| Source: KOF Economic Institute
Global interdependencies are gradually recovering, as the KOF Globalisation Index for 2022 shows. Globalisation is returning to its pre-COVID-19 pandemic level. Economic globalisation in particular has provided a boost here, while social and political globalisation continue to suffer from the after-effects of the pandemic. The most globalised country is the Netherlands, followed by Switzerland and Belgium. Economic globalisation recorded the strongest growth in 2022. The easing of pandemic-related restrictions revitalised international trade in goods and services. Trade in services especially benefited from the lifting of most pandemic-related restrictions. Trade in goods also proved robust, supported by the resolution of supply-chain issues and continued high global demand. In contrast, financial globalisation weakened. Foreign direct investment, portfolio investment and international debt levels all declined as a share of gross domestic product (GDP). The growth of economic globalisation in 2022 was therefore driven primarily by trade flows rather than by financial interdependencies. Social and political globalisation achieving modest growth Social globalisation is showing its first signs of recovery – particularly in areas such as cultural exchange and personal mobility. The social globalisation index rose further in 2022 owing to improvements in the institutional framework, such as international agreements (de jure), as well as an increase in actual cross-border contacts and activities, such as tourism and cultural exchange (de facto). Nevertheless, its level remains below that of 2019, as international mobility remained limited. Political globalisation virtually stagnated. While institutional frameworks, such as membership of international organisations and multilateral treaties, improved slightly (de jure), the actual presence of international cooperation, for example in the form of diplomatic missions and non-governmental organisations (NGOs), decreased (de facto). Geopolitical tensions and a sharper focus on national interests helped to slow down global cooperation in this area. Country analysis: The Netherlands was once again the most globalised country in 2022. This is primarily due to its role as a central trading hub in Europe. The port of Rotterdam – one of the largest transhipment centres for goods in Europe – plays a key role in the Netherlands’ exceptionally large import and export volumes. This economic interdependence emphasises its importance in international trade. Switzerland follows in second place, playing a leading role in all three dimensions of globalisation – economic, social and political. In particular, the strength of its exports in the pharmaceutical and chemical sectors and its close integration into international organisations and trade networks secure it an outstanding position in the rankings. Belgium is in third place, supported by its strong integration into the European economy and its high density of international organisations. Russia, on the other hand, saw one of the sharpest declines in the globalisation index in 2022. International sanctions and the withdrawal of numerous international companies as a result of geopolitical tensions led to a significant decline in economic and social interdependencies. Outlook for 2023: inflation and trade shaping globalisation Inflation remained high in 2023, driven by energy crises and structural supply shortages, which weighed on global consumption and demand. Trade in goods declined while trade in services continued to return to normal, mainly owing to the recovery in tourism. At the same time, geopolitical tensions and economic uncertainty caused global trade flows to be reconfigured. These developments are likely to be reflected in the next KOF Globalisation Index. |