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How Robust is the Kearney/Foreign Policy Globalisation Index?

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  • Ben Lockwood

Abstract

We argue that the Kearney/Foreign Policy (KFP) index of globalisation is constructed by making some problematic assumptions about the measurement, normalisation and weighting of the variables included in the index. We propose alternative measurement, normalisation and weighting rules, and using these rules, recalculate the ranking of the fifty countries, using the original KFP data. Specifically, we use, in various combinations: (i) variables ‘adjusted’ for geographical characteristics of countries; (ii) statistically optimal weights obtained by principal components analysis; (iii) a normalisation rule that treats different years of observations separately. We find that the country rankings change significantly when adjusted variables are used, indicating that the original KFP index is partially measuring geographical differences between countries.

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  • Ben Lockwood, 2004. "How Robust is the Kearney/Foreign Policy Globalisation Index?," The World Economy, Wiley Blackwell, vol. 27(4), pages 507-523, April.
    • Handle: RePEc:bla:worlde:v:27:y:2004:i:4:p:507-523
    DOI: 10.1111/j.0378-5920.2004.00611.x
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    1. Pritchett, Lant, 1996. "Measuring outward orientation in LDCs: Can it be done?," Journal of Development Economics, Elsevier, vol. 49(2), pages 307-335, May.
    2. Jeffrey D. Sachs, 2001. "Tropical Underdevelopment," NBER Working Papers 8119, National Bureau of Economic Research, Inc.
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