Wednesday, April 23, 2014
MGI Report: Global flows in a digital age: How trade, finance, people, and data connect the world economy
Today, the movement of goods, services, finance, and people has reached previously unimagined levels. Global flows are creating new degrees of connectedness among economies—and playing an ever-larger role in determining the fate of nations, companies, and individuals; to be unconnected is to fall behind.
MGI scenarios show that global flows could reach $54 trillion to $85 trillion by 2025, more than double or triple their current scale.
The study finds that countries with a larger number of connections in the global network of flows increase their GDP growth by up to 40 percent more than less connected countries do. The penalty for being left behind is rising.
MGI’s new Connectedness Index ranks 131 countries on total flows of goods, services, finance, people, and data and communication, adjusting for country size. The index shows that developed economies remain more connected than emerging ones: Germany tops the list, followed by Hong Kong and the United States. Emerging economies are less connected to global flows, but some are climbing up the ranks rapidly: Morocco and Mauritius gained 26 places and 28 places, respectively, between 1995 and 2012—the largest increases in our index. Saudi Arabia rose 19 places, reflecting the rising value of oil exports and the recycling of oil wealth into global financial markets. India gained 16 places in this period, thanks to growth in services flows, and Brazil jumped 15 on the strength of expanding services and financial flows.
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