big shift beyond trade has only just begun.

How much More Globalized are Advanced Economies than Emerging Markets?

Exports (% of GDP)

FDI Outflows(% of Gross Fixed Capital

Formation)

Int’l Internet Bandwidth(Per Internet User)

Int’l Tourist Arrivals(Per Capita)

Advanced

Emerging

Advanced

Emerging

Advanced

Emerging

Advanced

Emerging

(nearly equal)

(4x more globalized)

(6.6x more globalized)

(7.4x more globalized)

GLOBALIZATION STALLED IN 2012

Globalization’s post-crisis recovery

stalled last year. The world was still less deeply interconnected

in 2012 than it was in 2007.

GOOD TIMES OR BAD TIMES FOR GLOBALIZATION?

Highlights from the Depth Index of Globalization 2013