Ireland Ranks as the World’s Most Global Nation

Ireland ranks as the world’s most global nation for the third year in a row, according to the fourth annual A.T. Kearney/ Foreign Policy Magazine Globalization Index™. Amidst a faltering global economy, Ireland maintained strong economic links and high levels of personal contact with the rest of the world, helping it hold onto the top spot even as many countries saw their globalization scores slip.

This year’s index shows that globalization survived considerable challenges in 2002, the last year for which complete annual data are available. Economic integration dropped to the lowest levels since 1998, reflecting slow economic growth in many regions as well as the effects of heightened travel alerts, stringent security at ports and airports, corporate scandals, financial market fallout from Argentina’s economic unraveling and jarring terrorist attacks in Indonesia and Kenya. However, non-economic drivers of global integration—from travel to telephone traffic—maintained their forward momentum, making the world more integrated at the end of 2002 than ever before.

The A.T. Kearney/Foreign Policy Magazine Globalization Index measures economic, person-to-person, political and technological integration in 62 countries, accounting for 96% of the world’s gross domestic product (GDP) and 84% of the world’s population. The rankings are based on 14 variables grouped in four categories: economic integration, personal contact, technology, and political engagement.

THE GLOBAL TOP 20

Globalization in Retreat?
Several factors suggested that globalization was in retreat in 2002—the first full year after the September 11, 2001, terrorist attacks—from a major dockworker strike in California to controversial tariff measures designed to protect U.S. steel producers, and resulting tensions between the United States and its global trade partners. Overall, trade volumes expanded slightly despite these roadblocks, but global economic integration declined sharply overall.

Foreign direct investment (FDI) flows, already down about 40 percent in 2001, slid another 20 percent to $651 billion—the lowest level in five years. The United States and United Kingdom accounted for nearly half the drop, but the trend was felt worldwide, with FDI inflows dropping in two thirds of the countries covered. Global portfolio capital flows also contracted; stock market losses in the United States, Germany and Brazil erased wealth. Risk aversion grew in the wake of Argentina’s economic meltdown.

Technology, Telephone Traffic and Tourism Trump Economics

Other factors helped deepen globalization during the year, including person-to-person contact and rapidly expanding Internet use.

• With 22 million more people traveling across international borders, global travel and tourism bounced back from the previous year—when it declined for the first time since World War II. Asia showed some of the strongest gains, with China alone attracting 36.8 million visitors to rank among the five most popular destinations (prior to the SARS outbreak in early 2003).
  
  
• International connections via telephone and the Internet also grew in 2002—in part because they offered substitutes for “being there” in an era of increased travel safety concerns. International telephone traffic rose by 15 billion minutes to total more than 21 minutes per person. Many of these calls were from mobile phones, which outnumbered fixed-line telephone connections for the first time in 2002 and allowed subscribers in many developing countries to “leapfrog” outmoded fixed-line infrastructure. More than 130 million new Internet users came online in 2002, bringing the world total to more than 620 million—9.9 percent of total world population, up from only 8.1 percent the year before. The number of users in developing regions rose 40 percent, three times faster than in developed countries. In China, the number rose 75 percent in 2002; in Brazil, 78.5 percent; and in India, 136 percent. Even in the Middle East, one of the world’s least wired regions, Internet use jumped by 116 percent in 2002.

Other Findings on Health, Religion and Women’s Well-being

This year’s index explores whether globalization challenges traditional values, marginalizes women and undermines the social systems and other conditions required for healthy lives, as some critics claim. In fact, results show that the most global nations are also those in which people live the longest, healthiest lives and where women enjoy the strongest social, educational and economic progress. At the same time, globalization appears to have little impact on religious participation. For example, two of the most global countries, Ireland and the United States, also rank among the most devout.

These findings complement results from earlier years showing that, on par, the most global countries are also those with the most equal income distribution patterns, the most inclusive political systems, the lowest corruption, and the best records of environmental protection.

Regional Highlights

• North America ranked as the world’s most globalized region for the first time, outpacing Western Europe, which saw overall scores slip for the second year in a row. Technological expansion helped push the United States up four slots to seventh place, just behind sixth placed Canada. The United States had the world’s largest absolute number of Internet hosts—nearly 12.5 times more than second-place Japan—and the largest absolute number of Internet users, at 155 million.



• Despite declining scores, Western Europe claimed 6 out of the 10 most globally integrated countries in this year’s index. At 29th place, Japan was the most global country in East Asia . The country was among the top financial donors to international aid and international peacekeeping missions and made its first overseas deployment of peacekeeping personnel in East Timor.



• In the developing world, Southeast Asia again ranked as the most globally integrated region, with Singapore and Malaysia placing among the world’s 20 most globalized countries (and the first and second place countries in trade).



• Central and Eastern Europe registered strong gains and was among the few world regions to see levels of economic integration deepen. FDI to the region surged by 19 percent as countries liberalized in preparation for European Union accession, and companies looked for low-cost production platforms for the European market.



• China experienced impressive growth in exports and FDI—surpassing the United States to become the world’s top investment destination—but fell four spots, in part due to its poor performance in political integration.



• Even as it gained prominence as a preferred choice for information technology outsourcing, India ranked next-to-last, as slowing global markets and persistent ethnic violence trimmed trade, investment and overall growth.



• The Middle East did not fare well in this year’s results, with all countries except Tunisia dropping in the rankings. The region continued to struggle with steady declines in export performance and extremely low levels of political integration, in addition to high population growth, double-digit unemployment, poorly diversified economies and a heavy reliance on oil.

The full text of the 2004 Globalization Index can be found at www.foreignpolicy.com and www.atkearney.com.