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Globalization continues to move ahead despite worldwide economic and political instability - but is advancing on different paths in different nations, according to the 2006 A.T. Kearney/FOREIGN POLICY Magazine Globalization Index™, an annual study which assesses the extent to which nations accounting for the majority of the world’s population are becoming more or less globally connected.

American technological connectivity to the rest of the world, measured in terms of Internet hosts and secure servers per capita, moved the United States up to third place. Singapore ranked first again this year.  Switzerland rose to second place and Ireland dropped to fourth place, after falling from the top spot last year. Denmark moved up to fifth place, replacing the Netherlands, which fell to seventh.

This year’s index examines data from 2004, a year that saw the European Union, NATO, and the World Trade Organization take on new members yet also witnessed terrorist attacks in the heart of Europe and increasing concern about immigration and border security.

Overall, globalization proved resilient. Global trade grew by 10.3 percent. Foreign direct investment increased overall by 6 percent; financial and personnel contributions to U.N. peacekeeping missions jumped despite new global tensions emerging from the Iraq war; international tourist arrivals soared to record levels; and internet usage spiked in some unlikely places, including Indonesia, Morocco, Nigeria, and Senegal.

The A.T. Kearney/FOREIGN POLICY Globalization Index™, now in its sixth year, is the first comprehensive empirical measure of globalization and its impact. It measures 12 variables which are divided into four baskets: economic integration, person-to-person contact, political engagement, and technological connectivity.  The data represent 62 countries, accounting for 96 percent of the world’s gross GDP and 85 percent of its population.

The Global Top 20

1. Singapore
2. Switzerland   
3. United States        
4. Ireland
5. Denmark

6. Canada
7. Netherlands
8. Australia
9. Austria  
10. Sweden

11. New Zealand
12. United Kingdom
13. Finland
14. Norway
15. Israel

16. Czech Republic
17. Slovenia
18. Germany
19. Malaysia
20. Hungary

Regional and Country Highlights

Singapore is ranked first for the second consecutive year on the strength of its increased political engagement and personal contact. The country’s financial contribution to U.N. peacekeeping missions rose, and Singaporeans keep in close touch with the rest of the world through tourism and remittances.

The United States continues to be lifted by its high technological score, despite relatively weaker connections with the rest of the world in the personal and economic realms. It ranked first in both the number of Internet hosts and secure servers per capita. It was boosted in political and diplomatic terms by stronger engagement with international organizations, more foreign investment in the United States, and a greater financial commitment to U.N. peacekeeping.

Australia entered the top 10 for the first time, climbing four spots to eighth place. Its rise was propelled by high commodity prices, which benefited Australia’s mining industry, combined with strong services, greater foreign investment, and strong tourism.

France experienced one of this year’s biggest falls, dropping five spots and out of the top 20. France saw a continued decline in trade as a share of gross domestic product (GDP). Although the country tops the rankings in political globalization due to its active participation in treaties, peacekeeping, and international organizations, it lags badly on the economic side because of high tariffs and stubborn agriculture subsidies.

Russia, whose path to globalization has been inconsistent, rose five places in this year’s ranking, to 47th, after falling eight places in last year’s index.

Ireland, the most globalized country in 2001 and 2002, dropped from second to fourth place, as foreign investment shifted to Asia and Eastern Europe.

Canada once again retained its sixth-place ranking, aided by its growing technological connectivity. Canada ranked sixth in this dimension in 1999 and now ranks second, behind only the United States.

China saw some improvement, climbing three places in the index, to 51st. China’s trade volume grew to more than $1 trillion in 2004, making it the world’s third-largest trading nation.

Iran again took last place in this year’s index, a spot it has now occupied six years in a row.

Additional Findings on Wealth, Taxes, and Pollution

In addition to the rankings, this year’s index also explores the relationships between a country’s global integration and its levels of foreign investment, wealth, taxes and informal economy, and pollution. The results show that:

The BRIC countries - Brazil-Russia-India-China-may finally be on the fast track to globalization. While the BRICs have generally scored poorly on the Globalization Index, this year’s index shows that may be changing. India’s overall score improved in most areas. China’s trade volume growth now makes it the world’s third-largest trading nation, and foreign direct investment in Russia, India and Brazil is on the rise.

The less connected a country is to the world, the larger its shadow economy tends to be. However, even some of the most globalized countries—such as Sweden and Denmark—have large informal sectors populated by people trying to escape some of the world’s heaviest taxes. 

The United States is home to nearly half of the world’s billionaires (371 of 793), but the developing world is quickly adding new faces to the ranks. India’s list of billionaires grew from 9 to 19 in the last year, China now has 8, and Turkey boasts an impressive 21—seven more than France.

Do global warming and globalization go together?  This year’s index shows that, with few exceptions, highly globalized nations produce more carbon dioxide per capita than less-globalized countries. The United States, Australia, Canada, and Singapore—all of which ranked in the top 10 in the Index—also rank among the world’s most prolific producers of carbon emissions.

About the Globalization Index

The A.T. Kearney/Foreign Policy Magazine Globalization Index ranks 62 countries representing 85 percent of the world’s population, based on 12 variables grouped in four categories: economic integration, personal contact, technological connectivity, and political engagement. The index quantifies economic integration by combining data on trade and foreign direct investment. Technological connectedness is gauged by counting Internet users, Internet hosts, and secure servers. Political engagement is assessed by taking stock of the number of selected international organizations and the number of selected international treaties that each country signs, as well as each country’s financial and personnel contributions to U.N. peacekeeping missions and levels of governmental transfers. Personal contact is charted by looking at a country’s international travel and tourism, international telephone traffic and cross-border transfers, including remittances.