GLOBALISATION for IB1 2013
Optional Theme 1:
MEASURING GLOBAL INTERACTIONS
Definitions of Globalization
Globalization:
 The International Monetary Fund (IMF) defines
globalization as:
“the growing interdependence of countries worldwide
through the increasing volume and variety of cross-border
transactions in goods and services and of international
capital flows, and through more rapid and widespread
diffusion of technology”
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The Geographer’s definition
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According to Peter Haggett globalization is
“the process by which events, activities and decisions in one
part of the world can have significant consequences for
communities in distant parts of the globe”.
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Today, Globalization has come to be associated with:
“the spread of economic, social and cultural ideas
across the world, and the growing uniformity
between different places that results from this
spread”.
The consequences of globalisation is a dilution of
economic, social and cultural differences between
places.
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Glocalization
It is a term that was invented to emphasize that the
globalisation of a product is more likely to succeed when
the product or service is adapted specifically to each
locality or culture it is marketed in.
-presence of McDonald’s restaurant everywhere on the
globe = globalisation
- the changing menus of the restaurant to appeal to the
local tastes = glocalisation
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Someone’s view of globalization
Your car is Japanese.
 Your pizza is Italian.
 Your beer is German.
 Your wine is Spanish.
 Your democracy is Greek.
 Your chocolate is Ghanaian.
 Your coffee is Brazilian.
 Your tea is Chinese.
 Your watch is Swiss.
 Your fashion is French.
 Your shirt is Indian.
 Your shoes are Thai.
 Your radio is Korean.
 Your vodka is ...Russian.
 5 And then complain: your neighbour is an immigrant?
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Globalization Index
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AT KEARNEY:
AT Kearney is a management consultancy firm that advises
large corporations on international competitiveness.
Founded in 1926 in the US (Chicago).
Publishes its index in the Foreign Policy Magazine.
It assess the extent to which the world’s most populous
nations are becoming more or less globalised.
The AT Kearney Foreign Policy index measures twelve variables,
which are subdivided into four “baskets” of global integration:
Economic integration, personal contact, technological
connectivity and political engagement.
72 countries ranked in the 2007 globalisation index accounts
for 97% of the world’s GDP and 88% of the world’s
population.
Economic integration:
 Combines data on international trade
 and foreign direct investment (FDI) inflows and outflows,
 international travel and Tourism
Technological connectivity:
 Counts the number of internet users
 internet hosts,
 and secure servers
Political engagements
 Includes each country’s membership in a variety of
representative international organizations e.g foreign aid,
treaties, organizations, and peacekeeping operations
Personal contacts
 International telephone calls
 cross-border remittances
 Travel
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The data obtained for a given variable are calibrated
through a process that assigns the value of 1 to the
highest data with the all other points valued as fractions
of 1.
The base year is assigned a value of 100. The given
variable’s scale factor for each subsequent year is the
percentage growth or decline in the GDP – or
population-weighted score of the highest data point,
relative to 100.
Globalization index scores for every country and year
are derived by summing all the indicator scores.
Singapore is the most globalised according to this
measure. This is followed by Switzerland and the USA in
the third position.
Check the internet for graph showing first 20countries
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The Globalization Index 2007 – Top 20 countries
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McThailand
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Mc Japan
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Mc Russia
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McDonalds in Saudi Arabia
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McDonalds in China
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The KOF Index of Globalization
The KOF Index of Globalization was introduced in
2002 (Dreher, 2006)
KOF is a Swiss Institute of Business Cycle Research.
The overall index covers the economic, social and
political dimensions of globalization.
It defines globalization to be the
“process of creating networks of connections among
actors at multi-continental distances, mediated
through a variety of flows including people,
information and ideas, capital and goods”.
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KOF conceptualized Globalization as
“a process that erodes national boundaries, integrates
national economies, cultures, technologies and governance and
produces complex relations of mutual interdependence”.
More specifically, the three dimensions of the KOF index
are defined as: Economic, Social and Political.
Economic globalization, characterized as long distance flows
of goods, capital and services as well as information and
perceptions that accompany market exchanges;
Political globalization, characterized by a diffusion of
government policies; and
Social globalization, expressed as the spread of ideas,
information, images and people.
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Economic Globalization
Broadly speaking, economic globalization has two
dimensions. First, actual economic flows are usually
taken to be measures of globalization.
Actual Flows: The sub-index on actual economic
flows includes data on trade, FDI and portfolio
investment.
Restrictions: The second index refers to restrictions
on trade and capital using hidden import barriers,
mean tariff rates, taxes on international trade (as a
share of current revenue) and an index of capital
controls.
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Social Globalization
The KOF index classifies social globalization in three
categories.
Personal Contacts: This index is meant to capture direct
interaction among people living in different countries.
Information flows: It includes the number of internet users,
(per 1000 people), the share of households with a television
set, and international newspapers traded (in percent of GDP).
Cultural Proximity: Cultural proximity is arguably the
dimension of globalization most difficult to grasp. Dreher
(2006) suggests the number of English songs in national hit
lists or movies shown in national cinemas that originated in
Hollywood, number of McDonald's Restaurants, number of
Ikea shops, etc.
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Political Globalization
It measures the:
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number of embassies and high commissions in a
country
number of international organizations to which the
country is a member
number of UN Security Council peace missions a
country participated in
International Treaties
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Method of Calculation -1
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To construct its globalization index KOF transforms
each variable into an index using a scale of 1 to 100,
where 100 is the maximum value for a specific
variable over the period 1970 to 2006 and 1is the
minimum value.
Higher values indicate greater degree of globalization.
The data is transformed according to the percentiles
of the original distribution.
The weights for calculating the sub-indices are
determined using principal components analysis for the
entire sample of countries and years.
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Method of Calculation -2
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The analysis partitions the variance of the variables
used in each sub-group.
The weights are then determined in a way that
maximizes the variation of the resulting principal
component, so that the indices capture the variation
as fully as possible.
The same procedure is applied to the sub-indices in
order to derive the overall index of globalization.
The KOF index shows that globalization has been
taken place since the 1970s.
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According to the index, Belgium is the most
globalised nation in the world, followed by Austria,
Sweden and the Netherlands.
The least globalised country is Burundi, Burma and
Central African Republic.
However, countries like Saudi Arabia, North Korea,
Somalia and other Islamic states were left out in the
analysis by KOF. Why? Due to lack of data.
Examples of KOF’s index of Globalization.
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WORLD SYSTEM ANALYSIS
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World systems approach is identified with Immanuel
Wallerstein (1974).
It is a way of looking at economic, social and political
dev’t.
The world systems analysis sees the world as a single unit
and any analysis of dev’t must be seen from a capitalist
world economy.
Wallerstein argued that any analysis which looked at
individual countries was too simplistic and suffered from
developmentalism.
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According to Wallerstein, the capitalist world
system has three main characteristics:
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A global market
Many countries, which allow political and economic
competition
Three tier countries
The tiers are identified as
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Core (mostly MEDCs)
Periphery (mostly LEDCs)
Semi-periphery (countries with class struggle and
social change e.g Latin America in the 1980s and
Eastern Europe in the late 80s and 1990s)
The Theory of Core and Periphery
The basic principle of the 'Core-Periphery' theory
is that:
 as general prosperity grows worldwide, the
majority of that growth is enjoyed by a 'core'
region of wealthy countries despite being severely
outnumbered in population by those in a
'periphery' that are ignored.
 The disparity of wealth between core and
periphery countries is staggering, with 15% of the
global population enjoying 75% of the world's
annual income.
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The Core
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The 'core' consists of Europe (excluding Russia,
Ukraine, and Belarus) , the United States, Canada,
Australia, New Zealand, Japan, South Korea, and Israel.
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Within this region is where most of the positive
characteristics of globalization typically occur:
transnational links, modern development (i.e. higher wages,
access to healthcare, adequate food/water/shelter),
scientific innovation, and increasing economic prosperity.
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These countries also tend to be highly industrialized
and have a rapidly-growing service (tertiary) sector.
The top twenty countries ranked by the United
Nations Human Development Index are all in the
core.
The opportunities created by these advantages
perpetuate a world driven by individuals in the core.
People in positions of power and influence around
the world are often brought up or educated in the
core (nearly 90% of world "leaders" have a degree
from a Western University).
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Periphery
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The 'periphery' consists of the countries in the rest of
the world: Africa, South America, Asia (excluding Japan
and South Korea), and Russia.
Although some parts of this area exhibit positive
development (especially Pacific Rim locations in
China), it is generally characterized by extreme poverty
and a low standard of living.
Health care is non-existent in many places, there is
less access to potable water than in the industrialized
core, and poor infrastructure endangers slum
conditions.
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Population is skyrocketing in the periphery.
Many people living in rural areas perceive
opportunities in cities and take action to migrate
there, even though there are not enough jobs or
housing to support them.
The majority of population growth around the world
is occurring in the periphery.
The rural-to-urban migration and high birth rates of
the periphery are creating both megacities, (urban
areas with over 8 million people), and (hyper cities,
urban areas with over 20 million people).
These cities, such as Mexico City or Manila, have little
infrastructure and feature rampant crime, massive
unemployment, and a huge informal sector.
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The Semi-Periphery
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Between the two extremes lie the semi-peripheries.
These areas represented either core regions in
decline or peripheries attempting to improve their
relative position in the world economic system.
Good examples of declining cores that became semiperipheries include Portugal and Spain. Other semiperipheries at this time were Italy, southern Germany,
and southern France.
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Economically, these regions retained limited but
declining access to international banking and the
production of high-cost high-quality manufactured
goods.
Unlike the core, however, they failed to predominate
in international trade and thus did not benefit to the
same extent as the core.
According to Wallerstein, the semi-peripheries were
exploited by the core.
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Theories of Globalization
1. The World Economy Theory (Hyperglobalisationism)
 Hyperglobalists define globalization as the process by
which the capitalist world-system spreads across the
entire globe.
 They argue that the global market place is becoming so
advanced and integrated that the nation-state is becoming
obsolete.
 They are of the view that the market is more rational than
governments
 On the other hand they think that corporate power is less
compassionate than governments, who are usually
accountable to the people who voted them to power
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With the operation of capitalist market in many parts of the
world, hyperglobalist argue that globalisation has reached its
geographical limit in the 1990s.
They are of the view that the world economy is now a single
world market and a single labor force.
Countries in the core the world economy are MEDC who
concentrate on highly skilled labor force, operate capital
intensive methods of production, have a strong army and
consume much of the profits of the world
The periphery countries focus on low skilled workers, operate
on labour intensive methods, producers of raw materials for
MEDCs with a weaker army.
There are semi-peripheral areas which are less dependent on
the core than the periphery. They have a stronger military
force and a more diversified economy.
2. The Regional Bloc Theory (Global Scepticism)
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Global Sceptics disagree with the hyperglobalists view.
The theory suggest that globalization is the result of
growing regional blocs, e.g ECOWAS, NAFTA, EU etc.
It views globalization as a strategy extend capitalism to
other parts of the world, which sometimes results in
violent protests.
It suggests that there is no gov’t interference in the
globalization process.
They are of the view that the root cause of globalization is
the unquestioning nature of the subject.
That capitalism not compassionate and therefore not
friendly to the poor; it however stresses on competition
and financial efficiency.
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The Third Way Theory (or Transformationalism)
It examines the link between economic processes globally.
It looks for ways of transforming the powers of the nationstate to cope with the pressures of globalisation.
It challenges existing institutions to transform or
restructure.
It is linked to a political agenda in the EU called the ‘the
third way’.
It is summarized in the saying “Think globally, Act locally”.
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World-Culture Theory
It sees globalization in terms of the increasing uniformity
or homogenization of cultures around the world.
This theory will be discussed later in detail in IB2.
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Blank outline world map
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Mapping Global Core – Internet Map
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Areas without internet coverage
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