FOR IMMEDIATE RELEASE: April 26, 2005
CONTACT: Jeff Marn, 202/939-2242, jmarn@CarnegieEndowment.org
The United States broke into the top five for the first time in the annual ranking of the world’s most globalized nations, rising to fourth place from its previous seventh in the 2005 A.T. Kearney/Foreign Policy Magazine Globalization Index™. Singapore took the top spot, edging out three-time winner Ireland on the strength of its increased political engagement and foreign trade ties.
Despite weaker connections with the rest of the world in the political and economic realms, the United States rose due to its technological strength. It ranked first in both the number of Internet users and secure servers.
Russia experienced one of this year’s biggest falls, dropping eight spots to 52nd of the 62 nations in the index as the oil-dependent economy saw a continued decline in trade as a share of gross domestic product (GDP). Perennial bottom-dweller Iran finished last for the fifth consecutive year.
Overall, globalization proved resilient in 2003, the last year for which complete data are available. Global trade jumped by more than 5 percent and development assistance reached a record $69 billion, despite new global tensions emerging from the Iraq war, the breakdown of World Trade Organization (WTO) talks in Cancún, and a sars epidemic that exposed gaps in international health monitoring.
The A.T. Kearney/Foreign Policy Globalization Index™ is the first comprehensive empirical measure of globalization and its impact. It measures economic, person-to-person, political, and technological integration in 62 countries, accounting for 96 percent of the world’s gross gdp and 85 percent of the world’s population.
In addition to its annual country findings, the 2005 index explores the relationships between a country’s global integration and its levels of education, political freedom, perceived corruption, and susceptibility to terrorism.
The Global Top 20
4. United States
11. New Zealand
12. United Kingdom
15. Czech Republic
Regional and Country Highlights
Singapore rose to the top in this year’s ranking on the strength of its increased political engagement and foreign trade ties. The country’s financial contribution to U.N. peacekeeping missions increased by 41 percent and in 2003, it became the first Asian nation to sign a bilateral trade agreement with the United States.
The United States rose on the strength of its growth in Internet hosts and secure servers, which are enabling factors for continued technological integration. But it was much less open in the economic realm, lagging behind in trade and foreign direct investment (FDI), due in part to a large and vibrant domestic market. In political and diplomatic terms the United States ranked 57th of the 62 ranked countries when it comes to signing international treaties.
Russia fell eight places in this year’s index to number 52. The country has still not made the reforms necessary to join the WTO, and trade as a share of Russia’s GDP has fallen sharply since 1999. In addition, the Kremlin’s legal assault on oil giant Yukos and the terrorist attacks by Chechen forces may have deterred foreign investment.
In Europe, lower-cost countries that may be considered for future European Union membership, including Croatia, Romania, and Ukraine, all saw increases in FDI: more than a 50 percent increase for Croatia and more than double for Ukraine. Trade flows were also up between 26 percent and 36 percent for all three countries. However, accession countries in 2004—including the Czech Republic, Slovakia, and Slovenia, all slipped in the index, with FDI inflow falling by more than two thirds for each of the three countries as their cost competitiveness began to erode.
Canada retained its sixth-place ranking, aided by its growing technological sophistication. Canada ranked sixth in technological connectivity in 1999 and now ranks second behind the United States. The country’s technological sophistication has helped it garner a growing segment of the outsourcing industry, attracting U.S. companies that prefer to set up operations close to home.
China saw some improvement, climbing three places in the index to number 54. China’s share of world exports, reached 6 percent in 2003, up from 1.9 percent in 1990. At the same time, 2003 was the first full year that China became the largest export market for both South Korea and Taiwan. Despite this economic progress, China has struggled to make a big jump in its globalization ranking. As many indicators are measured on a per capita basis, gains from globalization may be slow to reach the country’s massive population.
Iran again took last place in this year’s index, a spot it has now occupied five years in a row. Foreign direct investment flows as a percentage of GDP have been in decline. The regime’s monitoring of its citizens and the Internet have also kept the country’s personal contact and technological ties weak. Iran has less international tourism as a percentage of population than Senegal and, except for Bangladesh, the fewest secure servers per capita.
Additional Findings on Education, Political Freedom, and Terrorism
This year’s index also explores the relationships between a country’s global integration and its levels of public education spending, political freedom, perceived corruption, and susceptibility to terrorism. The results show that:
- On average, more globally integrated countries spend more on public education. This relationship was particularly strong in developing countries.
- Citizens of globally integrated countries also enjoy greater political rights and civil liberties. And globalization may keep politicians honest, as the adoption of higher international standards for transparency tends to discourage corruption and increase government efficiency.
- Opening a country’s borders alone does not make the country more vulnerable to terrorism. Little correlation was found between a country’s level of global integration and the number of significant terrorist attacks on its soil.
About the Globalization Index
The A.T. Kearney/Foreign Policy Magazine Globalization Index ranks 62 countries representing 85 percent of the world’s population, based on 12 variables grouped in four categories: economic integration, personal contact, technological connectivity, and political engagement. The index quantifies economic integration by combining data on trade and foreign direct investment. Technological connectedness is gauged by counting Internet users, Internet hosts, and secure servers. Political engagement is assessed by taking stock of the number of selected international organizations and the number of selected international treaties that each country signs, as well as each country’s financial and personnel contributions to U.N. peacekeeping missions and levels of governmental transfers. Personal contact is charted by looking at a country’s international travel and tourism, international telephone traffic and cross-border transfers, including remittances.
About A.T. Kearney
A.T. Kearney (www.atkearney.com) is one of the world’s largest management consulting firms. With a global presence that includes more than 55 cities and 35 countries, spanning major and emerging markets, A.T. Kearney provides strategic, operational, organizational and technology consulting, and executive search services to the world’s leading companies. The Global Business Policy Council is a strategic service of A.T. Kearney that helps chief executives in monitor and capitalize on macroeconomic, geopolitical, demographic, and technological change worldwide. Council membership is limited to a select group of corporate leaders and their companies. The Council’s core program includes periodic meetings in strategically important parts of the world, tailored analytical products, regular member briefings, regional events, and other services.
About Foreign Policy
Founded in 1970, Foreign Policy is the premier, award-winning magazine of global politics, economics, and ideas. The 2005 nominee and 2003 winner of a National Magazine Award for General Excellence, our readers include some of the most influential leaders in business, government, and other professional arenas in the United States and more than 160 other countries. In addition to our flagship English-language edition and award-winning Web site, www.ForeignPolicy.com, FP is published in Arabic, French, Italian, Spanish, and Turkish editions and is published by the Carnegie Endowment for International Peace (www.CarnegieEndowment.org) in Washington, D.C. For syndication permission, contact Ayari De la Rosa at (202) 939-2241 or adelarosa@CarnegieEndowment.org.