Wednesday, May 22, 2024
Globalisation is on the rise

Globalisation is on the rise

Despite a turbulent decade, the newly released DHL Global Connectivity Index (GCI) 2024 has put forth valuable insights into the global cargo industry, with a focus on the regional development and opportunity emerging in the Asian sub-continent. 

Trade flows have proven to be quite resilient amid geopolitical conflicts and public policy headwinds. Although it’s becoming a more challenging environment for globalisation, the 2024 index shows connectedness is at a record high. 

“It is important to recognise the resilience of global flows because a lopsided focus on the threats to globalisation could make deglobalisation a self-fulfilling prophecy,” Steven Altman, Director of the DHL Initiative on Globalisation at NYU Stern School of Business, stated.

Trends over the past two decades has been towards 20 percent growth despite seeing various challenges from the 2008 financial crisis to the Covid-19 pandemic to ongoing conflicts in Gaza and Ukraine.  

“Public policy around globalisation needs to be very assertive, welcoming, and fruitful to open up new markets,” Altman explained.

“The five factors of the framework that need to be well managed are: peace and security, the domestic business environment, international openness and connectedness, regional integration, and public support. 

“Despite having data to support four of the factors, the last element – public support – doesn’t have detailed information but various factors such as support of globalisation and an overall positive attitude towards connectedness can create the environment.”

READ: DHL strengthens Indian stance

How India fits into the model

Having secured 62nd in the Global Connectivity Index in 2024, India is certainly on an upward trajectory despite the potential instability of an upcoming general election and the slight possibility of a shift in leadership. 

Certain aspects have advanced during the current Indian government’s tenure, with greater openness to the world, working with the West and the East in the face of a global split due to geopolitical crises.   

India has enjoyed a higher export Gross Domestic Product ratio compared to China, presenting greater further growth opportunities going forward.

Along with Singapore, the top contender in the list, India benefits from vast geographical and cultural diversity, with a strong domestic market compared to similar nations. 

As per the DHL Trade Growth Atlas 2022, India is one of three countries set to excel in terms of the growth and scale of the absolute amount of its trade growth between 2021 and 2026. 

India’s current connectedness profile is consistent with expectations, but India’s economic trajectory implies that expectations for India’s connectedness will rise swiftly over the coming years. 

A more globally connected India would both reinforce the nation’s development and make it an increasingly important partner for other country’s international trade flows. 

“India’s success is mainly driven by its attractive growth prospects along with efforts to diversify China-centric supply chains and business models,” Altman explained.

“There was a surge in the value of announced greenfield foreign direct investment (FDI) projects in India by foreign companies in 2022, followed by a smaller increase the next year. 

“In 2023, companies announced plans to invest more in greenfield FDI in India than in any other country except the United States.” 

READ: DHL Express introduces direct freighter flights between Hong Kong and Australia

Global outlook

DHL’s assessment found that the weakening of connections between the world’s two largest economies, the United States and China, has led to a decrease in all types of flows between the countries by approximately one quarter compared to 2016.

However, despite some tension in recent years, the degree of mutual relations between the two powers still surpasses any connections between other entities, suggesting that globalisation is still alive and well.

“Deglobalisation is still a risk. While there have been predictions that there could be fractures in the global economy due to geopolitical threats and political changes, the latest data suggests that international flows are growing,” Altman outlined.

“This indicates that deglobalisation is still a risk, but not currently a reality. In fact, very few countries are cutting ties with their traditional partners – a positive sign for the global economy, as it suggests that countries are still committed to working together and benefiting from the gains of international trade.” 

Picture of Ajinkya Gurav

Ajinkya Gurav

With a passion for aviation, Ajinkya Gurav graduated from De Montford University with a Master’s degree in Air Transport Management. Over the past decade, he has written insightful analysis and captivating coverage around passenger and cargo operations. Gurav joined Air Cargo Week as its Regional Representative in 2024. Got news or comment to share? Contact ajinkya.gurav@aircargoweek.com

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