Globalization is recovering, but remains below pre-pandemic levels

The globalization index published by the Swiss institute KOF increased slightly in 2021, without exceeding the maximum level reached in 2019, according to the institution's last report, from December 2023.

The aggregate value of the global globalization index increased to 61.21 points, from 60.97 points in the previous year, while the "da facto" globalization index increased to 57.94, from 57, 69 (the maximum of 58.59 points was reached in 2018), and the "de jure" globalization index rose to a new maximum of 63.65 points, from 63.47 points in the previous year (see chart 1) .

According to the KOF methodology, the de facto globalization index measures actual international flows and activities, while the de jure globalization index measures the policies and conditions that enable and facilitate economic and social flows and activities.

The index measures the economic, social and political dimensions of globalization and is used to evaluate the degree of globalization for 195 countries since 1970. To determine the value of the aggregate index, 42 variables are used, with values between 1 and 100.

The most globalized country is Switzerland, with an aggregate globalization index of 90.75 points, followed by Belgium and the Netherlands, with 90.38 points and 90.32 points, respectively, as shown in the KOF press release . At the component level, economic globalization shows signs of recovery, while the social globalization index is characterized by the maintenance of some restrictions due to the pandemic.

For Romania, the aggregate index of globalization increased to 79.2 points in 2021, from 78.95 points in the previous year, while the maximum value, of 79.23 points, was reached in 2019 (see graph 2).

The de facto globalization index rose to 72.4 points, from 72.18 points in 2020, while the maximum value was reached in 2017, and the de jure globalization index rose to a new high of 85, 99 points, from 85.72 points in the previous year.

As for the general worldwide conditions for de jure economic globalization, they remained stable, as shown by KOF data, against the background of the significant increase in the de facto trade index, driven by strong growth in consumer spending.

On the other hand, trade in services remained moderate and financial integration declined, probably due to higher market volatility and investor caution in the uncertain post-pandemic economic environment.

The social globalization index fell slightly in 2021, amid the lingering effects of the pandemic. The tourism and migration indices stagnated following the application of travel restrictions, while the digital segment registered significant increases, against the background of the growth of online communication.

The degree of political globalization continued its moderate growth, as a result of the increase in the de jure general conditions index, which includes the number of positions in international organizations.

Switzerland's place at the top of the ranking is due to the high level of exports and imports, its influential role in the global financial sector, but also the fact that many international organizations are based here.

After Switzerland, Belgium and the Netherlands, Sweden, Great Britain, Austria, Germany, Denmark, Finland and France follow in the general ranking of globalization.

"Their place in the top ten is largely due to the economic, social and political interdependence of the member states within the European Union", as shown in the KOF Institute press release, where it is also emphasized that the globalization model of large countries, such as the United States United States or China, it is much more complex.

While "the United States is less economically globalized, but more politically globalized," China is "a major political player on the world stage" but "ranks lower in terms of economic globalization and social", according to the KOF report.

The Swiss institute's analysis also highlights the stronger growth of globalization among developing and emerging economies, with "countries such as Albania, Rwanda and Georgia moving up the rankings, indicating an increasing openness to global trade, digital connectivity and diplomacy International".

Given that the data from KOF show that low-income countries have already exceeded the level of globalization reached before the pandemic, maintaining this trend, especially against the background of the increasing influence of the BRICS bloc, may lead to an increase in globalization in the coming years, but against the background major structural changes.