KOF Globalisation Index: COVID pandemic has slowed globalisation

Historically, the advance of globalisation has been shaped by dramatic events. Following the demise of the Soviet Union, globalisation grew rapidly from 1990 until 2007. However, the financial crisis and the subsequent Great Recession of 2009 abruptly halted this trend. For 2020, the latest year covered by the KOF Globalisation Index, the degree of globalisation has decreased noticeably.

Economic globalisation particularly adversely affected by pandemic...

The progress of economic globalisation has been stagnating since the financial crisis of 2007, and this trend has been exacerbated by the trade conflict between the United States and China in recent years. A distinction must be made here between financial globalisation and trade integration. Whereas international financial flows (de facto financial globalisation) did not decline in 2020 while the legal framework remained unchanged (de jure financial globalisation), trade weakened. The trends in international trade integration (de facto trade globalisation) were particularly negative. Trade in services, such as tourism and transport, was massively constrained and caused volumes to decline.

... but social globalisation has also suffered

Social globalisation has also been severely affected, as the intensity of personal contacts (measured, for example, by tourism flows and migration) has been significantly reduced. Travel restrictions caused a decline in travel, and migration to OECD countries reached an all-time low in 2020. At the same time, there is a slight downward trend in cultural globalisation. Meanwhile, the degree of political globalisation, as measured by the current index, continues to increase modestly.

Country overview

Switzerland, the Netherlands and Belgium remain the most globalised countries in the world. Switzerland regained first place in 2020. It is strongly globalised in all categories (economic, social and political). Switzerland’s economic structure was particularly advantageous during the crisis of 2020. It has a high level of international trade integration and exports a particularly large number of chemical and pharmaceutical products. This sector has been less seriously affected by the COVID-19 pandemic than, for example, the production of aircraft and vehicles has. Politically, the three countries in the top spots play an important role in many international institutions, such as the World Trade Organization in Geneva and the EU Parliament in Brussels. They are followed by Sweden, the United Kingdom, Germany, Austria, Denmark, Finland and France.

European countries tend to be highly globalised owing to their strong political integration and free trade agreements. China has moved up several places to number 77. Although China was one of the first countries to be hit by the pandemic, production there adjusted quickly, so trade was only very marginally restricted in 2020.

Future outlook

As the indicator only extends to 2020, the impact of the war in Ukraine and its consequences are not taken into account in the latest KOF Globalisation Index. The pandemic-related supply shortages will then show up in next year’s publication. In addition, initial vaccination progress has triggered positive trends in social globalisation.