Sizing up global integration

The more globalized nations boast greater income equality, not less

Globalization has become the new century's most abused buzzword. Advocates and detractors alike bend its meaning to fit their arguments.

In truth, globalization entails a dense web of cross-border relationships that range from the very evident - one example is the exotic fruits found in supermarkets - to the very subtle, such as the opinions that become conventional wisdom as a result of the unprecedented boom in human interaction.

One aspect frequently missed in the debates about globalization is its measurement: How extensive is globalization? Which countries are the most globalized? The least? And why?

Those rare instances in which anyone attempts to measure globalization typically rely on data concerning international trade and investment flows, to the exclusion of other aspects of global integration.

To fill this gap, Foreign Policy magazine teamed up with A.T. Kearney to create the Globalization Index, which employs indicators spanning information technology, finance, trade, travel, and personal communication to gauge levels of global integration in 50 key developed countries and emerging markets.

The results of this exercise offer a fascinating three-dimensional glimpse of the nature, speed, and scope of globalization. Looking closely at the details, we find strong evidence that some of the most widely held notions surrounding global integration require reexamination. Consider just a few of our observations:

Globalization and income disparity need not go together. The world's most global countries boast greater income equality than their less-global counterparts.

Even among developing countries, those that are more integrated with their neighbors (such as Hungary, Poland, and the Czech Republic), tend to have more equitable patterns of income distribution than those that are not as well integrated (including Argentina, China, and Russia).

This finding offers a counterpoint to those who argue that developing countries are poor and unequal because of globalization, suggesting instead that history, economic policies, welfare programs, and education policies may play an important role in shaping income distribution.

More-globalized nations are freer and less corrupt. With few exceptions, countries that score well on the Globalization Index enjoy greater political freedom, as measured by the annual Freedom House survey of civil liberties and political rights. Similarly, a comparison of the index's rankings with Transparency International's survey of perceived corruption worldwide suggests that public officials in more-global countries are less corrupt than their counterparts in closed economies.

More than one digital divide

It comes as little surprise that the world's industrialized economies surpass the rest of the globe in the development of information technologies. However, various indicators of Internet use and access indicate that other gaps exist within the global digital divide.

The United States, Canada, and Scandinavian economies such as Finland and Sweden far outpace other advanced countries in the diffusion of new information technologies.

Meanwhile, globalization in many of the countries that are part of the euro currency bloc has been weighed down by their slow start in Internet development.

Bigger is not always better

The most-global economies tend to be small nations for which openness allows access to goods, services, and capital not readily available at home. Tiny Singapore ranks as the world's most-global nation, with the Netherlands, Sweden, and Switzerland not far behind.

Singapore boasts high levels of trade, heavy capital flows, and an annual stream of international travelers nearly three times higher than the country's population of a little more than 4 million. And with international telephone traffic that totals 390 minutes per person each year, the country far outdistances its nearest rivals in cross-border contact between people. By contrast, the United States hosts only one-sixth that proportion of international travelers and claims less than one-fourth the international telephone traffic per capita.

These findings suggest that much of the common knowledge surrounding globalization remains misguided.

To be fair, the forces drawing nations together include many that are beyond the ability of governments to control, including global warming, the spread of disease, and the rise of transnational crime. But ongoing debates over the relative merits of global integration have very real implications, both for countries and for the people who live in them. We believe that all sides are best served when these debates rely less on anecdotal evidence and more on empirical facts.

Moises Naim is editor and publisher of Foreign Policy magazine. Paul A. Laudicina is the managing director of A.T. Kearney's Global Business Policy Council. The A.T. Kearney/Foreign Policy magazine Globalization IndexTM is featured in the January/February issue of Foreign Policy magazine.

(c) Copyright 2001. The Christian Science Publishing Society

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