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Almost equi-marginal principle based composite index of globalization: China, India and Pakistan

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  • Sudhanshu K. MISHRA

    (North-Eastern Hill University, Shillong, 91 - 793022, New Delhi, India.)

Abstract

The present study proposes an alternative method to construct an index of globalization which is based on the principle of almost equi-marginal contributions (AEMC) or Shapley values of the constituent variables to the overall index rather than the correlation coefficients among the constituent variables and the overall index (the KOF index based on the principal component scores). This has been done by minimization of the Euclidean norm of the Shapley values of the constituent variables. As an exercise, secondary time series data (1970-2013) on the measures of globalization in three different dimensions (economic, social and political) of three economies (China, India and Pakistan) have been used. A comparison of the AEMC index with the KOF index reveals that while the former is more inclusive, the latter is more elitist in matters of inclusion of the weakly correlated constituent variables in the overall (composite) index. As a consequence, the AEMC index is more sensitive than the KOF index of globalization. Both indices capture the trends in globalization in the countries under study and are highly correlated between themselves. Thus, AEMC is an alternative or perhaps a better method to construct composite indices.

Suggested Citation

  • Sudhanshu K. MISHRA, 2017. "Almost equi-marginal principle based composite index of globalization: China, India and Pakistan," Journal of Economic and Social Thought, KSP Journals, vol. 4(3), pages 335-351, Seprember.
    • Handle: RePEc:ksp:journ3:v:4:y:2017:i:3:p:335-351
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    References listed on IDEAS

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    1. Bhandari, Amit Kumar & Heshmati, Almas, 2005. "Measurement of Globalization and Its Variations Among Countries, Regions and Over Time," IZA Discussion Papers 1578, Institute of Labor Economics (IZA).
    2. Sudhanshu K. MISHRA, 2016. "BA Note on Construction of a Composite Index by Optimization of Shapley Value Shares of the Constituent Variables," Turkish Economic Review, KSP Journals, vol. 3(3), pages 466-472, September.
    3. Zaheer Khan Kakar & Bashir Ahmad Khilji & Muhammad Jawad Khan, 2011. "Globalization and Economic Growth: Evidence from Pakistan," Acta Universitatis Danubius. OEconomica, Danubius University of Galati, issue 3(3), pages 208-217, June.
    4. S K Mishra & P Nayak, 2007. "Socioeconomic Dimensions of Globalization in India," The IUP Journal of Managerial Economics, IUP Publications, vol. 0(1), pages 63-80, February.
    5. Jinjun Xue & Chuliang Luo & Shi Li, 2014. "Globalization, Liberalization And Income Inequality: The Case Of China," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 59(01), pages 1-21.
    6. Torben Andersen & Tryggvi Thor Herbertsson, 2005. "Quantifying globalization," Applied Economics, Taylor & Francis Journals, vol. 37(10), pages 1089-1098.
    7. Mishra, SK & Kumar, Binod, 2012. "Disparities in Globalization of the World Economies," MPRA Paper 41936, University Library of Munich, Germany.
    8. Sudhanshu K Mishra, 2013. "Global Optimization of Some Difficult Benchmark Functions by Host-Parasite Coevolutionary Algorithm," Economics Bulletin, AccessEcon, vol. 33(1), pages 1-18.
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    Cited by:

    1. Sudhanshu K. MISHRA, 2017. "Measuring degree of globalization of African Countries on almost equimarginal contribution principle," Journal of Economics Bibliography, KSP Journals, vol. 4(4), pages 345-353, December.
    2. Sudhanshu K. MISHRA, 2018. "Globalization under hysteresis: A study of Eastern Bloc Countries, China and India," Journal of Social and Administrative Sciences, KSP Journals, vol. 5(1), pages 46-59, March.
    3. Sudhanshu K. Mishra, 2018. "A Study on Regime Type and Globalization in Simultaneous Equation Framework," Journal of Economics and Financial Analysis, Tripal Publishing House, vol. 2(1), pages 99-128.
    4. Mishra, SK, 2017. "A New Kind of Two-Stage Least Squares Based on Shapley Value Regression," MPRA Paper 83534, University Library of Munich, Germany.
    5. Mishra, SK, 2017. "Are Democratic Regimes Antithetical to Globalization?," MPRA Paper 83321, University Library of Munich, Germany.

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    More about this item

    Keywords

    Globalization; KOF index; Equi-marginal; Shapley value; Global optimization; China; India; Pakistan.;
    All these keywords.

    JEL classification:

    • C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation
    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
    • F60 - International Economics - - Economic Impacts of Globalization - - - General
    • P52 - Political Economy and Comparative Economic Systems - - Comparative Economic Systems - - - Comparative Studies of Particular Economies

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