Globalization Index 2007 Methodology

The A.T. Kearney/FOREIGN POLICY Globalization Index tracks and assesses changes in four key components of global integration, incorporating measures such as trade and investment flows, movement of people across borders, volume of international telephone calls, Internet usage, and participation in international organizations.

The 72 countries ranked in the 2007 Globalization Index account for 97 percent of the world’s gross domestic product (GDP) and 88 percent of the world’s population. Major regions of the world, including developed and developing countries, are covered to provide a comprehensive and comparative view of global integration.

Economic integration combines data on trade and foreign direct investment (FDI) inflows and outflows. Personal contact tracks international travel and tourism, international telephone calls, and cross-border remittances and personal transfers (including worker remittances, compensation to employees, and other person-to-person and nongovernmental transfers).

Technological connectivity counts the number of Internet users, Internet hosts, and secure servers through which encrypted transactions are carried out. Finally, political engagement includes each country’s memberships in a variety of representative international organizations, personnel and financial contributions to U.N. peacekeeping missions, ratification of selected multilateral treaties, and amounts of governmental transfer payments and receipts.

For most variables, each year’s inward and outward flows are added, and the sum is divided by the country’s nominal economic output (GDP) or, where appropriate, its population. Two of the political engagement indicators remain as absolute numbers: memberships in international organizations and number of treaties ratified. A country’s contributions to U.N. peacekeeping missions are measured as a weighted average of financial contribution divided by the country’s GDP, and the country’s personnel contribution divided by the country’s population. Hence, the indicator counts a country’s contributions relative to its capacity to contribute, rather than the absolute size of contribution. This overall process produces data for each year that enable comparisons between countries of all sizes.

The resulting data for each given variable are then "normalized" through a process that assigns values to data points for each year relative to the highest data point that year. The highest data point is valued at 1, and all other data points are valued as fractions of 1.

The range of normalized scores for each variable each year is then multiplied by a "scale factor." For simplicity's sake, the base year (1998 in this case) 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. With the scale factor, comparisons between countries in the same year are preserved, and comparisons between changes in individual variables over time are possible. Country variable scores are then summed, with triple weighting on FDI and double weighting on trade due to those factors’ particular importance in the ebb and flow of globalization. Technological variables and political variables are each collapsed into single indicators, with equal weightings for the component variables. Globalization Index scores for every country and year are derived by summing all the indicator scores.

Foreign Direct Investment Data

Government Transfer Data

Gross Domestic Product Data

International Organization Data

International Travel Data

Internet Host Data

Internet User Data

Pacekeeping Missions Data

Population Data

Remittances and Personal Transfers Data

Secure Internet Servers Data

Telephone Traffic Data