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How Global Am I?
There is hardly a country in the world that closes itself off completely to the global community. But how well are individual countries actually globalized and how can this be measured?
What do you think? What country is rated the most globalized? China, the economic power? Not even close. In an unimpressive showing, the country ranked 80th. The United States, the global power? No. It only made it to 23rd place. Perhaps an up-and-coming city-state and financial center like Singapore? A bit better, but even the Asian tiger only came in 20th place. The nation that actually tops the list of 197 countries has no seaport and doesn’t even have a city with a million people. It is Switzerland.
More Than Just the Economy
These findings are from the latest Globalization Index published by the Swiss Federal Institute of Technology (ETH) in Zürich. The creation of the index, first published in 2002 and reissued annually, falls under ETH’s Swiss Economic Institute (KOF). The researchers don’t work with the latest data. For example, the index from 2019 is based on data from 2017. That means inferences about the current U.S. political situation and the impact of Brexit cannot be drawn from the information yet. The methodology behind the KOF Index differentiates it from other globalization rankings. The research team resisted the temptation to just consider bare-bones economic data. This is the most common approach, but they thought it clearly fell short. They determined the level of globalization using three aspects: economic, social and political. They looked at 42 variables while giving them different weights. From an economic standpoint, Singapore had the highest scores in the 2019 index. Luxembourg scored highest for social globalization, while Italy had the edge from a political perspective.
KOF Globalization Index
Economic Globalization: Some examples: trade in goods and services, customs duties, taxes, trade restrictions, foreign investments, investment restrictions, capital account openness, investment agreements.
Social Globalization: This includes visa restrictions, tourism streams, migration, international airports, students and patent filings, trade and high technology, freedom of the press, access to the Internet, civil rights, gender equality, level of education, registration of international brand rights, number of McDonald’s restaurants and IKEA stores.
Political Globalization: This mainly involves the number of embassies and international non-governmental organizations, membership in international organizations, conclusion of international agreements and participation in UN peace missions.
In the end, a mix of all three rankings determines the degree of globalization. This is where the “old world” dominates the list. Without exception, the top 15 countries are in Europe. In addition, except for Switzerland and Norway, they are all members of the European Union and are closely interwoven economically, socially and politically. The United Kingdom still belonged to the EU when the data was collected, and it landed in fifth place. Non-European states (Canada and Singapore respectively) first appear in the 16th and 20th spots. Something else stands out too: The top 20 largely includes relatively small countries. Fourteen of them have a population of about 10 million or less. The KOF researchers came up with this explanation: “Due to a high degree of integration, with neighboring countries, for example, small countries tend to be more highly globalized than large ones. In the latter cases, a large portion of the exchanges take place within the country.” But what’s the reason for Switzerland’s top ranking? The authors highlighted the country’s high rate of foreign trade, bolstered by its export-oriented chemical and pharmaceutical industries. Switzerland also plays a prominent role in the global financial system as a banking center. Due to the many international holding companies that have their headquarters in Switzerland, the country is “closely interlinked with countries abroad.” Switzerland also gets high marks as a multilingual country with cultural diversity, high income levels and a geographic position in the heart of Europe. Finally, many international organizations make their home in Switzerland (36 in Geneva alone), including the World Trade Organization and the International Red Cross. Known for its neutrality, the country is well-positioned internationally with a range of broadly-based advantages.
Small countries tend to be more highly globalized than large ones.
While the KOF closely examined the globalization levels of nations, other studies have zeroed in on cities. For one thing, they are considered agile. This gives them the opportunity to make measurable progress relatively quickly. The international consulting firm A. T. Kearney has been gathering data for its Global Cities Index for a decade, evaluating economic activity, human capital, information-sharing, cultural offerings and political engagement. New York and London scored the highest in 2019. The authors are even giving London the best prospects for the future, ahead of Singapore, not withstanding the uncertainty relating to Brexit. The British capital continues to represent “a coveted destination for direct foreign investment,” and is particularly convincing in terms of innovation, economic power and governance. The index has a well-known urban expert, Prof. Greg Clark, supporting its conclusions. Clark says that London succeeded in attracting talent, investors and visitors from throughout the world even after the global economic crisis of 2008. This occasionally led to the development of new technological and scientific industries. You could put it this way: London, where an empire once flourished, is again the navel of the world. Will this apply to all of the United Kingdom at some point? The next KOF indexes will let people know.
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