Globalization and how it is measured
In August 2018 India's first IKEA store opened in Hyderabad, a city in southern India. A Swedish company now sells Swedish-designed furniture to Indian shoppers, and the sign above the door carries the IKEA name alongside Telugu script. That one building brings together the four things that globalization moves: goods, money, people and ideas.
The process by which the world becomes more connected and interdependent, as people, goods, money and information move between places more easily. As a result, a growing share of the world's population is part of the global economy and aware of other places.
Globalization has a long history. Between 114 BCE and about 1450 CE, China traded across Africa and Eurasia along the Silk Road, a network of linked land and sea routes. Silk travelled west, and so did religions, philosophies and technology. Since then globalization has moved through several phases:
- Imperialism (19th century): European empires built global trade routes and moved capital across oceans.
- Acceleration (1990s and early 2000s): economies became far more interdependent and trade grew quickly.
- Slowdown (after 2008): following the global financial crisis, the volume of global trade levelled off.
- An information phase (today): some experts argue a new phase has begun, driven by the spread of information. Global communication keeps getting faster and denser.
Globalization is hard to define, and people disagree about whether it is mostly good or mostly harmful. To make comparison possible, the KOF Swiss Economic Institute created the KOF Globalisation Index in 2002. It tracks how globalized 185 countries are over time, using three dimensions.
| Dimension | What it measures |
|---|---|
| Economic | Trade flows, financial flows and services |
| Social | Personal contact (international phone calls, tourist numbers, migration), information flows (patent applications, high-technology trade, TV and internet access) and cultural proximity (trade in cultural goods, trademark registrations, number of McDonald's restaurants or IKEA stores) |
| Political | Number of embassies and international NGOs, membership of international organizations and treaties |
Each country receives an overall score from 1 to 100, and the separate dimensions are reported as percentiles.
The Hyderabad IKEA would push India's score up in the social dimension, because the number of global chain stores counts as a measure of cultural proximity. Economic activity and cultural change are measured side by side.
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