Terrorism Fails to Halt Globalisation

The September 11 terrorist attacks, the slowdown in worldwide growth and sharply reduced cross-border investment have failed to block the rapid advance of globalisation, according to a study published on Tuesday.

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

The study, by A .T .Kearney, a management consultancy, and Foreign Policy Magazine of the US, ranks Ireland for the second year running as the world's most "globalised" country, in spite of faltering economic integration in the European Union as a whole.

Iran is rated the least globalised of the 62 countries surveyed, a symptom of the continuing marginalisation 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.

The findings are based on measures of economic performance, political engagement, technological development and personal contact through international travel, telecommunications and foreign transfer payments.

Although many of the statistics used are for 2001, the year the attacks in the US took place, the study says globalisation is driven by long-term forces and "amounts to more than the ebbs and flows of the business cycle".

Rejecting suggestions that September 11 will halt globalisation, 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 volumes in 2001 was due as much to the bursting of the information technology bubble as to transport problems after September 11, and exports were a higher proportion of world output than in any year in the preceding decade except 2000.

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

The study dismisses claims that globalisation encourages a "race to the bottom". It says many highly globalised countries continue to impose relatively heavy tax burdens. It finds no clear link between globalisation and lower wages in industrialised countries or harm to the environment.

However, it concedes that global integration has been a double-edged sword for countries such as New Zealand, Romania, South Africa and Turkey, where large capital inflows had been reversed.