Tuesday, May 24, 2005

Globalization Index

An index that measures a country's global link based on various measures definitely sounds interesting. Thats exactly what the Globalization Index developed by AT Kearney/Foreign Policy magazine has been trying to present every year (since 2002) .

Some of the things I found interesting in the index are..
Non-predictive - Although the study assigns an index to the 62 countries (representing 85% of the world population) studied, it does not draw conclusions as to whether a high index is necessarily good or bad.
Complexity factor - The study recognizes the complexity in defining globalization as one index and states that although cultural trends could be included in this index, it is too complex and defies measurement.
Measures - Both economic and non-economic measures are included in calculating the index. The four dimensions(with their measures) highlighted in the rankings are (i) economic integration (trade+FDI), (ii) personal contact (telephone+travel+remittances and personal transfers), (iii) technological connectivity (internet users+internet hosts+secure servers), and (iv) political engagement (international organizations+U.N. peacekeeping+treaties+government transfers).
Weightage - Variables such as investment flows and technology are double weighted as they are considered important drivers of globalization and affect different dimensions of life (economic, cultural, political, social).
Correlation - Given the fact that the index doesn't necessarily reflect the goodness or badnesss, the correlation of the index scores with different measures provides an insight into more than just the broader trends. The fact that China and India (supposedly HOT now) are positioned at 54 and 61 respectively in the 2005 rankings is an example how this data should not be misinterpreted.


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