Aug 192013

What exactly is globalization?

Globalization can be defined in simple terms as “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.” [Peter Haggett in his Geography (A Global Synthesis), Pearson Education Limited, 2001]. Though globalization began centuries ago with colonial conquests and trade, it has only gained widespread attention in the past few decades.

Globalization is a highly contentious issue. There are major debates as to whether globalization brings more benefits than problems. While many international organizations such as the International Monetary Fund and World Bank are pro-globalization, many individuals and sectors of society remain deeply skeptical, and a powerful anti-globalization movement has arisen in some parts of the world.

How globalized is Mexico?

Several attempts have been made to quantify globalization. In this section we compare two indices which look at how globalized Mexico is compared to other countries.

The KOF Index of Globalization measures three main dimensions of globalization: economic, social and political. Economic globalization considers the long distance flows (exports, imports) of goods, capital and services, as well as political restrictions (tariffs, taxes) to these flows. Social globalization measures the international spread of ideas, information (telephone traffic, internet access) and people (migration, tourism). Several small European countries score well on these first two measures. Political globalization examines the number of embassies a country has, as well as its membership of international organizations and participation in UN peace missions. European countries occupy the first seven places on this dimension. Based on the indices for these three dimensions, an overall index of globalization is calculated.

The 2009 KOF Index used data from 2006 to rank 208 countries. Mexico placed 65th overall, with rankings of 79th for economic, 69th for social, and 80th for political globalization. By comparison, Russia ranked 61st, Argentina 63rd, Brazil 79th, China 91st, Indonesia 100th and India 122nd.

The A.T. Kearney Globalization Index has four main components: economic integration (trade, foreign direct investment), personal contact (telecommunications, travel, remittances), technological connectivity (internet) and political engagement (international treaties, organizations and peacekeeping). The 2006 index ranked 62 countries. Mexico placed 42nd overall, with ranks of between 36 and 41 for each of the four components. For comparison, Russia ranked 47th, Argentina 43rd, Brazil 52nd, China 51st, Indonesia 60th and India 61st.

In Mexico’s case, these two globalization indices give broadly similar results. The data suggest that Mexico is relatively globalized compared to other large emerging countries. However, in the case of the USA, the different methodologies of the two indices produce very different results. The KOF index ranks the USA as 38th out of 208, with rankings of 59th for economic, 56th for social and 9th for political globalization respectively. The A.T. Kearney index places the USA 3rd out of 62 countries, despite its ranks for separate components of 58th for economic, 40th for personal, 1st for technological and 41st for political globalization. The differences between the indices indicate the difficulty of quantifying globalization.

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