Measuring economic globalization: spatial hierarchies and market topologies

Measuring the degree and extent of economic globalization is subject to a variety of issues ranging from theoretical conceptualization to the selection of appropriate data. This examination of economic globalization underscores the importance of a geographic perspective that is necessarily situated within a temporal context. International trade data and exploratory spatial data analyses are used to assess patterns of economic globalization between 1970 and 1997. Results indicate that preserving topological relationships between states in the global economy can guide, inform, and extend future studies of the processes and patterns of economic globalization. DOI:10.1068/a3449 } Current address: Department of Geography, University of California, Los Angeles, 1255 Bunche Hall, Box 951524, Los Angeles, CA 90095-1524, USA; e-mail: [email protected]. prominently within discussions about globalization and international political economy (for example, Agnew and Corbridge, 1995; Gilpin, 2000; Hirst and Thompson, 1999; Waters, 1995). Held et al (1999) document three competing `tendencies' of globalization, each of which speaks directly to the above. At one end of the globalization spectrum is the `hyperglobalist' tendency which suggests that the traditional hierarchies present in the world economy will fade away, as will the nation-state, as capitalism and technology force the economies of the world to converge economically. Conversely, globalization `skeptics' argue that nation-states and markets will remain paramount, with the gap between the developed and underdeveloped regions of the world continuing to grow, in light of increased economic bloc formation.What lies between, if not beyond, these two perspectives is the `transformationalist' tendency which views globalization as the intensive and extensive restructuring and reordering of social, political, and economic relations, processes, and actors throughout the world in the face of modernity. Evaluating the patterns of international trade can put the merits and shortcomings of each globalization tendency into a wider spatiotemporal context, and can illuminate particular experiences, as well as regional and global trajectories of economic globalization. Trade as an economic activity predates the nation-state and can be documented back several thousands of years (Grant, 2000). Because international trade is practiced and documented widely, in both historic and geographic terms, international trade data are used as surrogate measures of contemporary economic globalization from 1970 to 1997. Though foreign direct investment (FDI) and the locational decisions made by multinational firms are often used to examine economic globalization (for example, Braunerhjelm and Ekholm, 1998; Dicken, 1992), data about FDI and multinational firms are relatively limited in terms of temporal availability and lack the geographic coverage that is present in much of international trade data. For instance, the United Nations Conference on Trade and Development (UNCTAD, 1999, page 18) reports that 80% of the nearly US $650 billion of FDI outflows in 1998 originated in only ten countries. This is not to say that FDI and multinational firms are not significant features of contemporary economic globalization, but that international trade data permit analyses that are more geographically inclusive and more historically comprehensive. International trade theory, or more specifically the theory of comparative advantage, also provides a useful backdrop for this analysis. Briefly, this tenet of international economics asserts that a country should specialize in producing a good in which it has a relative cost advantage compared with other countries, and import those goods in which it is at a relative cost disadvantage. Theoretically, differences in factor endowments (that is, land, labor, capital, and technology) determine what a country produces and exports, and what goods a country needs to obtain through imports. Ultimately, the gains from trade outweigh the costs of remaining autarkic as postspecialization production exceeds that of the prespecialization period within the trading system.What is of interest here is not the theory of comparative advantage per se, but the neoclassical assumptions upon which it restsöfree trade and perfect markets. Free trade and perfect markets represent the ideal of economic efficiency, and coincide with one of the ideal types of globalization identified by Held et al (1999)ö the hyperglobalist tendency. It is widely acknowledged, however, that international trade is not free, but restricted by tariffs, quotas, and barriers, and that markets are not perfect, but suffer from imperfections such as incomplete information. A more fundamental obstacle to the activity of international trade is geography. The costs of overcoming distance, in financial, political, and cultural terms, remain significant and though the world trading system has expanded over time countries still trade more with their immediate neighbors than with countries that are farther away 418 M E Shin