Published : 2014-05-07 20:41
Updated : 2014-05-08 10:11
South Korea was ranked eighth in the world in goods transactions in 2012, but in terms of combined global flow of goods, services, finance, people and data, the country placed 20th, according to a report by U.S.-based management consultancy McKinsey.
The result was based on the McKinsey Global Institute Connectedness Index, which measured 131 countries’ levels of global integration between 1980 and 2012 through a study of different types of global flows, including goods, services, finace, people and data. McKinsey unveiled the index in its recent report, “Global Flows in a Digital Era.”
“South Korea is an export powerhouse, but its overall (global flow) ranked only 20th due to low people flows,’’ the McKinsey report said.
Germany topped the index, gaining high scores in all five cross-border flows, overtaking the U.S., the world’s largest goods trader in 2012. The U.S. placed third on the Connectedness Index, following Hong Kong in second.
The report underlined the importance of overall global flows beyond goods transactions as contributors to a country’s economic growth.
“Flows of goods, services and finance in 2012 reached $26 trillion, or 36 percent of global GDP, which was 1.5 times larger than that in 1990,” the McKinsey report said.
One of the two major forces in accelerating the growth and evolution of global flows is global prosperity. The other force is the growing pervasiveness of Internet connectivity and the spread of digital technology, McKinsey said.
The consultancy also found global flows’ contribution to global GDP hovers around 15-25 percent annually.
Regarding the upcoming trends in global flows, networks are expected to be broadening and deepening as emerging economies join in.
“Emerging economies are becoming important as both consumers and producers in the global economy, and now account for 38 percent of global flows, nearly triple their share in 1990,’’ the report said.
Another major future trend in global flows will be that the knowledge-intensive share of global flows increasingly dominates capital- and labor-intensive flows ― and is growing faster, too.
In the past, global flows were dominated by labor-intensive flows from low-cost manufacturing nations and commodity-intensive flows from resource-rich economies. But today knowledge-intensive flows account for half of global flows, and their share is gaining.
“The new era of dramatically broadening and deepening global flows will create many new opportunities for governments and companies to drive growth and innovation and will open the door to greater participation by entrepreneurs and individuals,” the McKinsey report said.
By Seo Jee-yeon (firstname.lastname@example.org)