The Globalization Index of Mexico

Article published in Plaza de Armas (www.plazadearmas.com.mx), April 18th, 2011

The Economy Research Center of the Swiss Federal Institute of Technology in Zurich, the best university in Switzerland and the 23rd place in the world according to the 2010 Academic Ranking of World Universities (one of the most prestigious ranks), started in 2002 the publication of the Index of Globalization, with the purpose to evaluate the way in which each country creates connections and interdependence networks with other countries through the flow of people, information, ideas, capital and goods.

The Index is calculated from a model developed by economist Axel Dreher, through which he identified how globalization, particularly the one related with capitals, goods and services, influences in the economic growth of a country.

The Index evaluates 23 variables divided in three groups: economic, social and political globalizations. The first group evaluates the flows of money and the existing restrictions for commercial exchange with other countries. The second group considers the contact with people in other countries, as well as the easiness to be exposed to ideas, information and influences of foreign cultures. The third group evaluates the creation of political relationships with other countries and the participation in international organizations and agreements.

Although the Index began to be published in 2002, it evaluates information since 1970. The evaluation published this year is made with data from 2008.

The results indicate that Belgium is the most globalized country, and it has been for the last 5 years. Let’s remember that Brussels is the seat of the European Government, and Europe is the most globalized region, so the result sounds natural.

Mexico has improved its grade in a 50% from 1970 to 2008; however, we have done it slower than other countries. In 1970, we were on 43^rd place out of 172 countries, but in 2008 we were in the 75^th place out of 186, a loss of 32 places that made us go from the top 25% of the list to a place each time closer to half of the table.

To avoid an evaluation of almost 40 years, let’s center the analysis in the last 4 years. The country was in place 64 in 2005, but in the last 3 years we fell to place 75. This fall was caused by the loss of places in the three groups evaluated.

Globalization	2004 rank	2008 rank
Economic	76	89
Social	81	91
Political	74	87

It may sound weird that in the rankings of each group we are lower than in the general rank. This happens due to the behavior of other countries: there is a group of countries consistently in the first 20 places in each group, but there are a lot of countries that have a very good rank in one group, and bad rankings in the other two (for example, within the first 40 countries in one group, but below place 100 in the rest). The fact that Mexico has very similar rankings in the three groups makes us go up in the general rank, but that is not precisely a consolation.

In Latin America, there are 34 countries evaluated. Mexico is in place 11. The most globalized country in the region is Chile.

Something interesting to observe is that Latin America has its worst results in the social globalization, where the country with the best classification is in place 44. This indicates that we still have many connections to develop to facilitate cultural exchanges and personal contacts with other countries. In the case of Mexico, let’s remember a data I mentioned three weeks ago, when I mentioned that approximately 0.9% of the population that lives here was born in other country. OECD estimates this variable is 0.5%; in either case, we are the country with the lowest value in this indicator out of the 34 countries in OECD, and this surely creates our low socialization index.

Made by Atalaya with data from the KOF Index of Globalization

It is common to get lost in the daily discussions between the official figures that show progresses and the attacks, with reason or without it that discredits the progresses. However, a parameter we must never lose of sight is the magnitude of such progresses compared with those in other countries, since that will allow us to have a better understanding in a wider panorama. For the moment, it appears that we are not taking advantage of the trade agreements we have with more than 40 countries; we need to reduce the restrictions for international commerce and increase proportionally to our economy the international flows of money, goods and services. If we don’t do it, we will compromise the economic growth we need to revert the historical backward movements we have had.