Measuring Globalization

The multivariate technique of factor analysis is used to combine several indicators of economic integration and international transactions into a single measure or index of globalization. The index is an alternative to the simple measure of openness based on trade, and it produces a ranking of countries over time for 23 OECD countries. Ireland is ranked as the most globalized country during the 1990’s, while the UK was at the top during the 1980’s. Some of the most notable changes in the rankings are the decline of the US, Canada, and to a lesser extent Japan. Norway also receives a lower ranking. There are notable improvements in the ranking for Finland, Italy, Portugal, Spain and Sweden. For Portugal and Spain the changes seem to follow EU membership in the mid 1980’s.