Measuring Globalization

Globalisation is not a new phenomenon. From the ancient era, people used to share their ideas in need of their livelihoods, survival. Globalization is a broad concept, used to describe a variety of phenomena that reflect increased economic, social and political interdependence of countries. Thus globalisation indicates global interactions, in terms of economic, political, social, cultural and environmental dimensions, as integration in a way to be globally connected. However, there are debates concerning the impacts of globalisation on the well being of the humanity, but no doubts about its existence. Many developing countries are participating to globalized world, which increased the concerns about globalization and its impacts on different aspects of life, as well. Therefore, the objective assessment of the consequences of globalization is an important agenda for contemporary development discourse. Here, it is necessary to understand it clearly which creates increasing demands of measuring it as well.

The measurement of globalisation using indices is a recent development. The globalisation indices of World Markets Research Centre (WMRC, 2001) and the A.T. Kearney-Foreign Policy (ATK/FP) are the pioneer in the field of measuring globalisation. ATK/FP index is a broader index and probably the most widely-known measure of globalisation. In addition, it is used as the benchmark for many alternative globalisation indices. Among other recent attempts to quantify globalisation, Salamon and Sokolowski’s (2004) Global Civil Society Index, Centre for the Study of Globalisation and Regionalisation (CSGR, 2006) index of the University of Warwick, the Maastricht Globalisation Index (MGI) and the index produced by the KOF Swiss Economic Institute are renowned (Dreher et el, 2008).

The KOF’s Globalization index and Bangladesh:

The KOF globalisation index was first published in 2002, which covers 123 countries and includes 23 variables. The overall index includes the economic, social and political dimensions of globalisation. The recent KOF index of 2012, introduces an updated version of the original index, employing more recent data with a wide coverage of 187 countries. Belgium, Ireland and the Netherlands are headed the index, whilst Timor-Leste, Kiribati and the Equatorial Guinea are at the bottom of the list. Bangladesh ranked 154 among the 187 countries with a score of 40.73.

| | |Graph: | | | |South | |Asian | |Countries | |in KOF | |Index, | |2012 |

According to this index, Nepal (37.44) and Bhutan (28.85) are less globalized than Bangladesh, among the neighbouring South Asian countries. Pakistan (52.18) and India (51.88) are leading the index among the region, followed by the Sri Lanka (50.15) and Maldives (41.24).

Table: Different dimensions of Globalization in South Asian Countries

|KOF Index |Economic Globalization |Social Globalization |Political Globalization | |Country | |Bangladesh |1999 |2004 |2009 | | | | | | |Economic Globalization |19.81 |30.49
|34.48 | |Actual Flows |13.15 |22.47 |32.62 | |Restrictions |26.46 |38.51 |36.34 | | | |Social Globalization |26.46 |38.51 |36.34 | |Data on personal contact |18.43 |18.8 |20.22 | |Data on Information Flows |22.04 |28.73 |39.09 | |Data on Cultural Proximity |1.75 |1.32 |1.21 | | | |Political Globalization |72.09 |74.6 |77.41 | | | |Overall |31.56 |36.99 |40.72 |

benefits of economic globalization, as well as protecting itself from the shock of globalization.

In terms of social globalization, still Bangladesh is not that much globalised. Its position is 182 out of 187 countries. Especially, in case of cultural proximity, Bangladesh scored the lowest, as there is no Macdonald’s restaurant or the showroom of Ikea.

On contrary, in terms of political globalization, Bangladesh is relatively more globalised or more connected with the world system, as it stands at 68th position. Being the leading participant of UN Security Council missions, Bangladesh scored most in this dimension of globalization.

A critical analysis of the construction and composition of the KOF’s index:

The KOF Index of Globalization ranks countries based on economic, social and political activity. The results of this index provide an assessment of how much, or how little, countries are opening them up and interacting with others. The objective of this index is to depict the extent of the globalization of a country from different dimensions, not to describe the impact or consequence of it. The principle components analysis is used to calculate the weight for variables. KOF’s analysis suggests the increase in economic globalization of a particular country is due mainly to a rise in actual flows of international financial transactions, consists of foreign direct investment (FDI) stocks, international trade flows, portfolio investment stocks, and income payments to foreign nationals. It also calculates the de jure factors, the openness or the restrictions of the trade and financial management policies of a country.

From the dimension of social globalization, the KOF’s index consists of 11 different sub indicators. Among them, presence of Macdonald’s restaurant and Ikea showroom indicates the cultural proximity of a country. Here, the cultural globalization is almost get confused with the Americanization.

In measuring political globalization, KOF’s index considers the number of embassies in country, membership of different International Organizations, signing the International Treaties, and participation in UN Security Council missions. However, though the number of embassies a country has abroad, may resonate increasing co-operation and even integration; this is not considered in KOF’s index. Again, many countries made fewer contributions to U.N. peacekeeping, both in terms of financial aid and personnel, as it is very much contextual and country specific, resulting that even the most globalized countries might face challenges in maintaining openness for political globalization.

KOF’s index does not consider or adjust the geographic characteristics of countries. Moreover, it is not concerned about the environmental aspects of globalization, whereas global warming and climate change is one of the major concerns of contemporary global development. Recognizing the green economy, the integrated ecological costs in trade and consumption, carbon trade, all the important global issues are completely overlooked in this index.

Few other interesting but complex features of globalization, such as, cultural transformations, global consciousness, and trans-border environmental issues, are not captured by this index, as they are difficult to measure.

From the methodological view point, KOF’s index is completely based on quantitative research, focused on weighted data and statistics, which creates the risks of over simplification. As a multi-dimensional issue, globalization demands qualitative analysis of its various aspects, which is absent here. An interdisciplinary approach to measure the globalization could have answered the multi-facetted dimensions of questions to understand and grasp the various phenomena of globalizations adequately.

References:

01. Dreher, A., et el. (2008) Measuring Globalization- Gauging its Consequences, New York, Springer.