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How to Measure Globalization? A New Globalization Index (NGI)

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  • Petra Vujakovic

Abstract

This paper presents the New Globalization Index (NGI). It is a composite index constructed to measure the relative globalization level of a group of countries. With its 21 variables, it accounts for the multidimensionality of this phenomenon instead of relying purely on economic indicators. As compared to other existing globalization indices, three major innovations are introduced in the NGI. Firstly, five variables that have until now not been used in globalization indices enter the calculations, introducing some new and important aspects to the measure, such as international student mobility and environmental issues. Secondly, the NGI forms a weighted sum of bilateral trade flows using the geographical distances between trading partners as weights. This modifies the usual trade openness measure by placing more weight on distant trading partners. In effect, intra-regional trade is given a lower weight in the NGI. One of the effects of this procedure is a significant downward movement in the ranking of some EU countries, whose international openness comes primarily from trade within their region and reflects regional integration more than globalization. A final innovation in the NGI is the use of a statistical method (principal component analysis) to form subcomponents of globalization according to the statistical features of the variable structure. The goal of this step is the analysis of the multidimensionality of globalization. Three dimensions emerge by the use of this technique: finance, trade and politics, and social globalization. Principal component analysis is also employed for producing weights for individual indicators within the overall index. Additionally, a control for country size is employed for some of the variables, as has been done in some other globalization indices before. The final index contains 70 countries and covers a period between 1995 and 2005. Copyright International Atlantic Economic Society 2010

Suggested Citation

  • Petra Vujakovic, 2010. "How to Measure Globalization? A New Globalization Index (NGI)," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 38(2), pages 237-237, June.
    • Handle: RePEc:kap:atlecj:v:38:y:2010:i:2:p:237-237
    DOI: 10.1007/s11293-010-9217-3
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    Citations

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    Cited by:

    1. Amavilah, Voxi & Asongu, Simplice A & Andrés, Antonio R, 2014. "Globalization, Peace & Stability, Governance, and Knowledge Economy," MPRA Paper 58756, University Library of Munich, Germany.
    2. LUPU, Iulia, 2013. "A Foray Into The Tangle Of Globalization Measurement," Studii Financiare (Financial Studies), Centre of Financial and Monetary Research "Victor Slavescu", vol. 17(2), pages 8-20.
    3. Trivedi, Smita, 2016. "Operationalizing peace through commerce: Toward an empirical approach," Business Horizons, Elsevier, vol. 59(5), pages 525-532.
    4. Christos Kollias & Suzanna-Maria Paleologou, 2017. "The Globalization and Peace Nexus: Findings Using Two Composite Indices," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 131(3), pages 871-885, April.
    5. Parisa SAMIMI & Guan Choo LIM & Abdul Aziz BUANG, 2011. "Globalization Measurement: Notes on Common Globalization Indexes," Journal of Knowledge Management, Economics and Information Technology, ScientificPapers.org, vol. 1(7), pages 1-20, December.
    6. Khaled Elmawazini & Sonny Nwankwo, 2013. "Globalisation and Income Gap between Rich and Poor Nations," Economic Issues Journal Articles, Economic Issues, vol. 18(2), pages 19-40, September.

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