measuring globalisation

• how can the degree of globalisation be measured


  thorugh indicators and indices
• what is an indicator


  a measure of an individual aspect of globalisation, eg ammount of FDI
• what are indices


  an expression of indicators as a percentage, either compared to the highest actual total, or of a maximum possible total, or compared to a certain base year
• how can indices be expressed


  as whole numbers out of a max of 100

  a decimal fraction: eg 4/100ths of 1.0
• are indices composite?


  they can be
• what is a composite measure


  a measure combining several individual factors

  eg HDI
• how are composite indices calculated


  each component indicator expressed as a %

  - component index values can then be added together and a mean value is calculated to give the overall index value
• how can indices be weighted


  each component is multiplied by some fraction of 1 based on its relative importance and THEN the components are added
• what are two composite indices of degree of globalisation


  AT kearney index

  KOF index
• what is the KOF index of globalisation


  an index produced annually by the Swiss institute for business cycle research

  
  

  combines 24 indicators spread across 3 categories

  a mean of the 3 categories are calculated to give an overall globalisation index

  where data is not available they use the previous years data
• what are the 3 categories of the KOF index


  economic globalisation

  political globalisation

  social and cultural globalisation
• what is involved in the economic globalisation category of KOF index


  uses indicators eg

  - world bank data on trade flows

  - fdi

  -tariff rates
• what is involved in the political globalisation category of KOF index


  uses indicators eg

  - number of foreign embassies in the country

  - number of UN peacekeeping missions participated in

  - membership of international organisations eg WTO
• what is involved in the social and cultural globalisation category of KOF index


  uses indicators eg

  - volume of international ICT traffic

  - tourist flows

  - households with TV set

  - 'global affinity' (the presence of international TNC's such as macdonalds)
• how long has the KOF index been calculating for and how many countries

  since 1970, 207 countries
• why is the age of KOF important


  allows for comparisons overtime

  
  

  however, changes eg measuring books bought may decrease and impact a globalisation score because digital books have not been accounted for
• evidence to suggest KOF works

  developed countries are found at the top of the list

  emerging countries are found mid way

  developing countries are found at the bottom of the list

  
  

  which suggests a positive correlation between globalisation and development
• KOF results (on avg)

  small european countries are often at the top of the list

  whereas the larger USA and BRICS have lower index values

  - perhaps due to the fact that KOF measures international interactions without anything considering internal flows within larger countries

  
  

  smaller countries have shorter distances to neighbouring countries, have fewer domestic attractions and a small domestic market so trade is necessary
• negative of KOF


  technological developments also mean some indicators look dated eg: international mail has perhaps changed to email and social media, books to e-books

  
  

  small countries vs larger ones

  
  

  weighting of indicators may have a cultural bias such as 'number of macdonalds in a country
• positives of KOF


  it uses data widely available eg data from the World Bank FDI measure, means there is fewer missing or estimated data which increases accuracy and comparability
• what is the AT kearney globalisation index


  a measure of globalisation produced annually by AT kearney management consulting firm

  
  

  uses 12 indicators spread across 4 categories

  includes 62 countries, covering 84% of global population and 96% of GDP

  started in 2008
• what are the 4 AT kearney categories


  Economic integration

  technological connectivity

  political engagement

  personal contact
• what is involved in the economic integration category of ATK index


  measures trade and FDI flows
• what is involved in the technological connectivity category of ATK index


  uses indicators eg:

  - number of internet users

  - number of internet hosts

  - number of secure internet servers
• what is involved in the political engagement category of ATK index


  uses indicators eg:

  - membership to international organisations/treaties

  - contribution to UN peacekeeping

  - level of gov transfers such as aid
• what is involved in the personal contact category of ATK index


  uses indicators eg:

  - international travel and tourism

  - international telephone traffic

  - personal border financial transfers eg remittances
• how is ATK index calculated


  is calculated for each indicator based on its relative position on a scale (highest value of 1, lowest of 0)

  
  

  FDI, internet usage and international telephone traffic is weighted double
• ATK results (on avg)

  small european countries dominate the top 20

  
  

  unlike KOF, USA is 4th and canada is 6th

  smaller countries have higher FDI indicators due to small domestic markets
• negative of ATK


  the heavy weighting given to ICT enables the USA to gain a high index score despite their low scores on political engagement in terms of treaties signed