Here is a brief excerpt from an article written by James Manyika, Jacques Bughin, Susan Lund, Olivia Nottebohm, David Poulter, Sebastian Jauch, and Sree Ramaswamy for the McKinsey Quarterly, published by McKinsey & Company. To read the complete article, check out other resources, learn more about the firm, obtain subscription information, and register to receive email alerts, please click here.

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Global flows have been a common thread in economic growth for centuries, since the days of the Silk Road, through the mercantilist and colonial periods and the Industrial Revolution. But 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’s James Manyika and Susan Lund discuss trends in cross-border exchanges of goods, services, finance, people, and data and information.

Flows of goods, services, and finance reached $26 trillion in 2012, or 36 percent of global GDP, 1.5 times the level in 1990. Now, one in three goods crosses national borders, and more than one-third of financial investments are international transactions. In the next decade, global flows could triple, powered by rising prosperity and participation in the emerging world and by the spread of the Internet and digital technologies. Our scenarios show that global flows could reach $54 trillion to $85 trillion by 2025, more than double or triple their current scale.

A new McKinsey Global Institute (MGI) report, Global flows in a digital age: How trade, finance, people, and data connect the world economy, examines the inflows and outflows of goods, services, finance, and people, as well as the data and communication flows that underlie them all, for 195 countries around the world.

Our research finds that such flows matter for global GDP growth. Today, we estimate, they add between $250 billion and $450 billion to it every year, or 15 to 25 percent of the total. In addition, we find 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 (exhibit). 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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James Manyika is a director with the McKinsey Global Institute, where Susan Lund is a partner and Sree Ramaswamy is a senior fellow; Jacques Bughin is a director in McKinsey’s Brussels office; Olivia Nottebohm is a principal in the Silicon Valley office, where David Poulter is a consultant; and Sebastian Jauch is a consultant in the Munich office.