4.1.1 Measuring Globalization Notes

Global Interactions are Dynamic Processes Connecting Places

1. Global interactions include flows of goods and services, capital, technology, knowledge and information, cultural traits, and people.
2. These processes are dynamic and are neither inevitable nor universal.
3. Global interactions make places more interconnected and interdependent, but not always similar, they may increase or reduce the inequalities between places.

Assessing the Extent of Global Interactions

Global interactions make up globalization.

1. Formally, globalization can be defined 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 the more rapid and widespread diffusion of technology” (International Monetary Fund - IMF).
2. To measure and compare globalization across countries and cities, indices are used.
3. These indices provide insights into the patterns and trends of global connectivity, but are limited as the complexity of globalization is impossible to grasp in a single index.

Key Globalization Indices

1. KOF Globalization Index

1. The KOF Globalization Index is one of the most comprehensive tools for measuring globalization.
2. It evaluates countries based on three dimensions:
   1. Economic Globalization (33.3%) including
      1. Trade Flows: Value of imports and exports expressed as share of GDP.
      2. Foreign Direct Investment (FDI): Investment by foreign entities.
      3. Trade Restrictions: Tariffs and non-tariff barriers.
   2. Social Globalization (33.3%) including
      1. Information Exchange: Internet usage, freedom of press.
      2. Cultural Proximity: Presence of global brands like McDonald's and IKEA.
      3. Personal Contacts: International tourism and migration.
   3. Political Globalization (33.3%)
      1. Diplomatic Engagement: Number of embassies and consulates.
      2. International Organizations: Membership in bodies like the UN or WTO.
      3. Treaties: Participation in international agreements.

2. AT Kearney Global Cities Index

1. While the KOF Index focuses on countries, the AT Kearney Global Cities Index (GCI) evaluates cities as hubs of globalization.
2. GCI assesses the extent to which cities are able to attract, retain, and generate global flows of capital, people, and ideas.
3. It ranks cities based on:
   1. Business Activity: Presence of multinational corporations, financial markets, and trade.
   2. Human Capital: Education levels, international student population, and skilled workforce.
   3. Information Exchange: Media presence, internet connectivity, and technology infrastructure.
   4. Cultural Experience: Museums, sports events, and international cultural influence.
   5. Political Engagement: Influence in global governance and international diplomacy.

Patterns and Trends in Globalization

1. High Levels of Globalization in Europe and North America

1. Europe and North America (oftenly referred to as “The West”) traditionally and consistently rank as the most globalized regions.
2. Key factors include:
   1. Economic Performance: These places traditionally have been highly industrialized, being centers of innovations and investments.
   2. Economic Integration: The European Union (EU) facilitates free trade, labor mobility, and political cooperation.
   3. Cultural Exchange: High levels of tourism, migration, cultural exports, and information exchange.