Globalised Ireland

The Irish Times and other media today carried a report on the publication of a new globalisation index produced by Ernst & Young which places Ireland third on the globalised states list. The EY index joins an increasingly crowded field, so what follows is a bluffer’s guide to globalisation indices. As always, a good starting point (but never more than that) is the relevant Wikipedia entry.

There are now four globalisation indices with some claim to respectability.

The A.T. Kearney/ Foreign Policy globalisation index. Although the methodology is available from the A.T. Kearney website, the detailed results themselves were published in the Nov/Dec issue of Foreign Policy each year which generally requires subscription access (university or other library, although reports up to 2005 are available on the Kearney website). This seems to have been first into the field, initially launched in 2001. However, the last update in 2007 presented data for 2006, and in 2008 the index was replaced in Foreign Policy by a Global Cities Index. The A.T.Kearney website says that the two are complementary, but the fact remains that the index has not been updated since 2006. Also, the data are made available only in pdf format so cannot be easily manipulated. The index covers 62-72 countries and tracks four dimensions of globalisation: economic integration, personal contacts, technological connectivity and political engagement. However, a major criticism of the index is that the weights are arbitrary (essentially equal weights for each indicator with heavier weightings for trade and investment “due to those factors’ particular importance in the ebb and flow of globalization”). Given the emergence of better-grounded competitors, this could explain its apparent demise (see the papers by Lockwood and Heshmati for critical reviews).

The KOF index of globalisation has a cool website with a great interactive interface. It is also a serious academic effort by Axel Dreher based at the KOF Swiss Economic Institute. It was devised in 2002 as a more comprehensive measure of globalisation than the A.T.Kearney/Foreign Policy measure. The 2007 index was just released last week, and the database now consists of data on a yearly basis for 208 countries over the period 1970 – 2007. It sets out to measure the economic, social and political dimensions of globalization, where the weights are 37%, 39% and 25%, respectively. Twenty four different indicators are used and the weights are derived from statistical (principal components) analysis. This is currently the brightest kid on the block.

Another academic contribution GlobalIndex comes from a bunch of sociologists linked in the TransEurope Research Network funded by the European Science Foundation, but which owes quite a lot to Dreher both in the choice of variables and the weighting methodology. Publication lags are obviously even longer in sociology than they are in economics, and the 2008 paper which introduces the index provides data from 1970 but only up to 2002 under four dimensions: economic globalization, socio-technical globalization, cultural globalization, and political globalization. The index consists of 31 variables for 116 countries with the weights determined by statistical methods and the data can be downloaded in various formats (excel, stata, spss).

Finally, Ernst & Young produced their index yesterday, although much of the hard slog in constructing the numbers has been done by the Economist Intelligence Unit. The EY index tracks the performance of 60 major countries according to 20 separate indicators that the EIU believes capture the key aspects of cross-border integration of business. The indicators fall into five broad categories: openness to trade; capital movements; exchange of technology and ideas; labor movements; and cultural integration. The innovative feature of the index is that these factors have been weighted (ranging from 17% to 22% for each) based on the significance placed upon each factor by 520 surveyed senior company executives doing international business. The performance of countries is measured over time, so that progress toward greater or lesser globalization since 1995 can be observed, with a forecast of likely performance until 2013. Unfortunately, the raw data do not seem to be publicly available in any form and the index data themselves cannot be easily downloaded.

The following table compares the rankings for Ireland for the latest year available for each index. There is a good deal of similarity, but it is noteworthy that on the KOF index which I would tend to see as the most robust, Ireland’s ranking falls to 11th place.

Globalisation rankings compared

Do these rankings matter? Those of us working in universities have learned to be more than a little sceptical of rankings, but there is always a certain egoistical interest to see where one’s own country is ranked. More important, at this point in history, there is some interest in whether globalisation is being rolled back or not, and indices can help to throw light on this. Wide use is also made of the indices to test hypotheses about the relationship between a country’s engagement with globalisation and various economic and social outcomes (see the papers cited on the KOF website). Globalization indices do not close the debate, but they can be helpful in sparking it.

19 thoughts on “Globalised Ireland”

  1. That’s a really useful comparison of globalisation indices, thanks.

    One thought that comes to mind though if the plasticity of a term like ‘cultural’ and whether the number of McDonald’s in a country (Dreher’s Social Globalisation iii index) really tells us all that much about how deep it goes – ok so they probably eat a lot of Happy Meals but is this really a solid enough indicator to call in when something as amorphous as ‘globalisation’ is involved?

  2. Looks like it’s the absence of an Ikea store (as of 2007) that drags Ireland’s ranking down in Alan’s favoured measure, the KOF. If so, then by 2009, Ireland will presumably be pretty close to the top on this measure also!

  3. @ Patrick Honohan

    “The index covers 62-72 countries and tracks four dimensions of globalisation: economic integration, personal contacts, technological connectivity and political engagement.”

    Well thank God it didn’t cover 36272 countries.

    All hail IKEA.

    “four dimensions of globalisation”

    What is this nonsense?

    Is there some “global” printing press that will create 5000,000 “jobs” in Ireland and eliminate €100bn of misallocated capital?

    If you know of that money creating machine please let me know before you power it up.

    Will the Greeks know before the Irish that the Money Creation Machine is fecund?

    If the Greeks are getting Printed Money why are the Irish taking €100bn of debt?

    What is a “Nation” if it has no control of the printing of money?

    Perhaps Ireland is not a Nation, not a Republic. Just another debtor?

    So, even if that is the way, do you not think it entirely stupid that Ireland should pay while Greece gets its way with Horse?

    Why should Ireland throw itself at the gates?

    If Greeks can get away with stupidity why not the Irish?

    If Germany wants to print money for Greeks why not print money for Irish?

    If Germany wants the job of the Money Printing then do it.

    If Germany doesn’t want the job then they should let the Euro die and stop pretending.

  4. Greg
    Stop channelling me, it is weirding me out! Am I as shrill as that?
    The greeks have an army and subs that they wish to use against an ally! Ireland just wanted to be richer than anyone else.

    Tawdry, huh? The Germans have considerable experience at marching around Europe. This situation is going to worsen into areas other than mere finance. That is what EU unity is about, OK? Binding peoples together by offering them wealth.

    It is not the Germans fault that the Irish were determined to be so very, very, rich and to pay so much for ahem jerry-built housing that belongs nowhere except as disaster relief? The 1400 sq ft I sold for a kings ransom in 2003? had external walls with concrete blobs transmitting water when it rained, as it sometimes does in Ire land, to the “dry” walls which we had papered. Mould multiplies.

    Care for the neighbour, community goes out the aluminium window when greed comes in. That is what makes the gombeens tick and allows them to buy their way out of any trouble. Ire land deserves this siyuation! It was eminently avoidable. It is being aggravated by poor policies built on kleptocracy by the circles running this sweet little republic! Please do not blame them.

  5. One question that can be asked in relation to globalisation indicators is how they are interpreted as being good, bas or indifferent to a particular place.

    A more complicated problem is that while they can help us to focus more on how places are becoming more integrated in global production networks and global value chains, we are still often stuck with conceptualisations that are mainly domestic economy-based, mainly because most of the available data are based on these separate entities.

    It is interesting to note that even a rather staid organisation like the OECD has begin to focus more on global value chains in recent years, rather than on the traditional export/import view of economic activity.

    The real challenge, however, both conceptually and methodologically is to devise ways of comparing value chains.

  6. @Conor, Patrick, Seamus

    At last, I found a way of including the table, apologies.

    I guess each of you are highlighting in different ways the two fundamental quetions to be asked of any index (a) what is it that we are trying to measure, and (b) can we find good indicators for these characteristics? The IKEA comment is a great one and highlights the fact that the choice of indicators is always an arbitrary one. In his original paper, Dreher only included the McDonalds indicator and commented as follows: “Cultural proximity could be proxied by the number of English songs in national hit lists or movies shown in national cinemas that originated in Hollywood.
    However, the only proxy available is the number of McDonald’s restaurants located in a country.” The KOF index has evolved since then and presumably will continue to do so. I think the basic question is whether these inevitable compromises and limitations of a single index undermine its usefulness. I think my own response would be “use, but with care”.

  7. In his original paper, Dreher only included the McDonalds indicator and commented as follows: “Cultural proximity could be proxied by the number of English songs in national hit lists or movies shown in national cinemas that originated in Hollywood.

    So, an outright admission that by ‘globalisation’ is really meant Americanisation? And economists wonder why they’re not taken seriously by everyone else?

    kthxbai

  8. @EWI – “So, an outright admission that by ‘globalisation’ is really meant Americanisation?”

    Er, when was it ever anything other than that?

  9. “a good starting point (but never more than that) is the relevant Wikipedia entry.”
    surely this doesn’t do justice to Wikipedia?

  10. http://www.dailymail.co.uk/news/article-1247218/Dont-fall-sick-hours-Scandal-GPs-refusing-work-nights-weekends-claimed-boys-life.html

    Globalization means that at weekends and after hours we have a third world health service …. It is all about choices, not slogans! Freedom means taking a harder road, cos those who enslave you seldom make it obviously unattractive: we need to learn to judge things for ourselves. Public servants, eh? Social cohesion may suffer …..

  11. Globalization is about doing things cheaply, and all that that implies! Efficiency is often a bad way to go, viewing humans as business units, or even business unit managers. B U M.

    And dole for the middle classes. All just management speak for cutting costs and stealing from as many as possible. But it can have unintended consequences as the overshoot shows up the process for what it is and those behind it.

    Sea lanes are what it is all about. Aircraft carriers allow the projection of force all around the world. Trade depends on sea lanes. Depends on America. That is why America is the greatest gainer. When it was Pax Britannica, wheat was exported from India and Ireland, while the locals were lazy and feckless, unable to feed themselves as a result of their unfitness. Or maybe the two are somehow connected? Land use? Ya think?

    This is what passes for intellectual blogging?

  12. I would have thought that “how much you are like America” is not really relevant, but “how much you can outcompete America in other countries” is?

    When will ‘America’ be replaced by another country?

  13. @ Pat

    “Stop channelling me, it is weirding me out!”

    No idea what “channelling” is, I don’t do Yoga.

    What weird’s me “out” is the €7,000,000,000, of treasury “invested” in perpetual preference shares in AIB and BOI.

    This money is absolutely gone.

    The mechanism was to make the nominal value of those shares to €70,000,000.

    When they are converted they are worth nothing but shit.

    That weird’s me “out”.

    The media won’t cover it. Irisheconomy.ie will cover it, but only as another slight on the body politic.

    The €7,000,000,000 is gone Pat.

    The €4,000,000,000 given to Anglo Irish Bank is gone Pat.

    The €2,000,000,000 for Irish Nationwide is gone Pat.

    The next €6,000,000,000 to Anglo Irish Bank is gone Pat.

    The next €10,000,000,000 to AIB and BOI is gone Pat.

    We have a Central Bank and a new head of that bank and he is doing absolutely nothing about it.

    Apparently his job is not to protect the Treasure.

    It seems it his job to suggest a secret meeting in which the Treasure is no longer.

    Now that is weird.

    I have suggested previously that we have no need of a Central Bank if we have no power to print money and determine the interest rate for this economy.

    I am correct.

    That also is weird.

  14. Pat,

    “Globalization is about doing things cheaply”

    Globalization is Global Fascism pure and simple. That’s why the meme is “Global Warming”.

    The bailing out of Anglo Irish Bank is a necessary part of the Fascist agenda.

    If Anglo Irish Bank does not pay its debts the Fascists lose. Everything would be undone.

    No bank can be allowed to fail.

    The protection of Anglo Irish Bank has nothing to do with Enterprise.

    The protection of Anglo Irish Bank has nothing to do with Capital.

    Capital would have destroyed Anglo Irish Bank, it is the nature of Capital.

    The protection of Anglo Irish Bank has nothing to do with State.

    Why would a State protect the thing that Capital would devour?

    It is the merger of Capital & State (Fascism) against the people.

    “Fascism should more appropriately be called Corporatism because it is a merger of state and corporate power.” …. Benito Mussolini

    No one is safe.

    There is no need for Brown Shirts, Black Shirts or Blue Shirts.

    The Green Shirts are indoctrinating your children. And soon your children will make you a criminal for not believing their EcoFascism.

    All hail Anglo Irish Bank.

    All hail Europe and its new found colour.

  15. Pat,

    “It is not the Germans fault that the Irish were determined to be so very, very, rich and to pay so much for ahem jerry-built housing that belongs nowhere except as disaster relief?”

    Indeed. Children will be children.

    But that doesn’t mean the State has to be child.

    “Lollypops Icecream Chocolate all free today”

    What a fantastic way to run a State.

    http://www.youtube.com/watch?v=zUnhfvGdmmw&feature=related

    Children will be children Pat.

    Even if they are elected.

    The problem is, when the Childcatcher comes the children have to grow up.

    Anglo Irish Bank is a bottomless pit of loss.

    We need adults to take decisions.

    We don’t need secret inquiries.

  16. At first glance, seeing Ireland at the head of these lists, I feel a certain verification. Yes, I nod to myself, from my experience of it, and from my comparison with other places, Ireland feels highly globalised. Or rather, Americanised. I suppose as Alan points out, this immediate identification with Ireland’s position contains a certain conceit. Look, there’s Ireland!

    But beyond the indices, and despite their methodological dubiousness, there is probably an abvious truth in Ireland’s place: we are highly Americanised. But even here, one needs to tread carefully. We have gorged ourselves to obesity on a diet of American cultural produce. It really is astonishing the quantity of American cultural references that are now taken for granted in Ireland. From trends in music, to literature, to film, to technology (the demand for which is now almost as driven by fashion as function, witness iPad), we are closely tied with American culture: or to be more precise, those aspects of its coastal culture of which the rest of the world cannot get enough.

    Yet the story is a complex one. Historical, even recent historical, ties make it
    obvious why it was always more likely that we would have an Irish literary success entitled ‘Brooklyn’ and not, say, ‘Berlin’. The chain of connections which saw anotehr great Irish born writer pen a recent novel set mostly in New York, but involving immigrants in New York, is more complex, but Joseph O’Neill’s Netherland is clearly the product of a thoroughly globalised imagination. But anyway, American references in Irish letters are not altogher new (“Philadelphia here I come”).

    When it comes to film, the overwhelming hegemony of US produce is even more pronounced in Ireland. I saw somewhere a study of the quantity of non-Anglo-Saxon film shown in Ireland. It is truly miniscule and far, far, lower than the equivalent in any other non-English speaking european country. The significance of language in a cultural colonisation cannot be over-stated.

    But even in those indices where culture was given a metion, its weighting was tiny. Perhaps not surprising, since the main object of those it seems was to examine economic or political globalisation. Perhaps the low value given to culture in the indices explains why in all the surverys, Ireland is the only English speaking country to appear in the top 5. And in the survey where Ireland is 11, Canada is the only other predominantly English speaking country to appear above it, and of course Canada has a significant French speaking province.

    As many comments have already pointed out, these indices are to a certain extent, puerile. To reduce the hideously complex phenomenon of globalisation to a single number is always going to hide more than it reveals. Yet, as Alan points out, at least it provokes us to think about our position in the world.

  17. The KOF is a curious bird.

    All but one of the top 11 are members of the EU, the largest protectionist trade bloc in the world.

    Useful information. hmmmm…..

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