The 2003 A.T. Kearney/Foreign Policy Magazine Globalization Index

Source: Carnegie

For Immediate Release:January 7, 2003
Contact: Mike Boyer (FP), 202-939-2345, mboyer@ceip.org and Helen Kensick (AT Kearney), 312-223-7266, helen.kensick@atkearney.com

IRELAND REMAINS WORLD'S MOST GLOBAL NATION
Countries continue to integrate, but at slowing pace, according to the third annual Globalization Index released by FOREIGN POLICY and A.T. Kearney

Ireland ranks as the world's most global country for the second year in a row, according to the third annual A.T. Kearney/FOREIGN POLICY Magazine Globalization Index released today. Ireland's high score is the result of strong performance in measures of global social integration, as well as its robust trade and investment links with the rest of the world. Ireland was followed by, in order, Switzerland, Sweden, Singapore, and the Netherlands. The United States finished in 11th place, up one spot from last year's index.

The Globalization Index shows that levels of integration continued to climb in the wake of the September 11 terrorist attacks and prolonged global economic slowdown, albeit at a much slower pace than in previous years. Economic integration declined, but growth in political, social, and technological connections more than offset the difference. Indicators of personal connections across borders such as international telephone traffic and Internet use saw steady growth, suggesting that globalization remains robust.

The A.T. Kearney/FOREIGN POLICY Magazine Globalization Index measures economic, social, political, and technological integration in 62 countries representing 85 percent of the world's population and more than 95 percent of world economic output.

MORE THAN JUST ECONOMICS
In the wake of September 11, many analysts speculated that the pace of global integration would slow significantly. Indeed, global economic integration suffered several setbacks. World economic growth plummeted from 4 percent in 2000 to 1.3 percent in 2001. Trade levels declined by 1.5 percent, and global foreign direct investment flows dropped more than 50 percent from $1.49 trillion to $735 billion, exacerbating trends begun before the terrorist attacks.

However, using available data through the end of 2001, the Globalization Index shows that other aspects of globalization sustained their forward momentum. Political engagement deepened as a result of factors like international cooperation in the war on terrorism and the continued integration of China and Russia into the world economy. Membership in international organizations expanded, and while the number of U.N. peacekeeping missions declined, the number of countries participating in them grew.

Levels of global personal contact and technological integration also continued to grow, with rising numbers of Internet users and a steady expansion in international telephone traffic offsetting the first decline in international travel and tourism since 1945. Worldwide telephone traffic grew more than 9 percent to reach 120 billion minutes, while the number of Internet users grew 22.5 percent to well over 550 million people, with China alone adding 11 million new users.

COMPLETE TOP 20 RANKINGS

Ireland tops this year's index for the second year in a row, in part because it was one of a handful of countries to avoid the slowdown in global trade and capital flows. In 2001, Ireland attracted $91 billion in portfolio capital inflows-$11 billion more than the previous year and nearly $30 billion more than its neighbor, the United Kingdom. Ireland also expanded its international trade volumes, ranking just behind Singapore and Malaysia in total trade measured as a share of gross domestic product. Ireland is also the world's most talkative nation, with more than 737 minutes of international telephone calls per person in 2001.

Switzerland ranked second, also for the second year in a row, buoyed by a strong reputation as an international financial center and income payments from investments overseas, which totaled $7,670 for each citizen in 2001. Swiss citizens made an average of 1.85 international trips per person in 2001, second only to the Czech Republic. Singapore, which topped the first Globalization Index three years ago, finished fourth this year.

Overall, developed nations dominate the Globalization Index Top 20, but several emerging markets also appeared, including the Czech Republic, Malaysia, and Israel. The biggest gains were marked by Morocco, which jumped 17 places to rank 29th, and South Africa, which jumped 16 places to finish 38th, both as the result of huge increases in foreign investment. Saudi Arabia experienced this year's most significant decline, falling from 37th to 61th as declining oil prices and political fallout relating to the war on terrorism took their toll.

OTHER HIGHLIGHTS FROM THE 2003 GLOBALIZATION INDEX
Globalization correlates with environmental protection. The world's most global countries rank higher in environmental performance, according to a comparison of the Globalization Index and an analysis of the Environmental Performance Index (EPI) administered by the Yale Center for Environmental Law and Policy and the Center for International Earth Science Information Network at Columbia University. Seven of the Globalization Index's top 10 are among the EPI's most environmentally friendly nations.

Globalization does not undermine working-class wages. In fact, the most global nations tend to have the highest manufacturing wages, according to the best available data. This trend is particularly visible in small European nations such as Norway, where manufacturing workers earned an average of $38,415 per year. Greater variation exists in developing countries-but there is no measurable correlation between globalization and low wages.

Multinational firms are a key driving force behind economic integration. The globalization of companies plays a large role in the globalization of economies. Shipments inside multinational firms make up huge shares of international trade-accounting for 47 percent of total imports to the United States, for instance. For globalizing countries, this suggests that attracting foreign affiliates of global companies is key to greater participation in the global economy.

The full text of the article describing the findings of the Globalization Index, including full rankings, supplemental information, and charts can be found at www.foreignpolicy.com and www.atkearney.com.

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 13 variables grouped in four baskets: economic integration, personal contact, technology, and political engagement. The index quantifies economic integration by combining data on trade, foreign direct investment, portfolio capital flows, and income payments and receipts. The index gauges technological connectedness by counting Internet users, Internet hosts, and secure servers. The index assesses political engagement by taking stock of the number of international organizations and U.N. Security Council missions in which each country participates and the number of foreign embassies that each country hosts. 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 and fastest-growing management consulting firms. With a global presence that includes more than 60 offices 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. A.T. Kearney is the high-value management-consulting subsidiary of global services leader EDS.

ABOUT EDS
EDS, the leading global services company, provides strategy, implementation, and hosting for clients managing the business and technology complexities of the digital economy. EDS brings together the world's best technologies to address critical client business imperatives. It helps clients eliminate boundaries, collaborate in new ways, establish their customers' trust and continuously seek improvement. EDS, with its management-consulting subsidiary, A.T. Kearney, serves the world's leading companies and governments in 58 countries. EDS reported revenues of $21.5 billion in 2001. The company's stock is traded on the New York Stock Exchange (NYSE:EDS) and the London Stock Exchange. Learn more at www.eds.com.

ABOUT FOREIGN POLICY
Founded in 1970, FOREIGN POLICY celebrated its 30th anniversary in September/October 2000 by relaunching its quarterly journal as a bimonthly, full-color magazine. FOREIGN POLICY was the recipient of the 2001 Editorial Excellence Award and two Ozzie Awards for design, presented by Folio.

FOREIGN POLICY circulates in 128 countries and has editions in Arabic, Greek, Italian, Spanish (three editions), and Turkish, as well as syndication agreements that circulate its content to millions of readers around the world. FOREIGN POLICY is published by the Carnegie Endowment for International Peace.

For syndication permission, contact Jason Mack, phone: 202-939-2367; e-mail: jmack@ceip.org.

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