Measuring Degree of Globalization of African Countries on Almost Equimarginal Contribution Principle

Mishra, SK (2017): Measuring Degree of Globalization of African Countries on Almost Equimarginal Contribution Principle.

Abstract

This paper is an exercise in construction of an alternative globalization index for 43 countries in Africa. It has used a new method for measurement of the degree of globalization (or construction of a globalization index) based on minimization of the Euclidean norm of the Shapley values, the concept borrowed from the cooperative game theory. It assigns weights to constituent variables such that their mean expected marginal contribution to the synthetic index is as equitable as possible. Since this index is based on combinatorial logic, it is also less likely to be affected by outlier data points. Globalization index for 43 African countries (for a time series of 45 years, 1970-2014) has been constructed. The new index has been compared with the KOF index of globalization for the countries under study. As its validation, it has been found that the index has stronger correlation (vis-à-vis the KOF index) with Human Development index, Corruption Perception index, Freedom index and the indicators of abject poverty in the African countries. Viewed as such the new index represents globalization closely in connection with other relevant socio-economic measures than its rival (KOF index of globalization) as well as it is based on more plausible theoretical premises based on marginal contribution rather than correlation.

• Item Type: MPRA Paper
• Language: English
• Keywords: Globalization; synthetic index; African countries; Shapley values; Equi-marginal contribution.
• Subjects: C - Mathematical and Quantitative Methods > C4 - Econometric and Statistical Methods: Special Topics > C43 - Index Numbers and Aggregation; C - Mathematical and Quantitative Methods > C7 - Game Theory and Bargaining Theory > C71 - Cooperative Games; F - International Economics > F0 - General > F02 - International Economic Order and Integration; F - International Economics > F6 - Economic Impacts of Globalization > F60 - General; O - Economic Development, Innovation, Technological Change, and Growth > O5 - Economywide Country Studies > O55 - Africa

References

Alfaro, L., Kalemli-Ozcan, S. and Vadym Volosovych, V. (2005). Why doesn’t Capital Flow from Rich to Poor Countries? An Empirical Investigation. http://www.people.hbs.edu/lalfaro/lucas.pdf

Andersen, T.M. and Herbertsson, T.T. (2003). Measuring Globalization. IZA Discussion Paper. 2003:817. Bonn: IZA.

Andersen, T.M. and Herbertsson, T.T. (2005). Quantifying Globalization. Applied Economics, 37(10): 1089-1098.

Dreher, A. (2006). Does Globalization Affect Growth? Evidence from a new Index of Globalization. Applied Economics, 38(10): 1091-1110.

Dreher, A., Gaston, N. and Martens, P. (2008). Measuring Globalisation: Gauging its Consequences. Springer. New York.

Heldring, L. and Robinson, J. (2013). Colonialism and development in Africa. http://voxeu.org/article/colonialism-and-development-africa (visited 7/11/2017).

Kataoka, S. (2008). Africa and an era of globalization. The Tokyo Foundation. (January 21, 2008). http://www.tokyofoundation.org/en/topics/eyes-of-wise/africa-and-an-era-of-globalization

Kedir, A.M. (2015). Enhancing regionalism for intra-African and African inward foreign investment. In Hanson, K.T. (ed.) Contemporary Regional Development in Africa. Routledge, London. Pp. 119-138.

Larmer, M. (2010). Social movement struggles in Africa. Review of African Political Economy, 37(125): 251-262.

Larmer, M., Dwyer, P. and Zeili, L. (2008). Southern African social movements at the 2007 Nairobi World Social Forum. Global Network, 9(1) Version of Record online: 9 DEC 2008.

Lockwood, B. (2001). How robust is the foreign policy/Kearney index of globalisation? CSGR working paper, vol. 79/01.

Mishra, S.K. (2006). Performance of Differential Evolution and Particle Swarm Methods on Some Relatively Harder Multi-modal Benchmark Functions. https://mpra.ub.uni-muenchen.de/449/1/

Mishra, S.K. (2013). Global Optimization of Some Difficult Benchmark Functions by Host-Parasite Coevolutionary Algorithm", Economics Bulletin, 33(1): 1-18.

Mishra, S.K. (2016). A Note on Construction of a Composite Index by Optimization of Shapley Value Shares of the Constituent Variables. Turkish Economic Review, 3(3):466-472.

Mishra, S.K. (2017a). Almost Equi-Marginal Principle Based Composite Index of Globalization: China, India and Pakistan. Journal of Economic and Social Thought, 4(3): 335-351.

Mishra, S.K. (2017b). Globalization under Hysteresis: A Study of Eastern Bloc Countries, China and India. Working Paper-81962. https://mpra.ub.uni-muenchen.de/81962/1/MPRA_paper_81962.pdf

Montiel, P.J. (2006). Obstacles to Investment in Africa: Explaining the Lucas Paradox. Paper presented at the high-level seminar: Realizing the Potential for Profitable Investment in Africa Organized by the IMF Institute and the Joint Africa Institute Tunis, Tunisia, February 28 – March 1, 2006. https://www.imf.org/external/np/seminars/eng/2006/rppia/pdf/montie.pdf

Ouattara, A.D. (1997). The Challenges of Globalization for Africa. Lecture on May 21, 1997. http://www.imf.org/en/News/Articles/2015/09/28/04/53/sp052197.

Randolph, J. (2001). G-Index:'globalisation measured. World Markets Research Centre.

Roth, A.E. (1988). The Shapley Value. Cambridge Univ. Press, New York.

Samimi, P. (2011). Globalization Measurement: Notes on Common Globalization Indexes. www.scientificpapers.org/wp-ntent/files/1216_Parisa_Samimi_Globalization_Measurement_Notes_ on_Common_Globalization_Indexes.pdf

Storn, R. and Price, K. (1997). Differential Evolution – A Simple and Efficient Heuristic for Global Optimization over Continuous Spaces. Journal of Global Optimization 11(4): 341–359.

Sundaram, J.K., Schwank, O. and Arnim, R. (2011). Globalization and development in sub-Saharan Africa. DESA Working Paper No. 102. http://www.un.org/esa/desa/papers/2011/wp102_2011.pdf.

Vujakovic, P. (2010).How to Measure Globalisation? A New Globalisation Index (NGI). Atlantic Economic Journal, 38(2): 237-237.