Globalization not going into reverse, annual index finds

Another tailwind for globalization is the significant decline in shipping costs over the past year or so, the report found. This effectively lessens the shipping penalty that had accompanied long-range trade flows.

The latest merchandise data, which analyzes trade flows from 171 countries and territories, “clearly debunks the perception of globalization going into reverse gear,” said John Pearson, CEO of DHL Express, the time-definite air express unit.

As a byproduct, the study casts doubt on any surge in regionalization in the wake of pandemic-related supply chain disruptions. “It remains an open question whether trade patterns will become significantly more regionalized in the future,” said Steven Altman, a senior research scholar at NYU’s Stern School and co-author of the report.

Many companies will continue to consider nearshoring, and such moves may make sense, Altman said. However, more than half of all trade already happens within regions, so he said that raises the question as to how much more trade will shift to shorter, regional distances.

The sizable decline in shipping and fuel costs in the past year has proved to be a tailwind for long-distance trade because it reduces the expenses that disproportionately affect long-distance shipping, Altman said.

In what has become a near-annual event, the Netherlands was chosen as the most globally interconnected economy in 2021, followed by Singapore and Belgium. The U.S. came in 28th, though it was the top performer among economies in the Americas.