NCPA - National Center for Policy Analysis

Globalization Not Slowed by Terrorism

January 9, 2003

The September 11 terrorist attacks, the slowdown in worldwide growth, and sharply reduced cross-border investment have failed to block the rapid advance of globalization, according to management consulting firm A .T .Kearney and Foreign Policy magazine.

The study concludes that faster international political and technological integration -- partly spurred by the attacks -- has more than offset the impact of weaker economic activity.

Rejecting suggestions that September 11 will halt globalization, it says terrorism has instead injected impetus by spurring closer international political co-operation, while expanded telephone and internet communication has offset declines in international air travel.

  • Although global economic integration retreated in 2001, the study says it receded from a very high level.
  • It notes that, in spite of being more than halved, foreign direct investment flows were bigger than for any year except 1999.
  • The 1.5 per cent fall in world trade volume in 2001 was due as much to the bursting of the information technology bubble as to transport problems after September 11.
  • Exports in 2002 were a higher proportion of world output than in any year in the preceding decade except 2000.

Among the signs of faster globalization cited by the study are the continuing growth of membership of international organizations and increased funding of multilateral institutions.

  • The study ranked Ireland, for the second year running, as the world's most "globalized" country, in spite of faltering economic integration in the European Union as a whole.
  • Iran is rated the least globalized of the 62 countries surveyed, a symptom of the continuing marginalization of much of the Middle East reflected in the region's stagnant growth, falling share of world trade and poor record in attracting foreign investment.

Source: Guy de Jonquiýres, "Terrorism Fails to Halt Globalization," Financial Times, January 7, 2003; based on A.T. Kearney / Foreign Policy Magazine Globalization Index 2003.


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