Global+participation

The International Monetary Fund (IMF) defines globalization as: //“the growing interdependence of countries worldwide through the increasing volume and variety of cross-border transactions in goods and services and of international capital flows, and through more rapid and widespread diffusion of technology//”
 * Definitions of Globalization **

According to Peter Haggett globalization is //“the process by which events, activities and decisions in one part of the world can have significant consequences for communities in distant parts of the globe”.//

Today, Globalization has come to be associated with: //“the spread of economic, social and cultural ideas across the world, and the growing uniformity between different places that results from this spread”.//

The consequences of globalisation is a dilution of economic, social and cultural differences between places.

It is a term that was invented to emphasize that the globalisation of a product is more likely to succeed when the product or service is adapted specifically to each locality or culture it is marketed in. e.g: -presence of McDonald’s restaurant everywhere on the globe = globalisation - the changing menus of the restaurant to appeal to the local tastes =glocalization
 * Glocalization **

Globalization Indices

**1. AT KEARNEY:**

AT Kearney is a management consultancy firm that advises large corporations on international competitiveness. <span style="background-color: rgba(255,255,255,0);">Founded in 1926 in the US (Chicago). It assess the extent to which the world’s most populous nations are becoming more or less globalised.

<span style="background-color: rgba(255,255,255,0);">The AT Kearney //Foreign Policy index measures twelve variables, which// are subdivided into four “baskets” of global integration: Economic integration, personal contact, technological connectivity and political engagement. 72 countries ranked in the 2007 globalisation index accounts for 97% of the world’s GDP and 88% of the world’s population.

<span style="background-color: rgba(255,255,255,0);">**Economic integration:** <span style="background-color: rgba(255,255,255,0);">Combines data on international trade and foreign direct investment (FDI) inflows and outflows, international travel and Tourism

<span style="background-color: rgba(255,255,255,0);">Counts the number of internet users internet hosts, and secure servers
 * <span style="background-color: rgba(255,255,255,0);">Technological connectivity: **

<span style="background-color: rgba(255,255,255,0);">**Political engagements** <span style="background-color: rgba(255,255,255,0);">Includes each country’s membership in a variety of representative international organizations e.g foreign aid, treaties, organizations, and peacekeeping operations

<span style="background-color: rgba(255,255,255,0);">**Personal contacts** <span style="background-color: rgba(255,255,255,0);">International telephone calls, cross-border remittances Travel

<span style="background-color: rgba(255,255,255,0);">The data obtained for a given variable are calibrated through a process that assigns the value of 1 to the highest data with the all other points valued as fractions of 1. The base year is assigned a value of 100. The given variable’s scale factor for each subsequent year is the percentage growth or decline in the GDP – or population-weighted score of the highest data point, relative to 100. Globalization index scores for every country and year are derived by summing all the indicator scores. Singapore is the most globalised according to this measure. This is followed by Switzerland and the USA in the third position.

<span style="background-color: rgba(255,255,255,0);">Check the internet for graph showing first 20countries <span style="background-color: rgba(255,255,255,0);">The Globalization Index 2007 – Top 20 countries <span style="background-color: rgba(255,255,255,0);">McThailand

<span style="background-color: rgba(255,255,255,0);">Mc Japan <span style="background-color: rgba(255,255,255,0);">Mc Russia <span style="background-color: rgba(255,255,255,0);">McDonalds in Saudi Arabia <span style="background-color: rgba(255,255,255,0);">McDonalds in China


 * <span style="background-color: rgba(255,255,255,0);">2. The KOF Index **

<span style="background-color: rgba(255,255,255,0);">The KOF Index of Globalization was introduced in 2002 (Dreher, 2006). KOF is a Swiss Institute of Business Cycle Research. The overall index covers the economic, social and political dimensions of globalization. It defines globalization to be the “process of creating networks of connections among actors at multi-continental distances, mediated through a variety of flows including people, information and ideas, capital and goods”.

<span style="background-color: rgba(255,255,255,0);">More specifically, the three dimensions of the KOF index are defined as: Economic, Social and Political.
 * <span style="background-color: rgba(255,255,255,0);">E //conomic globalization,//<span style="background-color: rgba(255,255,255,0);"> characterized as long distance flows of goods, capital and services as well as information and perceptions that accompany market exchanges //;//
 * //Political globalization,//<span style="background-color: rgba(255,255,255,0);"> characterized by a diffusion of government policies; and
 * //Social globalization,//<span style="background-color: rgba(255,255,255,0);"> expressed as the spread of ideas, information, images and people.

<span style="background-color: rgba(255,255,255,0);">**Economic Globalization** <span style="background-color: rgba(255,255,255,0);">Broadly speaking, economic globalization has two dimensions. First, actual economic flows are usually taken to be measures of globalization.
 * //Actual Flows://<span style="background-color: rgba(255,255,255,0);"> The sub-index on actual economic flows includes data on trade, FDI and portfolio investment.
 * //Restrictions//<span style="background-color: rgba(255,255,255,0);">: The second index refers to restrictions on trade and capital using hidden import barriers, mean tariff rates, taxes on international trade (as a share of current revenue) and an index of capital controls.

<span style="background-color: rgba(255,255,255,0);">**Social Globalization** <span style="background-color: rgba(255,255,255,0);">The KOF index classifies social globalization in three categories:
 * //Personal Contacts://<span style="background-color: rgba(255,255,255,0);"> This index is meant to capture direct interaction among people living in different countries. The sub variables are Telephone Traffic, Transfers (percent of GDP), International Tourism, Foreign Population (percent of total population), International letters (per capita)
 * //Information flows://<span style="background-color: rgba(255,255,255,0);"> It includes the number of internet users, (per 1000 people), the share of households with a television set, and international newspapers traded (in percent of GDP).
 * //Cultural Proximity://<span style="background-color: rgba(255,255,255,0);"> Cultural proximity is arguably the dimension of globalization most difficult to grasp. Dreher (2006) suggests the number of English songs in national hit lists or movies shown in national cinemas that originated in Hollywood, number of McDonald's Restaurants, number of Ikea shops, etc.

<span style="background-color: rgba(255,255,255,0);">**Political Globalization** <span style="background-color: rgba(255,255,255,0);">It measures the number of embassies and high commissions in a country <span style="background-color: rgba(255,255,255,0);">number of international organizations to which the country is a member, the number of UN Security Council peace missions a country participated in and international Treaties.

<span style="background-color: rgba(255,255,255,0);">Method of Calculation <span style="background-color: rgba(255,255,255,0);">To construct its globalization index KOF transforms each variable into an index using a scale of 1 to 100, where 100 is the maximum value for a specific variable over the period 1970 to 2006 and 1is the minimum value. Higher values indicate greater degree of globalization. The data is transformed according to the percentiles of the original distribution.

<span style="background-color: rgba(255,255,255,0);">The weights for calculating the sub-indices are determined using //principal components analysis// for the entire sample of countries and years. The analysis partitions the variance of the variables used in each sub-group. The weights are then determined in a way that maximizes the variation of the resulting principal component, so that the indices capture the variation as fully as possible. The same procedure is applied to the sub-indices in order to derive the overall index of globalization.

<span style="background-color: rgba(255,255,255,0);">According to the index, Belgium is the most globalised nation in the world, followed by Austria, Sweden and the Netherlands. The least globalised country is Burundi, Burma and Central African Republic. However, countries like Saudi Arabia, North Korea, Somalia and other Islamic states were left out in the analysis by KOF.

Click on the [|2015 KOF Index]for further details. Check on the right hand corner of the screen and you will find links to a number of useful documents relating to the index.