FAQWhy are only 62 countries included in the index? The 62 countries ranked in the 2004 Globalization Index account for 96 percent of the world’s gross domestic product (GDP) and 84 percent of the world’s population. Major regions of the world, including developed and developing countries, are covered to provide a comprehensive and comparative view of global integration. We can only include those countries which have published and reliable data across our entire range of indicators. At the same time, we have tried to balance the selection of small countries so no one region is overrepresented.
Where do the data come from? The most recently available data were collected from a wide range of sources, including World Development Indicators 2003 (Washington: World Bank), International Financial Statistics Yearbook 2003 (Washington: International Monetary Fund), Balance of Payment Statistics 2003 (Washington: International Monetary Fund), International Telecommunications Union Yearbook of Statistics 2003 (Geneva: International Telecommunication Union), Compendium of Tourism Statistics 2003 (Madrid: World Tourism Organization), the Secure Server Survey 2003 available online from Netcraft, and The World Factbook 2003 (Washington: Central Intelligence Agency). On rare occasions, where no alternative sources are available, estimations may be used.
What period do the data reflect? Annual data for 2002 are used to calculate the index published in March/April 2004. This data is the most recent available from our sources.
Are the data available online? The data are available on
www.foreignpolicy.com and
www.atkearney.com in Excel spreadsheets that can be downloaded to your computer. The full set of rankings is also available online.
Is the A.T. Kearney/FOREIGN POLICY Magazine Globalization Index the only index of its kind?As far as we can determine, no one else combines the range of factors we do in our tally of globalization scores. We consider personal contact, technology, and political engagement, as well as measures of economic globalization. If you find another index that does this, drop us a line.
Why are noneconomic measures included in the index?All sorts of indicators characterize and drive the phenomenon called globalization. We believe factors such as participation in international organizations, international telephone traffic and technological connectivity are important to understand globalization.
Why aren’t any cultural measures included in the index?Culture is an important source of cross-border contact, but it is devilishly difficult to measure that impact, especially given the dearth of reliable and comparable annual measures for all the countries we survey. This year, we have included a special online section on culture by two researchers at Singapore University who examined a country’s level of cultural integration via the imports and exports of journals and newspapers. This section can be found here.
My country’s ranking changed between this year’s and last year’s index. Why?Rankings change for any number of reasons. Sometimes, the country has seen a gain or decline in a particular indicator. Other times, there are neither significant declines nor gains in a given country, while other countries pull ahead.
Saudi Arabia should have ranked 41st in last year's Globalization Index, following a correction in data for portfolio capital flows, which were underreported at the time the index was compiled. This change had a slight impact on the 2003 scores of other countries that were ranked below Saudi Arabia.
Which country’s ranking fell the farthest compared with its ranking last year?Morocco fell from 29th to 47th. While this appears to be a huge drop, this decline more accurately reflects a return for the North African nation to its ranking in previous years (Morocco ranked 48th and 54th in the 2002 and 2001 Globalization Indices respectively).
FDI inflows to Morocco almost doubled in 2001 to $30 billion, mainly due to a large cross-border deal. As a consequence, Morocco shot up in the rankings last year but sank down again this year when such a megadeal was not repeated. Despite its large decline in the rankings, Morocco actually improved slightly on some economic indicators, including trade, and increased its global ties via personal contact dimension.
Which country’s ranking rose the most compared with its ranking last year?The Philippines rose from 54th to 33rd. Most of this can be attributed to its first place lead in the Remittances and Personal Transfers indicator, largely due to the growing numbers of Filipinos working internationally. The money sent back to the Philippines by Filipinos working abroad has become a vital component of their national economy. Compensation to employees (or the money paid to Filipinos working abroad plus money paid to foreign workers in the Philippines) was over 8 percent of GDP while Switzerland, in the number two spot, has compensation to employees at 3.17 percent of GDP. The Philippines also bucked the global trend and increased FDI by 13 percent and trade flows by 6 percent while most countries declined in these areas.
Which region is the most global?Europe is the most global region. Some small and open countries tend to take top places in the index because they rely on other countries for trade, investment, tourism, and travel. You can’t travel too far in Europe, for example, without crossing international borders. Bigger economies, on the other hand, are less reliant on the rest of the world.
Is it possible to have an ailing economy and still score well in the Globalization Index?Yes. A country can be highly global and be in the midst of a recession. An ailing economy is more likely the consequence of the business cycle or ineffective economic policy, not the degree to which the country is globally integrated. Additionally, an improved score in the economic dimension of the Index may not mean deepening integration with the rest of the world. If a country experiences a steep currency devaluation, like what happened in Argentina in 2002, its score in the Globalization Index may improve because the economic indicators, such as trade, are magnified as a share of a contracting GDP
Why is the FDI indicator double weighted? We have double weighted FDI flows because we believe that it is an important bellwether of globalization that incorporates economic, political, and technological aspects. FDI is crucial to the development of the economy, exports, employment opportunities, and competitiveness in the host countries. FDI also reflects political trends and legal and regulatory openness, and also promotes innovations in technology.
Should the citizens of highly global countries be happy about a high score in the index?A high score is neither a certain cause for great rejoicing nor for great sorrow. As residents of any highly global nation can attest, global integration can produce both benefits and problems. A world economy that can deliver investment and portfolio flows can also take them away. And while more open borders can make it more difficult to retain a country’s most talented workers, it is easier for these workers to return remittances to family that remain behind and to retain home-country business contacts. The index does not weigh the good effects of global integration against its ill effects. It is designed instead to measure the extent to which globalizing forces are present in selected countries.
Is the net effect of globalization good or bad?We don’t really know, especially since these effects will vary among different income brackets and social groups within each country. Any guess we would make would be just an opinion. However, we have sought to aid this dialogue by helping to paint an increasingly detailed picture of the benefits and costs that integration brings. Consequently, we always correlate index scores against other interesting measures to get some sense of what the data mean.
Results in previous years challenged the conventional wisdom on such issues as income inequality, wages, environmental protection, corruption, and political freedom by showing that, on par, the most global nations are also those with the strongest records of equality, the most robust protection for natural resources, the most inclusive political systems, and the lowest corruption. Moreover, there appears to be little proof that global nations have trimmed social benefits or slashed workers’ wages in an effort to get ahead. Adding to the picture, this year’s results also demonstrate that the most global countries are those where residents live the longest, healthiest lives and where women enjoy the strongest social, educational, and economic progress. These exercises do not show causation, but they do point to significant correlations.
Past iterations of the index that provide the answers to these questions are available online in FP’s Archive and also in reprint form.
Is the Globalization index a measure of competitiveness?No. Country competitiveness is related to input costs, infrastructure, economic policy, the cost of doing business, and a variety of other factors. Our index does not attempt to measure or rank country competitiveness.
Have the results been replicated?Yes. We know of at least one academic effort to replicate our results. The data and methodology are publicly available for this purpose and for related research.
Will the index be available next year?Yes. Look for it in the March/April 2005 issue of FOREIGN POLICY.