October 29, 2007


The Globalization Index 2007: The world may not be flat for everyone, everywhere, but there's no turning back the clock on globalization. For the seventh year, FOREIGN POLICY partners with A.T. Kearney to measure countries on their economic, personal, technological, and political integration. Find out who's climbing the ranks, and who's sliding down. (AT Kearney, November/December 2007, Foreign Policy)

For the fourth time in seven years, Singapore tops the list as the most globalized country in the world. But there was plenty of movement in the rest of the top 20. Many of the countries that previously ranked high fell off because of stiff competition from newcomers to the index. The top new addition was Hong Kong, which debuted in second place and distinguished itself with the highest scores in both the economic and the personal contact dimensions. The Netherlands made its way back into the top three for the first time since 2001, mostly due to the merger of the Royal Dutch Petroleum Company and Britain’s Shell Transport and Trading Company. Worth about $100 billion, the deal helped to increase foreign direct investment outflows for the Netherlands by more than 590 percent over the previous year. Meanwhile, the United States slipped four places in the overall rankings to end up at seventh. Although U.S. trade grew by 12 percent, foreign investment shrank by more than 60 percent, mostly due to the effects of the 2004 American Jobs Creation Act, which granted tax incentives for hiring domestically. Clearly, the forces of globalization can turn on a dime.

If there is one big factor that many of the most globalized countries have in common, it's their size: They're tiny. Eight of the index's top 10 countries have land areas smaller than the U.S. state of Indiana; and seven have fewer than 8 million citizens. Canada and the United States are the only large countries that consistently rank in the top 10.

So, why do small countries rank so high? Because, when you're a flyweight, globalizing is a matter of necessity. Countries such as Singapore and the Netherlands lack natural resources. Countries like Denmark and Ireland can't rely on their limited domestic markets the way the United States can. To be globally competitive, these countries have no choice but to open up and attract trade and foreign investment--even if they're famously aloof Switzerland.

Indeed, economic integration is where these top-performing, tiny countries flex their muscle. All eight rank in the top 11 on the economic dimension of globalization, which incorporates trade and foreign direct investment. Hong Kong and Singapore, the top two performers in this category, leave other economies in the dust. Additionally, the World Bank placed all the high-ranking, small countries except Jordan in the top 25 out of 175 economies in ease of doing business. Jordan, though, ranks first on the index's measure of political engagement, due to its participation in treaties and U.N. peacekeeping missions.

And if you're living in a small country, reaching out beyond your country's borders may be the only way to find new opportunities. Not surprisingly, six of this year's tiny globalizers also ranked in the top 10 on the personal dimension of globalization, which measures international phone calls, travel, and remittances. People in small countries boosted their countries' rankings by chatting it up on the phone, or in the case of Jordan, by sending large sums of money home. It all goes to show that mini can be mighty.

...but the one big one among them.

Posted by Orrin Judd at October 29, 2007 7:37 PM
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