Question

How would you measure the level of globalization of a country or region? Or, what are globalization indicators?

• Please focus on economic and business globalization, finance in particular. Use theories and concepts learned from this course to state your viewpoint.
• Please discuss (list, identify, describe, outline, select, relate, or judge) from at least three different perspectives.

Answer 1

Globalization is a process of integration among the people, companies, and governments of different nations, (of goods and services, capital, human beings, technologies, trade, flow of information) all over the planet.  

The 5 key indicators of globalization (paticularly, economic indicators) are :

1. GROSS DOMESTIC PRODUCT (GDP): It represents the value of all goods and services produced over a specific time period within a country's border. Economists can use GDP to determine whether an economy is growing or experiencing a recession. Investors can use GDP to make investments decisions—a bad economy means lower earnings and lower stock prices.
2. UNEMPLOYMENT RATES: Unemployment data is often used as a measure to indicate the health of an economy, and its labour resources. It is usually witnessed that the unemployment rate in an expanding economy gradually decreases. However, the rate increases drastically if an economy enters recession. To calculate the unemployment rate, the number of unemployed people is divided by the number of people in the labor force, which consists of all employed and unemployed people. The ratio is expressed as a percentage.
3. CONSUMER PRICE INDEX (CPI): CPI measures inflation by calculating the change in cost on a bundle of consumer goods and services. Increasing inflation usually translates to a decrease in purchasing power and can signal significant problems for future economic periods. Essentially it attempts to quantify the aggregate price level in an economy and thus measure the purchasing power of a country's unit of currency.
4. PRODUCER PRICE INDEX (PPI): The PPI measures the average changes in prices in primary markets of a given country by producers of commodities in three areas of production: industries, commodities, and stage-of-processing companies. Changes in the PPI are widely followed as an indicator of commodity inflation.
5. BALANCE OF TRADE: The Balance of Trade (BoT) is the difference between the total value of exports and the total value of imports of a country within a time period. Therefore, BoT is considered as the main economic indicator of a country's international commerce activities and an important parameter to assess economic growth. The balance of trade impacts currency exchange rates as supply and demand can lead to an appreciation or depreciation of currencies. A county that imports more than it exports will have less demand for its currency.