Globalization of National Economies, 1975-2005

Recent studies on economic globalization have used various indicators, such as the ratio of trade-to-GDP and the ratio of FDI-to-GDP, to analyze the globalization performances of national economies. Although each indicator is useful in itself, our contention is that a single composite indicator (index) can provide more comprehensive information and would enable policy-makers and researchers to compare and rank the globalization performances of different countries, country groups and regions in a given year (or period) and over time. Accordingly, in this paper, we developed the economic globalization index to measure the extent of globalization of national economies. We have constructed the economic globalization index for the period 1975-2005. The overall results indicate that rich countries tend to be more globalized than poor countries. Furthermore, rich countries have improved their globalization –relative global integration level- from 1975 to 2005; however, many of poor countries’ relative levels of global integration have deteriorated during the same period. Our results seem to be in line with studies that characterize the recent situation in the world as “truncated globalization” or simply “triadization”.