The United States has dropped off the list of the top 25 most globalized nations, according to the new Index of Globalization released today by the KOF Swiss Economic Institute. The U.S. slipped to 27th place overall and 43rd on more specific measures of economic globalization, according to the report. The report notes, however, that, "As a large economy, a high proportion of [the U.S.'s] trade is internal, which means that [it] does not 'need' to be as globalized as small countries."
The overall globalization of the world economy has also slowed as a result of the lingering economic crisis, according to the Index, which tracks trends in overall globalization as well as in three specific categories -- economic, social, and political globalization.
Belgium, Austria, the Netherlands, Sweden, and Switzerland took the top five spots on the overall Globalization Index, while Singapore ranks first in economic globalization. Switzerland took the top spot for social globalization, with Canada in fourth place, and France topped the list for political globalization.
With the help of my colleague Charlotta Mellander, I looked at the factors associated with the globalization of national economies across the 100 plus countries on the KOF Globalization Index.
Globalization is closely associated with the level of economic development. There is a considerable correlation (.81) between the Globalization Index and economic output (GDP per capita).
Post-industrial, knowledge-based economies are also more globalized. Globalization is closely correlated with human capital levels (.73) and the percentage of the workforce in professional, knowledge-based and creative jobs (.68).
Globalized nations boast higher levels of happiness and life satisfaction. There is a considerable correlation between the Globalization Index and happiness as measured via Gallup surveys (.73).
Globalization has slowed as a result of the economic crisis. High levels of unemployment, especially in the manufacturing industries, pressure governments to close off global trade and move in a more protectionist direction. The KOF Globalization Index suggests that such measures can work against a country's interests. More globalized nations are wealthier and more knowledge-based, and their citizens are happier.
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