1 Introduction
Globalisation Index, de facto | Weights | Globalisation Index, de jure | Weights |
---|---|---|---|
Economic Globalisation, de facto |
33.3
|
Economic Globalisation, de jure
|
33.3
|
Trade Globalisation, de facto |
50.0
|
Trade Globalisation, de jure
|
50.0
|
Trade in goods | 38.8 | Trade regulations | 26.8 |
Trade in services | 44.7 | Trade taxes | 24.4 |
Trade partner diversity | 16.5 | Tariffs | 25.6 |
Trade agreements | 23.2 | ||
Financial Globalisation, de facto |
50.0
|
Financial Globalisation, de jure
|
50.0
|
Foreign direct investment | 26.7 | Investment restrictions | 33.3 |
Portfolio investment | 16.5 | Capital account openness | 38.5 |
International debt | 27.6 | International Investment Agreements | 28.2 |
International reserves | 2.1 | ||
International income payments | 27.1 | ||
Social Globalisation, de facto |
33.3
|
Social Globalisation, de jure
|
33.3
|
Interpersonal Globalisation, de facto |
33.3
|
Interpersonal Globalisation, de jure
|
33.3
|
International voice traffic | 20.8 | Telephone subscriptions | 39.9 |
Transfers | 21.9 | Freedom to visit | 32.7 |
International tourism | 21.0 | International airports | 27.4 |
International students | 19.1 | ||
Migration | 17.2 | ||
Informational Globalisation, de facto |
33.3
|
Informational Globalisation, de jure
|
33.3
|
Used internet bandwidth | 37.2 | Television access | 36.8 |
International patents | 28.3 | Internet access | 42.6 |
High technology exports | 34.5 | Press freedom | 20.6 |
Cultural Globalisation, de facto |
33.3
|
Cultural Globalisation, de jure
|
33.3
|
Trade in cultural goods | 28.1 | Gender parity | 24.7 |
Trade in personal services | 24.6 | Human capital | 41.4 |
International trademarks | 9.7 | Civil liberties | 33.9 |
McDonald’s restaurant | 21.6 | ||
IKEA stores | 16.0 | ||
Political Globalisation, de facto |
33.3
|
Political Globalisation, de jure
|
33.3
|
Embassies | 36.5 | International organisations | 36.2 |
UN peace keeping missions | 25.7 | International treaties | 33.4 |
International NGOs | 37.8 | Treaty partner diversity | 30.4 |
2 Measuring globalization
2.1 Defining globalization
We follow Dreher (2006), who, based on Nye and Keohane (2000), distinguishes between three different dimensions of globalization. Economic globalization characterizes long distance flows of goods, capital and services as well as information and perceptions that accompany market exchanges. Social globalization expresses the spread of ideas, information, images and people. Political globalization characterizes the diffusion of government policies.Globalization describes the process of creating networks of connections among actors at intra- or multi-continental distances, mediated through a variety of flows including people, information and ideas, capital, and goods. Globalization is a process that erodes national boundaries, integrates national economies, cultures, technologies and governance, and produces complex relations of mutual interdependence.
2.2 Literature and critique
2.2.1 Previous measures of globalization
Measure | Countries | Years | Variables | Description | Characteristics |
---|---|---|---|
KOF Globalisation Index - 2018 Version | 203 | 1970–2016 | 43 | Comprehensive indicator covering the economic, social and political aspects of globalization distinguishing between de facto and de jure. | Distinction between de facto and de jure globalization for each dimension and sub-dimension of the index. Differentiation between trade and financial globalization. Wide coverage in terms of countries and years. |
KOF Globalisation Index - 2007 Version | 207 | 1970 –2015 | 23 | Comprehensive indicator covering the economic, social and political aspects of Globalisation. | Wide coverage in terms of countries and years. Hybrid-measure. No clear distinction between trade and financial Globalisation. |
Maastricht Globalisation Index (MGI) – 2012 Edition | 117 | 2000, 2008, 2012 | 11 | Comprehensive indicator covering the political, economic, social & cultural, technological and environmental domain of globalization. | Includes an environmental dimension. Only covers three years. |
A.T. Kearney/ Foreign Policy Globalisation Index (ATK/ FP) | 62 | 2002–2007 | 14 | First composite indicator measuring globalization. Covers political engagement, technology, personal contact and economic integration on a global scale. | Serves as benchmark by many alternative indices. |
GlobalIndex | 97 | 1970–2002 | 31 | Sociological index of globalization covering the economic, sociotechnical, cultural and political dimensions of globalization. | Extends existing indices by additional dimensions and indicators representing a sociological concept of globalization. |
CSGR Globalisation Index | 119 | 1982–2004 | 16 | Composite index measuring the economic, political and social aspects of globalization. Weights of variables are determined by principal components analysis. | Variables measuring openness are corrected for by fixed country characteristics (initial population size, land area and if a country is landlocked). |
New Globalisation Index (NGI) | 70 | 1995–2005 | 21 | Comprehensive indicator measuring the economic, political and social aspects of globalization controlling partly for geographical distances between countries. | Controlling for geographical distance helps to some extend to distinguish globalization from regionalization. |
DHL Connectedness Indicator (GCI) | 140 | 2005–2015 | 12 | Composite indicator measuring depth and breadth of country’s integration with the rest of the world. Covers international flows of goods and services, capital, information and people. | Distinction between depth and breadth of integration. |
2.2.2 Focus of measurement: De facto globalization and globalization policies
2.2.3 Unit of measurement: National, subnational or individual
2.2.4 Dimensions of globalization: Economic, social and political dimension
2.2.5 Globalization versus regionalism: Accounting for distances, intensities and networks
2.2.6 Transformation of variables: Shall we account for country-specific factors?
3 The KOF Globalisation Index revisited
3.1 Content of revision
3.1.1 Distinction between de facto and de jure globalization
3.1.2 Distinction between trade and financial globalization
3.1.3 Measuring cultural globalization more broadly
3.1.4 Time-varying weights for the aggregation
3.2 Dimensions of the index and variable selection5
3.2.1 De facto economic globalization
3.2.2 De facto social globalization
3.2.3 De facto political globalization
3.2.4 De jure economic globalization
3.2.5 De jure social globalization
3.2.6 De jure political globalization
3.3 Method of calculation
3.3.1 Imputation of missing data
3.3.2 Normalizing the data
3.3.3 Determining the weights
3.3.4 Aggregation to indices
4 Some first comparisons and robustness checks
4.1 Comparing the 2018 and 2007 versions
4.2 Comparing the de facto and de jure dimensions
4.3 Comparing time-varying and constant weights
4.4 Including/excluding cultural globalization
5 Globalization and economic growth
N | Mean | SD. | Min | Max | Source | |
---|---|---|---|---|---|---|
GDP per capita growth | 823 | 1.90 | 3.14 | −13.41 | 23.01 | Penn World Table 9.0 |
log(Initial level of GDP per capita) | 823 | 8.96 | 1.17 | 6.02 | 12.26 | Penn World Table 9.0 |
Human capital index | 823 | 2.28 | 0.69 | 1.02 | 3.70 | Penn World Table 9.0 |
log(life expectancy) | 823 | 4.19 | 0.17 | 3.38 | 4.41 | World Bank – World Development Indicators |
log(fertility rate) | 823 | 1.09 | 0.55 | −0.07 | 2.07 | World Bank – World Development Indicators |
Investment (% of GDP) | 823 | 21.52 | 9.12 | 1.65 | 60.24 | Penn World Table 9.0 |
Government consumption (% of GDP) | 823 | 18.51 | 8.62 | 3.10 | 64.36 | Penn World Table 9.0 |
Rule-of-law index | 823 | 5.00 | 1.86 | 0.99 | 9.07 | Economic Freedom of the World |
Inflation rate | 823 | 4.29 | 6.67 | −16.26 | 29.78 | Penn World Table 9.0 |
Growth rate of terms of trade | 823 | 0.72 | 2.97 | −14.86 | 28.32 | Penn World Table 9.0 |
KOF Globalisation Index | 823 | 55.15 | 16.11 | 21.87 | 89.88 | this study |
KOF Economic Globalisation Index | 823 | 50.70 | 16.97 | 14.56 | 94.70 | this study |
KOF Social Globalisation Index | 823 | 50.51 | 21.83 | 6.54 | 91.02 | this study |
KOF Political Globalisation Index | 823 | 64.15 | 18.05 | 16.70 | 98.45 | this study |
KOF Trade Globalisation Index | 823 | 48.65 | 18.41 | 10.65 | 96.57 | this study |
KOF Financial Globalisation Index | 823 | 52.75 | 18.14 | 5.74 | 96.68 | this study |
KOF Interpersonal Globalisation Index | 823 | 48.51 | 21.40 | 5.00 | 90.85 | this study |
KOF Informational Globalisation Index | 823 | 52.56 | 22.60 | 3.04 | 94.54 | this study |
KOF Cultural Globalisation Index | 823 | 50.46 | 23.81 | 7.26 | 94.60 | this study |
KOF Globalisation Index, de facto | 823 | 53.68 | 15.73 | 19.31 | 91.62 | this study |
KOF Globalisation Index, de jure | 823 | 56.64 | 17.55 | 15.61 | 93.12 | this study |
KOF Economic Globalisation Index, de facto | 823 | 49.48 | 18.54 | 8.71 | 98.39 | this study |
KOF Economic Globalisation Index, de jure | 823 | 51.92 | 20.15 | 12.68 | 95.32 | this study |
KOF Social Globalisation Index, de facto | 823 | 48.22 | 23.72 | 3.54 | 96.67 | this study |
KOF Social Globalisation Index, de jure | 823 | 52.78 | 20.95 | 7.46 | 91.27 | this study |
KOF Political Globalisation Index, de facto | 823 | 63.10 | 20.12 | 19.16 | 97.45 | this study |
KOF Political Globalisation Index, de jure | 823 | 65.19 | 18.84 | 2.50 | 99.57 | this study |
KOF Trade Globalisation Index, de facto | 823 | 47.56 | 19.99 | 5.23 | 99.16 | this study |
KOF Trade Globalisation Index, de jure | 823 | 49.70 | 24.72 | 6.71 | 96.75 | this study |
KOF Financial Globalisation Index, de facto | 823 | 51.40 | 20.94 | 6.23 | 98.99 | this study |
KOF Financial Globalisation Index, de jure | 823 | 54.07 | 19.87 | 3.50 | 95.41 | this study |
KOF Interpersonal Globalisation Index, de facto | 823 | 47.08 | 24.31 | 2.82 | 96.56 | this study |
KOF Interpersonal Globalisation Index, de jure | 823 | 49.98 | 20.26 | 4.20 | 91.52 | this study |
KOF Informational Globalisation Index, de facto | 823 | 52.90 | 24.44 | 2.61 | 98.31 | this study |
KOF Informational Globalisation Index, de jure | 823 | 52.21 | 22.72 | 2.55 | 97.61 | this study |
KOF Cultural Globalisation Index, de facto | 823 | 44.55 | 26.39 | 2.04 | 96.85 | this study |
KOF Cultural Globalisation Index, de jure | 823 | 56.16 | 23.58 | 5.88 | 96.84 | this study |
Variables | (1) | (2) | (3) | (4) |
---|---|---|---|---|
Overall | Economic | Social | Political | |
KOF Globalisation Index | 0.164*** | 0.0774*** | 0.166*** | 0.0581** |
(0.0498) | (0.0284) | (0.0474) | (0.0277) | |
log(Initial level of GDP per capita) | −6.428*** | −6.294*** | −6.551*** | −6.001*** |
(0.891) | (0.896) | (0.945) | (0.836) | |
Human capital index | 0.627 | 1.198 | 0.254 | 0.873 |
(1.594) | (1.582) | (1.599) | (1.576) | |
log(life expectancy) | 5.122** | 5.491** | 3.984* | 4.838* |
(2.468) | (2.489) | (2.233) | (2.639) | |
log(fertility rate) | −0.0864 | −0.835 | −0.00398 | −0.549 |
(1.033) | (0.953) | (1.016) | (1.003) | |
Investment (% of GDP) | 0.132*** | 0.142*** | 0.131*** | 0.135*** |
(0.0327) | (0.0325) | (0.0323) | (0.0329) | |
Government consumption (% of GDP) | 0.0352 | 0.0339 | 0.0300 | 0.0430 |
(0.0363) | (0.0371) | (0.0363) | (0.0366) | |
Rule-of-law index | 0.222 | 0.226* | 0.255* | 0.266* |
(0.139) | (0.136) | (0.145) | (0.139) | |
Inflation rate | 0.00677 | 0.0115 | 0.000767 | 0.00730 |
(0.0212) | (0.0223) | (0.0217) | (0.0215) | |
Growth rate of terms of trade | 0.0519 | 0.0500 | 0.0542 | 0.0553 |
(0.0408) | (0.0401) | (0.0409) | (0.0419) | |
Observations | 823 | 823 | 823 | 823 |
R-squared | 0.364 | 0.354 | 0.361 | 0.347 |
Number of countries | 137 | 137 | 137 | 137 |
Variables | (1) | (2) | (3) | (4) | (5) | (6) | (7) | (8) |
---|---|---|---|---|---|---|---|---|
Overall | Overall | Economic | Economic | Social | Social | Political | Political | |
de facto | de jure | de facto | de jure | de facto | de jure | de facto | de jure | |
KOF Globalisation Index | 0.0730 | 0.146*** | 0.0275 | 0.0600*** | 0.144*** | 0.0682* | −0.00825 | 0.0828*** |
(0.0453) | (0.0306) | (0.0234) | (0.0160) | (0.0390) | (0.0397) | (0.0205) | (0.0206) | |
log(Initial level of GDP per capita) | −6.102*** | −6.517*** | −5.980*** | −6.433*** | −6.643*** | −6.139*** | −5.959*** | −6.043*** |
(0.871) | (0.879) | (0.859) | (0.857) | (0.969) | (0.880) | (0.857) | (0.844) | |
Human capital index | 0.835 | 0.841 | 1.041 | 1.439 | 0.757 | 0.598 | 1.193 | 0.900 |
(1.561) | (1.587) | (1.561) | (1.550) | (1.681) | (1.582) | (1.556) | (1.602) | |
log(life expectancy) | 4.640* | 5.605** | 4.832* | 5.690** | 4.828** | 4.090* | 4.793* | 5.670** |
(2.571) | (2.354) | (2.568) | (2.404) | (2.226) | (2.448) | (2.533) | (2.658) | |
log(fertility rate) | −0.909 | 0.378 | −1.234 | −0.314 | −0.144 | −0.603 | −1.105 | −0.178 |
(0.968) | (0.974) | (0.975) | (0.948) | (0.981) | (1.006) | (0.981) | (0.935) | |
Investment (% of GDP) | 0.140*** | 0.127*** | 0.143*** | 0.139*** | 0.139*** | 0.134*** | 0.143*** | 0.130*** |
(0.0326) | (0.0327) | (0.0324) | (0.0329) | (0.0319) | (0.0331) | (0.0330) | (0.0326) | |
Government consumption (% of GDP) | 0.0382 | 0.0350 | 0.0376 | 0.0357 | 0.0298 | 0.0366 | 0.0393 | 0.0416 |
(0.0367) | (0.0367) | (0.0370) | (0.0376) | (0.0361) | (0.0370) | (0.0371) | (0.0362) | |
Rule-of-law index | 0.272* | 0.192 | 0.274* | 0.206 | 0.265* | 0.265* | 0.279** | 0.248* |
(0.143) | (0.136) | (0.140) | (0.138) | (0.146) | (0.140) | (0.138) | (0.136) | |
Inflation rate | 0.00682 | 0.00917 | 0.00947 | 0.0115 | −0.00140 | 0.00694 | 0.00904 | 0.00782 |
(0.0218) | (0.0210) | (0.0223) | (0.0219) | (0.0214) | (0.0221) | (0.0221) | (0.0210) | |
Growth rate of terms of trade | 0.0503 | 0.0583 | 0.0512 | 0.0545 | 0.0464 | 0.0579 | 0.0546 | 0.0570 |
(0.0414) | (0.0404) | (0.0410) | (0.0399) | (0.0406) | (0.0411) | (0.0412) | (0.0421) | |
Observations | 823 | 823 | 823 | 823 | 823 | 823 | 823 | 823 |
R-squared | 0.346 | 0.369 | 0.343 | 0.354 | 0.367 | 0.344 | 0.340 | 0.364 |
Number of countries | 137 | 137 | 137 | 137 | 137 | 137 | 137 | 137 |
VARIABLES | (1) | (2) | (3) | (4) | (5) |
---|---|---|---|---|---|
Trade | Financial | Interpersonal | Informational | Cultural | |
KOF Globalisation Index | 0.0541** | 0.0438** | 0.146*** | 0.0669** | 0.0764** |
(0.0239) | (0.0205) | (0.0467) | (0.0293) | (0.0346) | |
log(Initial level of GDP per capita) | −6.150*** | −6.186*** | −6.363*** | −6.322*** | −6.151*** |
(0.876) | (0.884) | (0.876) | (0.900) | (0.903) | |
Human capital index | 1.298 | 1.086 | 0.651 | 0.976 | 0.366 |
(1.554) | (1.590) | (1.582) | (1.598) | (1.580) | |
log(life expectancy) | 4.420* | 5.842** | 5.087** | 4.198* | 4.103* |
(2.467) | (2.561) | (2.364) | (2.376) | (2.370) | |
log(fertility rate) | −0.622 | −1.150 | −0.336 | −0.421 | −0.692 |
(0.956) | (0.964) | (1.012) | (1.023) | (0.909) | |
Investment (% of GDP) | 0.141*** | 0.142*** | 0.127*** | 0.137*** | 0.140*** |
(0.0330) | (0.0323) | (0.0327) | (0.0333) | (0.0321) | |
Government consumption (% of GDP) | 0.0379 | 0.0348 | 0.0269 | 0.0368 | 0.0368 |
(0.0372) | (0.0371) | (0.0375) | (0.0373) | (0.0360) | |
Rule-of-law index | 0.271* | 0.226* | 0.265* | 0.288* | 0.243* |
(0.140) | (0.133) | (0.142) | (0.146) | (0.139) | |
Inflation rate | 0.0102 | 0.0107 | 0.00545 | 0.00307 | 0.00595 |
(0.0224) | (0.0220) | (0.0216) | (0.0222) | (0.0216) | |
Growth rate of terms of trade | 0.0552 | 0.0488 | 0.0459 | 0.0571 | 0.0561 |
(0.0402) | (0.0407) | (0.0410) | (0.0411) | (0.0419) | |
Observations | 823 | 823 | 823 | 823 | 823 |
R-squared | 0.350 | 0.347 | 0.363 | 0.347 | 0.349 |
Number of countries | 137 | 137 | 137 | 137 | 137 |
VARIABLES | (1) | (2) | (3) | (4) | (5) | (6) | (7) | (8) | (9) | (10) |
---|---|---|---|---|---|---|---|---|---|---|
Trade | Trade | Financial | Financial | Interpersonal | Interpersonal | Informational | Informational | Cultural | Cultural | |
de facto | de jure | de facto | de jure | de facto | de jure | de facto | de jure | de facto | de jure | |
KOF Globalisation Index | 0.0210 | 0.0415*** | 0.0161 | 0.0338*** | 0.122*** | 0.0758** | 0.0370** | 0.0301 | 0.0765*** | −0.00300 |
(0.0222) | (0.0134) | (0.0158) | (0.0123) | (0.0397) | (0.0300) | (0.0144) | (0.0271) | (0.0246) | (0.0213) | |
log(Initial level of GDP per capita) | −5.920*** | −6.322*** | −6.015*** | −6.198*** | −6.386*** | −6.105*** | −6.127*** | −6.165*** | −6.427*** | −5.964*** |
(0.838) | (0.845) | (0.872) | (0.864) | (0.866) | (0.866) | (0.872) | (0.889) | (0.955) | (0.850) | |
Human capital index | 1.091 | 1.447 | 1.061 | 1.225 | 0.892 | 0.782 | 1.080 | 1.045 | 0.861 | 1.189 |
(1.556) | (1.535) | (1.572) | (1.572) | (1.586) | (1.582) | (1.638) | (1.554) | (1.623) | (1.582) | |
log(life expectancy) | 4.426* | 4.858** | 5.083** | 5.709** | 5.582** | 4.556* | 4.195* | 4.692* | 5.420** | 4.804* |
(2.609) | (2.369) | (2.554) | (2.519) | (2.583) | (2.367) | (2.474) | (2.430) | (2.109) | (2.623) | |
log(fertility rate) | −1.007 | −0.478 | −1.297 | −0.694 | −1.029 | −0.331 | −0.510 | −0.914 | −0.715 | −1.067 |
(0.937) | (0.937) | (1.017) | (0.940) | (0.956) | (1.022) | (0.976) | (0.959) | (0.902) | (0.937) | |
Investment (% of GDP) | 0.140*** | 0.143*** | 0.144*** | 0.137*** | 0.135*** | 0.130*** | 0.138*** | 0.141*** | 0.151*** | 0.142*** |
(0.0332) | (0.0328) | (0.0321) | (0.0332) | (0.0322) | (0.0329) | (0.0331) | (0.0329) | (0.0316) | (0.0327) | |
Government consumption (% of GDP) | 0.0390 | 0.0387 | 0.0380 | 0.0362 | 0.0279 | 0.0337 | 0.0416 | 0.0358 | 0.0283 | 0.0398 |
(0.0371) | (0.0377) | (0.0371) | (0.0373) | (0.0383) | (0.0369) | (0.0368) | (0.0381) | (0.0356) | (0.0377) | |
Rule-of-law index | 0.285* | 0.253* | 0.269* | 0.219 | 0.257* | 0.279** | 0.287** | 0.279* | 0.251* | 0.280** |
(0.145) | (0.140) | (0.137) | (0.134) | (0.144) | (0.140) | (0.142) | (0.142) | (0.141) | (0.140) | |
Inflation rate | 0.00838 | 0.0116 | 0.00985 | 0.00945 | 0.00613 | 0.00696 | 0.00388 | 0.00758 | 0.00419 | 0.00877 |
(0.0221) | (0.0224) | (0.0224) | (0.0217) | (0.0216) | (0.0219) | (0.0220) | (0.0221) | (0.0213) | (0.0221) | |
Growth rate of terms of trade | 0.0536 | 0.0571 | 0.0514 | 0.0523 | 0.0398 | 0.0547 | 0.0568 | 0.0551 | 0.0477 | 0.0542 |
(0.0410) | (0.0404) | (0.0411) | (0.0406) | (0.0411) | (0.0412) | (0.0415) | (0.0411) | (0.0416) | (0.0420) | |
Observations | 823 | 823 | 823 | 823 | 823 | 823 | 823 | 823 | 823 | 823 |
R-squared | 0.342 | 0.349 | 0.341 | 0.348 | 0.358 | 0.352 | 0.345 | 0.342 | 0.361 | 0.339 |
Number of countries | 137 | 137 | 137 | 137 | 137 | 137 | 137 | 137 | 137 | 137 |