Globalization Report 2014

The increasing economic, political and social interconnectedness of the world is ubiquitous. It is evident in the steadily rising sales of German mechanical construction companies beyond the country’s borders as well as in the fact that more Asians use Facebook than North Americans and that the United Nations now has almost as many members as there are sovereign states. As different as they may seem, all of these developments are manifestations of a worldwide phenomenon – globalization.

No one disputes that the world is becoming more interconnected. But how the consequences of globalization are evaluated is very different, and often ideologically motivated. Opponents of globalization, e.g., postulate that it promotes inequality between countries as well as within societies. Proponents of globalization reply that the international interconnectedness opens up new markets, enabling growth and wealth.

Numerous scientific studies attempt to provide an objective basis for the discussion. Bergh and Nilsson (2010) conclude that most notably the social aspects of globalization lead to greater inequality in net household income. Dreher (2006) finds that globalization has a significantly positive influence on economic growth. Dollar and Kray (2001), Greenaway et al. (1999) and the World Bank (2002) come to similar conclusions.

One weakness of the cited studies is that although they note the positive effect of globalization on growth, they do not quantify it sufficiently – leaving unclear the extent to which different countries benefit from globalization.

This Prognos globalization report is divided into two sections. The major focus on the topic of “Who benefits most from globalization?” is intended to close the knowledge gaps sketched out above. The goal of this study is to determine the extent to which all highly developed national economies and the key developing nations were able to benefit from the ongoing globalization between the years 1990 and 2011. The study thus reveals the greater and smaller beneficiaries of the globalization process which makes it possible to determine the “globalization champion”. In a second step the future effects of globalization are estimated with the help of scenario calculations.

The second part of the globalization report focuses on the analysis of the economic, institutional and sociopolitical framework conditions in 100 national economies using the Prognos Investment and Free Trade Index. The index ranks these 100 economies and shows which foreign markets offer the greatest opportunities as well as the biggest risks for German exports and investment activities.

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