JOHANNESBURG – After 33 years of working in the global logistics industry, I continue to be amazed by how little globalised the world economy still is.
Given the apprehension that exists about globalisation in general and about trade in particular, some may view this statement as disingenuous.
Yet, at a time when populism and nationalism are becoming ever more pervasive and multilateralism is under increasing threat, it matters greatly to have one's facts straight.
For example, just about 20 percent of economic output worldwide is exported. Globally, investments made by companies buying, building, or expanding international operations are less than 10 percent of all new fixed investment. Only 3 percent of people live outside the countries where they were born. And the number of parcels shipped internationally equals just 1.3 percent of all domestically shipped parcels, according to the Universal Postal Union.
In addition, a large share of the cross-border trade that we tend to call globalisation is in fact regional in nature. For all the talk about global supply chains, most international supply chains are actually regional – a pattern that is documented in the 2018 edition of the DHL Global Connectedness Index, developed by scholars at the NYU Stern and IESE business schools.
Accordingly, it is not so much globalisation per se but the regionalisation of the world economy that has accelerated growth in many parts of the world. Cross-border trade, whether regional or global in reach, advances economic prosperity.
Progress in successfully tapping into the world economy is increasingly achieved in unexpected places. As noted in the 2018 DHL Global Connectedness Index, Cambodia, Malaysia, Mozambique, Singapore and Vietnam are the top countries globally whose actual international flows are larger than predicted by such factors as size, wealth, language and proximity. Notably, four of these five countries are located in Asia, one in Africa.
Even though there are significant tensions affecting the global trading system at this juncture, we should feel encouraged by the conclusion of major trade agreements.
As the recent EU-Japan Free Trade Agreement underscores, such trade deals also provide room for economic growth in what used to be considered the “first world”, largely by removing bureaucratic impediments to trade.
The steep rise in the number of cellphone users as well as smartphone users allows many, especially in developing countries, to not just participate more fully in their own national economy, for example, by having access to mobile payment systems. It also connects them better globally.
Crucially, online shops are far from being one-directional. They facilitate trade and expand opportunities in all directions. This even applies to small-scale artisan producers in remote corners of the world. They can now connect to customers globally.
Having worked on the frontlines of trade in many world regions, from the UAE and Australia to Singapore and Europe, what I have come to learn along the way is that global trade is fundamental to drawing countries together and allowing their citizens to prosper. The global logistics industry is both a beneficiary of as well as a catalyst for that greater connectedness.
Since 1990, globalisation has been a critical factor in reducing the number of people living in extreme poverty from 1.9 billion to 736 million.
If we actively focus on removing the remaining barriers to trade and access to information, including for people living in far-away places, we will be able to build on this impressive track record and put prosperity in reach of people everywhere.
John Pearson is the chief executive of DHL Express. The views expressed here are his own.