Special Report

Measuring Globalization

Measuring Globalization

The noted international economist Joseph Stiglitz called 2003 "a disaster for globalization." At one level, he was right. The Iraq war and its aftermath created deep fissures between the United States and its allies, and the great majority of countries who opposed the war. The U.N. Security Council, the lead body for international peace and security issues, was dealt a blow by the willingness of the coalition to launch a military campaign without its blessing. The war even prompted boycotts and muttering about possible trade embargoes.

During the height of the Iraq controversy, some German restaurants posted signs reading, "Sorry, Coca-Cola is not available any more due to the current political situation." The desire to express political differences at the cash register was reciprocated in the United States. One 2003 poll showed that nearly half of Americans preferred not to buy French goods. Even White House Chief of Staff Andrew Card was reported to have said that "Virginia wine is fine with me."

Economically, the year did not begin much better. Foreign investment flows slowed, and trade was stagnant for the first half of the year. In its meeting at Cancún, Mexico, the World Trade Organization (WTO) failed to agree on the reduction of powerful agricultural subsidies in the United States and Europe. What might have been a dramatic expansion of free trade fizzled, leaving behind no obvious roadmap for progress. In the realm of public health, the SARS epidemic grounded global travelers and exposed unsettling gaps in international health monitoring. Tourism to Asia dropped precipitously as a result — by as much as 50 percent in some countries.

Yet this year’s edition of the A.T. Kearney/Foreign Policy Globalization Index shows that the multifaceted force called globalization is made of sterner stuff. By the second half of 2003, the ties that bind were connecting us once again. Global trade, which grew at less than 1 percent in the first quarter, jumped by more than 5 percent in the second half of the year. Global development aid improved dramatically. The Organisation for Economic Co-operation and Development estimated that official development assistance reached a record $69 billion. The largest increase came from the United States, which boosted foreign aid by more than 20 percent.

The resilience of globalization indicates that it is a phenomenon that runs deeper than the political crises of the day. In an effort to measure its many dimensions, the index looks behind the headlines by using several indicators spanning trade, finance, political engagement, information technology, and personal contact to determine the rankings of 62 countries. These 62 countries together account for 96 percent of the world’s gross domestic product (GDP) and 85 percent of the world’s population. The index measures 12 variables, which are divided into four "baskets": economic integration, technological connectivity, personal contact, and political engagement.

The resulting rankings offer an important high-altitude look at which countries are globalizing and which are not. But sifting through the data that come out of the index also yields some interesting stories behind the broader trends.

The Winners’ Circle

The luck of the Irish finally ran out, as last year’s runner-up, Singapore, took the top spot in this year’s ranking, ending Ireland’s three-year streak. One key to Singapore’s rise was its increased political engagement. The island nation built bridges in 2003 — increasing its financial contribution to U.N. peacekeeping missions by 41 percent. (Indeed, a Singaporean general commanded the peacekeeping force in East Timor for much of 2003.) Singapore solidified its first-place ranking in foreign trade by signing a bilateral free trade agreement with the United States in May 2003, the first such agreement the United States had signed with an Asian nation. Meanwhile, Ireland’s strong economy slumped, with GDP growth sliding from a robust 6.9 percent in 2002 to a tepid 1.8 percent in 2003. There was other movement in the top five. Finland fell from fifth to 10th place. The United States jumped from seventh to fourth and became the first large country to crack the top five. Nations with large populations (and large domestic markets) generally fare worse in the index because they are typically less dependent on foreign trade and investment. The strong U.S. showing is primarily a result of its remarkable technological prowess.