External connectivity and its macroeconomic influence of a nation

The proverb of “All roads lead to Rome” implies the importance of connectivity in the international trade, economic development and influence of a nation. This paper aims to develop a method to measure a nation’s external connectivity by considering not only potential connection channels but also its economic power and international influence. Meanwhile, in the cases of China and United States, it empirically examines the impact of a nation’s external connectivity on its macroeconomic performance during 2000-2012. Our main findings are as follows: First, as for China, significant positive impacts of its external connectivity on inflation and change in gross national income (GNI) per capita are found but no empirical evidence confirm it in the case of United States. Second, a potential threshold effect reflected by a V-shape relationship might exist between China’s external connectivity and unemployment while regarding United States, a significant positive relationship is reflected. Last, a strong positive relationship between liner shipping connectivity index (LSCI) and China’s external connectivity, to a certain extent, reveals a fundamental significance of logistics connectivity in the improvement of China’s external connectivity but a similar finding is not confirmed in the case of United States. Results from this study shed some light on how to measure and compare connectivity and its macroeconomic influence among different nations, and to promote a nation’s overall competitiveness by the improvement of its external connectivity.