what is globalization?

Indexes of Globalization

Globalization may be unstoppable, but its pace does ebb and flow and the extent of it varies across cultures and countries. According to Foreign Policy Magazine, being highly globalized can hurt a country as much as it helps it, especially in urban areas. Cities like London and New York can profit the most economic integration, but they also may suffer the most during the global economic crisis.

The KOF Index of Globalization ranks countries based on measurements of economic, social and political activity. Belgium and Austria have consistently ranked the highest. (See http://globalization.kof.ethz.ch/.)

KOF shows that globalization has steadily increased over time, although it temporarily decreased in 2001 and social indicators have leveled off. The analysis section suggests that the increase in globalization is due mainly to the rise in FDI flows and to an increase in openness to trade. Out of 208 countries, the United States ranks 27nd on the KOF Index and 50th on its list of economic globalization.

The Foreign Policy/A.T. Kearney index is based on measurements of political engagement, personal contact, technological connectivity and economic integration. Singapore ranks number one, followed by Hong Kong, the Netherlands, Switzerland, Ireland, Denmark, the United States, Canada, Jordan and Estonia.

In 2007, the index showed that small countries like Singapore, Jordan and Ireland can gain great economic power by opening up to trade and investment. What these countries have in common is a lack of natural resources coupled by an adeptness for serving as regional hubs of economic activity. As the analysis accompanying the index suggests, “reaching out beyond your country’s borders may be the only way” small countries can find new opportunities. These small, highly globalized countries also ranked high in terms of the “personal dimension” measure of international phone calls, travel, and remittances.

Although the United States ranked seventh overall, it scored 71st in the economic integration category. The analysis says the United States fell in rank, from 3 to 7, because politicians granted tax incentives to companies that hire domestically.

(See http://www.atkearney.com/index.php/Publications/globalization-index.html.)