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A Simultaneous Equation Model of Globalization,

Corruption, Democracy, Human Development and Social Progress

Sudhanshu K. Mishra
C-91 (Ground Floor) Avantika
Rohini Sector-1, Delhi (India)-110085
Contact: mishrasknehu@[Link]

Abstract

This study builds a simultaneous equation model that establishes inter-connections among the
measures of globalization, measures of democracy, human development, corruption perception index
and per capita income, which in turn jointly influence social progress. The model has eleven
equations in which the response variables and the predictor variables are log-linearly related. The
empirical data used for estimation of the model pertain to the period 2006-2016 for 116 countries
distributed over all the continents. The model has been estimated by the conventional Two-Stage
Least Squares (2-SLS) and alternatively by a modified 2-SLS in which, at the second stage, Shapley
value regression has been used to ameliorate the detrimental effects of collinearity among the
predictor variables. It has been found that the modified 2-SLS outperforms the conventional 2-SLS.
Empirically, it has been established that globalization, democracy, human development and low level
of corruption are reinforcing each other and they together explain social progress quite well.

Key words: Globalization, democracy, corruption, human development, social progress,

simultaneous equation model, Two-Stage Least Squares, collinearity, Shapley value regression.

JEL Codes: C30, C36, C51, C57, C61, C71, D73, F62, F63, O15

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1. Introduction:

This study investigates into the debated inter-relationships among globalization, political
regimes, corruption, human development and social progress in a simultaneous model framework. It
recognizes that a school of scholars holds that globalization and democracy uphold each other and
they jointly hold back corruption, endorse human development and finally promote social progress.
Globalization also positively responds to democratic practices, human development and strong
social capital. Nevertheless, it is acknowledged that the opponent school of scholars relate
globalization to limiting the scope of democracy, promoting corruption, misaligning human and non-
human capital with globalization sponsored development and consequently thwarting social
progress. In what follows, an attempt has been made to put together the views and most important
empirical findings of various scholars and drawing upon the same build as well as estimate a
simultaneous equation model that may reveal the structural relationships among the said variables.

2. A Literature Survey on Relationships among Globalization with other Socio-economic Variables

In this section we put together the views and empirical findings of various scholars on the
relationship between globalization, political regime, human capital, social capital and social progress
as visualized by Stiglitz et al. (2009) and Social Progress Imperative. Human capital is summarily
measured by the human development index and corruption perception index has been used as a
prototype measure of social capital.

2.1. Relationship between Globalization and Political Regime

Numerous studies have been carried out to investigate into the relationship between regime
type (democracy to authoritarian) and globalization with the causal arrow indicating towards either
direction. A good number of studies investigate into the relationship between regime type and
development (Przeworski and Limongi, 1993) that cluster around the Lee thesis and in view of
globalization being considered as a means to development have a discernible bearing on the
relationship between regime type and globalization. Among such studies, Huntington and Jorge
(1975), Marsh (1979), Weede (1983), Landau (1986), Kohli (1986) and Helliwell (1992) provide
empirical evidences that indicate negative to inconsequential impact of democracy (or positive to
insignificant impact of authoritarianism) on development. On the contrary, Dick (1974), Kormendi
and Meguire (1985), Pourgerami (1988), Scully (1988; 1992), Barro (1989), Pourgerami (1991),
Remmer (1990), Leblang (1997), Halperin et al. (2005) and Knutsen (2008a; 2008b; 2010) provide
empirical evidences of a favourable impact of democracy (or unfavourable impact of
authoritarianism) on development. A number of studies assert that there is no direct relationship
between regime type and development. There are intermediate factors such as the (already)
attained development level (Przeworski, 1966; Adelman and Morris, 1967), type (whether
bureaucratic or traditional) of authoritarian regime (Sloan and Tedin, 1987), attributes and
inclination of the authoritarian ruler (Barro, 1997), regional factors with the historical, institutional,
cultural and geographic specificities that vary over the continents (Grier and Tullock, 1989), degree
of entrenchment of the political elite class and political competition that they face (Acemoglu and
Robinson, 2006a), etc that modify the relationship between regime type and development and,
therefore, one cannot relate them unconditionally. A number of empirical studies establish
connection between the regime type and the factors determining development. Boix (2003) and
Knutsen (2007) found a positive impact of democracy on rule of law and consequentially the

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protection of property rights. Knutsen (2008b) and Hegre and Fjelde (2008) found that democratic
governments perform better on control of corruption. Rodrik (1998) found that democracy helps
increase real wages of workers leading to increase in consumption, which may have efficiency-
promoting effects leading to development (Myrdal ,1972: p. 54). Sen (1999) stresses on freedom and
social progress, rather than economic development, and favours democracy for that reason.

A number of studies assess the impact of trade and development on the regime type
(especially democratization). Schumpeter (1950), Lipset (1959) and Hayek (1960) hold that free trade
and capital flows foster demands for democracy via (and also in favour of) enhancement of the
efficiency of resource allocation and consequent economic development. Eichengreen and Lebang
(2006) find a bi-directional causality that mutually reinforce democracy and globalization. Kollias and
Paleologou (2016) find a positive impact of globalization on democracy, although it is not true for
the countries of all income groups. Globalization hardly promotes democracy in poor economies.
Acemoglu and Robinson (2006b) shows that key democratizing forces associated with trade
openness depend on country’s relative factor endowment. Rudra (2005) observes that economic
globalization leads to improvements in democracy only if safety nets are used simultaneously as a
strategy for providing stability and building political support. Milner and Mukherjee (2009) find that
democracy fosters trade and capital account liberalization, but not all the aspects of globalization. Li
and Reuveny (2003) find that different constituents of globalization affect democracy in different
manner not conformal to each other. Haffoudhi and Bellakhal (2016) find that the efforts of
globalization in poor countries suffering from famines, chronic under-nutrition, poor state of human
development, low efficiency and poor state of resource allocation would not promote democracy.

There are a number of studies that point out undesirable effects of globalization on the
political sphere of less developed countries. Schwartzman (1998) observes that globalization and
democracy reinforce each other to facilitate the fulfilment of the interest of the dominant world
economic system. Sobhan (2003) observes that the countries with weak democratic institutions and
undiversified or externally dependent economies are often exploited. Turyahikayo (2014) observes
that globalization has been used as a tool by the established democracies/economies for
exploitation of cheap labour and dumping the industrial waste in poor countries. Steiner (2015)
observes that globalization may have a negative effect on public participation in the political domain.
Stein (2016) opines that a sovereign state system, democratic governments, and an integrated global
marketplace cannot coexist. It is most likely therefore that globalization will affect the sovereignty of
less developed countries adversely.

2.2. Relationship between Globalization and Non-Material Capital

Scholars are divided on the relationship of globalization with human development.

Sirageldin (2002) recognises the complex character of human development which is an outcome of
the historical process of symbolic cultural evolution. Globalization with fits and starts that moves
with the oscillatory forces of the international economy cannot uphold human development.
Globalization has affected the education sector to turn against the poor. The Human Development
Report 1999 took note of the adverse consequences of unregulated globalization on human
development and recommended stronger global governance (Naqvi, 2002). Rabbanee et al. (2010)
observe that while globalisation has often gone along with privatization and reduction of
government help to the poor, it affects human development adversely. Diametrically opposite to
this, Tsai (2006) finds that globalization affects human development/welfare positively. Sapkota
(2011) studies a large number of countries and finds that all components of globalization (economic,
social and political) have positive and statistically significant effect on human development.

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Huynen et al. (2005) analyse various pathways in which globalization may affect public
health (an important ingredient of human development) and highlights the need to regulate the
impacts of globalization so that they do not go against public health. Globalization idealizes and
romanticizes “the private”, while the bureau-professional regime of public welfare provision is
consistently and unthinkingly demonised (Ball, 2005). Yang (2006) points out that the privatization
“movement has profound implications, from primary schools to universities. Its impact is particularly
damaging to education in countries with a substantial population of poor people. ... Tragic stories
often make headlines in the press regarding the despair of working parents that they can never
afford to pay their child’s education fees.” In China, India and many other less developed countries
where a rapid transition is undergoing from free education to a fee-based system, it takes a heavy
toll on poor families, of whom many see education as their only way out of poverty. As Lake and
Baum (2001) point out, democracy is often instrumental in looking into the interest of the weaker
section through public provisioning. Globalization may affect government aided public provisioning
and affect social welfare, especially of the deprived class, adversely.

There are many research studies that observe the impact of globalization on human
development conditional or partial. Sabi (2007) finds that impact of globalization on human
development is not appreciable in developing countries at low or low-middle income groups.
Globalization may be important for human development only after certain level of income growth.
Figueroa (2014) finds that in Central and South American countries overall globalization as well as
social and political components of it has positive effect, but economic globalization has a negative
effect on human development. Asongu (2012) studies African countries and finds that while trade
globalization improves human development, financial globalization has the opposite effect. Lee and
Vivarelli (2006) hold that levels of economic and human development are crucially important to
determine the direction and the scope to globalization forces. Bottlenecks in the supply of educated
and skilled labour and in public and private investments may condemn a country to marginalisation,
exploitation and high levels of domestic unemployment and income inequality.

Along with the human capital, the social capital is crucially important for development.
Social capital (Durkheim, 1997) is made up of “goodwill, fellowship, mutual sympathy and social
intercourse among a group of individuals and families who make up a social unit … potentiality
sufficient to the substantial improvement of living conditions in the whole community.” (Hanifan,
1916; pp. 130-131). Social capital not only generates internal economies, it also attracts material
capital from abroad and helps in globalization. In this study we use ‘corruption’ as a prototype to
represent social capital. It is well acknowledged that corruption and malpractices erode away social
capital and discourage inflow of foreign capital while a strong legal framework to check corruption
enhances the inflow of foreign capital (Bayer and Alakbarov, 2016).

Knutsen (2008b) and Hegre and Fjelde (2008) found that democratic governments perform
better on control of corruption. This control may support globalization. Lalountas et al. (2011)
observe that globalization is a powerful weapon against corruption only for middle and high income
countries, while for low income countries globalization has no significant impact on corruption. Das
and DiRienzo (2009) find a nonlinear relationship between globalization and corruption. The effect
of globalization on corruption is dependent on the level of globalization. The highest corruption
levels are realized at moderate or transitioning levels of globalization.

Globalization has brought government officials and international businesses and trade
agents into a close relationship and consequentially increased the opportunities for rent-seeking.

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Eisner (1995), Gould (1991) and Jreisat (1997) argue, therefore, that globalization has increased the
opportunity of the use of official position for personal gain. Globalization has also made the
detection of corrupt practices more difficult (Leiken, 1997; Elliott, 1997). Ewoh et al. (2013) find that
while globalization of assets and capital markets has promoted corruption worldwide, it affects
developing nations negatively more than it impacts advanced countries. Ades and Di Tella (1997;
1999), Brunetti and Weder (1998), Treisman (2000) and Herzfeld and Weiss (2003) find that
globalization leads to reduction in corruption mainly due to openness. Badinger and Nin (2014) find
that globalisation (trade and financial openness) has a negative effect on corruption, which is more
pronounced in developing countries, while inequalities increase corruption. Golden (2002) found
that in Italy globalization led to decrease in corruption levels.

2.3. Relationship between Globalization and Social Progress

Globalization necessarily favours a market-based economy because it means economic

integration of economies through markets. Economic liberalism is its guiding spirit and it is assumed
that unrestricted self-interest would bring about the best material results. However, as Keynes
(1926) observed long back, it is not a correct deduction from the Principles of Economics that
enlightened self-interest always operates in the public interest. Nor is it true that self-interest
generally is enlightened. Unrestricted self-interest can be operational only if the society has
developed and internalized a strong sense of social obligation because morality of the minimum
order is necessary for the functioning of the market system. Further, it requires a mixed-economy
framework because market capitalism has never been the basis of political economy in any country,
at any time (Hirsch, 1977: p. 190; Naqvi, 2002). Singer (1950) argues that structural differences
between developed and developing economies interacting with each other on market principles may
introduce a systemic bias in which trans-border trade and investment hinder the growth-promoting
process of structural transformation in the developing economy. Streeten (1998) shows how
globalization has posed a threat to developing countries by arousing several kinds of social tensions
leading to impoverishment, inequalities, work insecurity, a weakening of institutions and social-
support systems and an erosion of established identities and values (Naqvi, 2002). As Stiglitz et al.
(2009) have pointed out globalization (in the way it has proceeded) has contributed to the
weakening of a sense of community. Moreover, globalization is a market-based concept. The
correspondence between market-based concepts and non-market based concepts is not yet well
established, but it is important to understand more fully the links between various measures of
market and non-market activities and of leisure and the quality-of-life metrics such as the social
progress index. Empirically, it has been found that the social progress index responds positively to
globalization index (Mishra, 2017).

From the literature cited above, it is understandable that there is no direct relationship
among globalization, political regimes, corruption, human development and social progress; they are
related with each other through a complex network of institutions, historical precedents, resource
endowments, socio-economic class structure and a host of other country-specific attributes.
However, when such relationships are investigated for a large number of countries together, the
country-specific attributes may be cancelled out to a large extents and some clear pattern might be
discernible. The present investigation begins with such an optimistic presupposition.

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3. A Simultaneous Equation Model of Globalization, Non-material Capital, Regime Type and Social
Progress
In the light of the literature cited above as well as the reasoning that guides an empirical
research in economics, the present study hypothesizes a bi-directional causal relationship between
the two sets of variables; the first set incorporating the measures of (economic, social and political)
globalization and the second set consisting of the measures of democracy (political regime type) and
the measures of non-material capital (human development as a measure of human capital and
corruption perception as a measure of social capital). Additionally, the measures of globalization
and the measures of non-material capital are directly or indirectly influenced by the economic
prosperity of a country (summarily measured by per capita income). Finally, it is visualized that social
progress (which is a more comprehensive or wider concept encompassing economic development
and welfare and is summarily measures by the social progress index) is influenced by globalization
(especially the trans-border flow of goods, services and information), non-material capital, political
regime type as well as economic development (represented by per capita income). Alternatively,
economic development (as measured by per capita income) could be substituted for social progress
but in our considered opinion the latter is the output of the former (if moving on the right track)
and, therefore, it is a preferred choice. The model does not include other variables (such as physical
and financial capital) explicitly since it assumes that per capita income and the level of human
development incorporate them indirectly. Similarly, institutions are indirectly represented by
political regime and corruption perception index.
The model (which extends the abridged model in Mishra, 2018) is schematically presented
below. It is a system of eleven structural equations of which the first ten make three stimulator
and/or moderator blocks while the last equation makes the fourth or final impact or response block.
The first three blocks formulate how the different aspects of globalization are self-concordant and
how they are influenced by non-material capital (human and social capital), political organization
and economic performance (per capita income) of a nation. Per capita income is a stimulant to
globalization. Globalization and the measures in the third block (non-material capital and political
regime) are mediator or moderators. They conceptualize how different aspects of globalization
influence as well as are influenced by non-material capital and political organization. The fourth
block formulates how globalization, non-material (human and social) capital, political regime and
economic development influence the overall social welfare or social progress of a nation.

Block-2 Block-1
Three Aspects of Globalization Economic Development (Per Capita Income)
Economic, Social, Political.
Six measures (in all) Block-3:
Economic – E1 and E2 Non-material Capital (Human, HD and Social, CP);
Social – S1, S2 and S3 Socially Responsive Political System (Democracy
Political – P Index, DI)
Composite Globalization
Index - GI Block-4
Social Welfare (Social Progress, SP)

The eleven structural equations of the model are presented below. Functional form-wise, it is
visualized that the relationships among the variables are linear in logarithm or log = log +
∑ log , where is a response variable, is a stimulus, predictor or explanatory variable,

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is a constant and is the coefficient (which may also be interpreted as a measure of elasticity of
with respect to ).

1 = 2, 1, , , , !. 01
2 = 2, 3, , , % , , !. 02
1 = & 1 , 3 , '() , , * , , + !. 03
2 = 2, % , , * , , !. 04
3 = , , , !. 05
= 1, 2, 1, 2, 3, !. 06
/ = 2, 1, 2, 3, !. 07
= 1, 2, 1, 2, 3, !. 08
2 = 1, 2, 3 !. 09
)/ = , , , / !. 10
= & / , , 2 , )/ , + !. 11
In a simultaneous equation framework, it is customary to classify the variables as
(1) endogenous and (2) exogenous (or pre-determined). The endogenous variables are those that
have been a response variable anywhere in the model while the exogenous variables are those that
have not been endogenous (response variable) anywhere in the model. In a dynamic framework, the
endogenous variables are of two types (i) current endogenous and (ii) lagged (prior in time)
endogenous. In the context of a particular equation, the lagged endogenous variables are called
predetermined variables and are treated similar to exogenous variables.
The lists of endogenous and predetermined/exogenous variables are presented below.
Endogenous Variables
Symbol Socio-Economic and Description
Sl. No.
political Aspects
1 E1 Economic Globalization Actual economic flows such as trans-border trade, direct
Max or Min (2006-14) investment and portfolio investment.
2 E2 Economic Globalization Relaxation of restrictions on trans-border trade as well as capital
Max or Min (2006-14) movement by means of taxation, tariff, etc.
3 S1 Social Globalization Trans-border personal contacts such as degree of tourism, telecom
Max or Min (2006-14) traffic, postal interactions, etc.
4 S2 Social Globalization Flow of information.
Max or Min (2006-14)
5 S3 Social Globalization Cultural proximity.
Max or Min (2006-14)
6 P Political Globalization Trans-national political set up.
Max or Min (2006-14)
7 DI16 Political Regime Democracy Index for 2016.
8 CP16 Social Capital Corruption Perception index for 2016.
9 HD15 Human Development Human Development Index for 2015.
10 GI10 Overall Globalization Max (2006-2014) or Min (2006-2014)
11 SP16 Social Progress Social Progress Index for 2016.

Exogenous/Predetermined Variables
Sl. No. Symbol Socio-Economic and Description
political Aspects
1 EPP06 Measure of Democratic Practices Electoral Process and Pluralism for 2006.
2 FOG06 Measure of Democratic Practices Functioning of Government for 2006.
3 PPN06 Measure of Democratic Practices Political Participation for 2006.
4 PCL06 Measure of Democratic Practices Political Culture for 2006.

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5 CVL06 Measure of Democratic Practices Civil Liberties for 2006.

6 CP06 Social Capital Corruption Perception index for 2006.
7 HD06 Human Development Human Development Index for 2005.
8 PCY06 Per Capita Income Per capita Income (in Int$1000) for 2006
9 DI06 Overall Measure of Democracy Overall Democracy Index for 2006

4. Data or the Measures Used in this Study

In this study we have drawn 116 countries from all the continents including Africa (38
countries), the Americas (23 countries), Asia (26 countries), Europe (26 countries) and Oceania (3
countries). These countries together represent all types of political regime (full democracy to
authoritarian), all levels of globalization (very low, to very high) and all levels of economic
development, social progress, human capital and social capital. The data used by us are presented in
the appendix (Table-A-1, Table-A-2, and Table-A-4).
In Table-A-1 we present five measures for democracy (EPPi06, FOGi06, PPNi06, PCLi06, CVLi06 and
DI06; i=1 through 116) for the year 2006 as well as the overall measure of democracy DI16 for 2016. In
Table-A.2 we present corruption perception Index, human development Index and also the overall
democracy index for 2006 and 2016. Table-A-2 also contains Social Progress Index (2016), Per Capita
Income (2015 – in Int$1000) and overall Globalization Indices scenario-wise (GImax and GImin,
explained below). In Table-A-3 and Table-A-4 we present aspect-wise sub-indices as well as overall
globalization indices for the two alternative (optimistic and pessimistic) scenarios explained below.
4.1. Measures of Different Aspects of Globalization with Two Scenarios
As it has been pointed out earlier, KOF(2017) visualizes three complementary aspects of
globalization: economic, social and political. They construct indices to measure each of these aspects
of globalization. They are sub-indices in the sense that merged together they provide the overall
index of globalization. We have used those KOF sub-indices for the period 2006-2014 (KOF, 2017).
However, the measure of overall globalization ()/10) is not that of KOF (Dreher, 2006; Dreher et al.,
2008). We have used the AEMC overall index (Mishra, 2016b) of globalization using the ‘almost equi-
marginal contribution principle’ that derives weights differently than KOF (which uses the principal
component analysis for constructing the overall index of globalization). By the way, the KOF and
AEMC indices of overall globalization are highly correlated (r=0.98). The AEMC index, which we
would denote by G, is for 9 years (2006-2014) and 116 countries, i.e. )4, ; 6 = 1,2, … ,116; 8 =
2006,2007, … ,2014.
On the basis of our AEMC index of overall globalization, we have formed two scenarios, the
one we call a pessimistic scenario and the other an optimistic scenario. It may be noted that for
every Gij we have the associated sub-indices [E1ij, E2ij, S1ij, S2ij, S3ij and Pij]; j=2006 through 2014 and
i=1,2,..., 116. We have constructed a scenario vector:
4: 4: 4: 4: 4: 4:
1 9 14 , 24 , 14 , 24 , 34 , 4 ;
which is associated with
4:
)4 = min&GA? ;?∈ CD ,D EF +, where i = 1, 2, … , 116
?

that gives us the set of values associated with the lowest extent of globalization experienced by any
country during 2006-2014. This gives us the pessimistic scenario (associated with ) 4: ).
Similarly, we have constructed the other scenario vector:
C 14 KL KL KL KL KL KL F
2 , 24 , 14 , 24 , 34 , 4

which is associated with

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KL
)4 = max&GA? ;?∈ CD ,D EF +, where i = 1, 2, … , 116
?

that gives us the set of values associated with the highest extent of globalization experienced by any
country during 2006-2014. This gives us the optimistic scenario (associated with ) KL ).
We have these two scenario vectors of globalization as our endogenous variables (along
with other endogenous variables) for estimation of our model. These scenarios influence and are
also influenced by other variables such as the measures of democracy, human and social capital, the
social progress, etc.

4.2. The Measures of Non-Material Capital

Socio-economic development is squarely based on availability of capital, which may be
material (physical and financial) and non-material. Role of material capital in promoting
development need not be overemphasized here. Yet, the role of non-material capital, which consists
of human and social capital, must be outlined. Human capital is made of the health and the skill
embodied in the people of a country. It is a determinant of labour productivity that not only helps
socio-economic development but also facilitates globalization. A comprehensive measure of human
capital is provided by the human development index which incorporates some basic measures of
health and education of the people of a country. This measure is provided by. Similarly, a prototype
measure of social capital is provided by the corruption perception index.

4.3. The Measures of Democracy

Political structure of a country that necessarily divides the political agents into two classes,
the governor (ruler) and the governed (subject), may have in-built mechanism to respond to each
other such that they function in coordination with each other in order to cater to the lofty ideals of a
civilized society ensuring law and order, protection of life and property, rule of law, justice, freedom
of different types given to the citizens including a scope to alter the governing agents or the
administrative system according to some rules and some procedure of doing so, transparency,
participation, enhancement of social capital, an environment for realization of potentialities of the
society and so on. One may classify the political regimes on the basis of meeting these criteria. Fully
democratic regimes provide opportunities to the subject to alter members of the government in
pursuance to ensure that they are better fit to meet the ideals while autocratic or authoritarian
regimes do not provide such scope. The Economist Intelligence Unit (EIU) of the Economist Group
has published the Democracy Index for 2006 onwards for several years, including 2016. The index is
based on 60 indicators grouped in five different categories namely, Electoral process and pluralism
(EPP), Functioning of government (FOG), Political participation (PPN), Political culture (PCL) and Civil
liberties (CVL), and a linear aggregation of indicators under each category provides a sub-index of
democracy in that category or aspect. Subsequently, these five sub-indices of different aspects of
democracy are linearly aggregated to yield an overall index (DI or the Index of Democracy). On the
basis of the overall score value of DI the political systems of different countries may be classified into
full democracies, flawed democracies, hybrid regimes and authoritarian regimes. In the present
study we have used the aspect-wise sub-indices for 2006 and the overall indices of democracy (DI)
for 2006 and 2016.

4.4. The Measures of Economic Development and Social Progress

Per capita income is a standard measure of productivity and level of economic activities of a
country as well as it represents the mean level of purchasing power of a representative individual
agent. Higher per capita income is likely to support higher per capita consumption expenditure
encouraging trade and globalization. Higher per capita income is also associated with higher
domestic savings and investment. Yet, per capita income may not be a good measure of real social

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progress or social welfare. Social Progress Imperative, an international organization, has been
constructing every year the social progress index for a large number of countries. The index
measures the extent to which countries cover social and environmental needs of its citizenry. It is
constructed by aggregating a large number of indicators covering three areas or dimensions - basic
human needs, foundations of wellbeing and opportunities. This index is considered as an output of a
right type of economic progress and does not incorporate the economic variables (such as income)
into it. It can work very well as a measure complementing per capita income. In our model per capita
income has been considered as an input variable while the social progress index has been
considered as an output variable.

5. Methodological Aspects of Estimation of the Model

To estimate the parameters (of the structural equations) in our model we have used Two-Stage
Least Squares (2-SLS) method. This method estimates the equations (of a simultaneous equation
model) one by one - without a necessity of any sequence to be followed. At the first stage, all
endogenous variables are subjected to Ordinary Least Squares (OLS) estimation procedure in which
all exogenous variables are used as predictor or explanatory variables. Expected vectors of all
endogenous variables are obtained. At the second stage, these expected vectors are used in place of
their original vectors wherever any of them is a predictor. Thus, the predicted vectors of
endogenous variables are used as their representatives or ‘instruments’. Notably, the original
endogenous variable is used as the response variable or ‘regressand’ in every equation. Since in O =
− Q RST (where is the observed endogenous variable, O is expected value, RST is the residual
obtained at the first stage) Q = 1, the 2-SLS is also called the Q-UVWXX XY6ZWY[\ for Q = 1. The 2-
SLS is easy to apply and free from the undesirable effects of misspecification of other equations in
the model. Since in this study little is known about correct specification of different equations in our
model, we have used the 2-SLS method of estimation. It has an added advantage that it uses the
instrumental variable method of estimation (Reiersøl, 1945) in a very natural manner.
However, it may be noted that the very procedure adopted by the 2-SLS - that at the second
stage it uses the linear function of all exogenous variables together with some exogenous variables
(explicitly) as predictors - renders it susceptible to collinearity. Collinearity among the predictor
variables has deleterious effects on the standard errors of the estimated parameters. At times, the
sign borne by an estimated coefficient may be wrong (Smith and Brainard, 1976). To ameliorate the
obnoxious effects of collinearity, we have used the Shapley value regression (Lipovetsky, 2006;
Mishra, 2016a) at the second stage of the 2-SLS. Optimization has been done by the Differential
Evolution method of global optimization (Storn and Price, 1997).

6. Main Findings

In what follows, we present our main findings of estimation of our model for both
alternative scenarios of globalization with the conventional as well as Shapley value based 2-SLS. As
mentioned earlier, the use of Shapley value regression to estimate the parameters of our model is
motivated by the presence of strong collinearity among the predictor variables that may not only
render the coefficients estimated by conventional 2-SLS statistically insignificant, they also may bear
incorrect sign. Our empirical findings presented in the next section corroborate to this concern.

It may also be a matter to interest to inquire the relative performance of Shapley-value

based 2-SLS vis-à-vis the conventional 2-SLS in explaining different endogenous (response) variables.
We have presented correlation matrices in appendix Table-A-7 (pessimistic globalization scenario)
and Table-A-8 (optimistic globalization scenario). The correlation coefficients are: \4 = \ 4 , ^] ,
where 4 is the 6 _ observed endogenous variable and ^] is the 8 _ endogenous variable estimated

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D
by conventional 2-SLS. By the way, \4,4 = \ D 4, ^` ) is the usual a D or the coefficient of determination
that one reports in the regression results. Similarly, \4 = \& 4 , b] +, where 4 is the 6 _ observed
endogenous variable and b] is the 8 _ endogenous variable estimated by Shapley value regression
based 2-SLS. The coefficient of correlation between conventional 2-SLS estimated endogenous
variable and Shapley value regression based 2-SLS is \4 = \ ^,` b] ). A large value of \ ^` , b` ) indicates
that the correlation between the conventional 2-SLS predicted and Shapley value regression based
2-SLS predicted vectors (of the same endogenous variable) is large or, in other words, the
conventional 2-SLS and Shapley value regression based 2-SLS are highly conformal. Throughout we
find (Panel-3) that \44 = \ ^` , b` ) is large for all endogenous variables. Further, \ 4 , ^` and \ 4 , b`
are very close to each other for all endogenous variables, although the latter is somewhat smaller
than the former. This is the cost that we must pay to circumvent the deleterious effects of
collinearity. These results confirm that Shapley value regression based 2-SLS will not mislead us.

6.1. Estimated Structural Equations for the Pessimistic Scenario of Globalization

The reduced form coefficients for the pessimistic scenario of globalization are presented in
appendix Table-A-5. Here we will discuss the estimated structural equation coefficients only. First of
all we present the results obtained by estimating the model by the conventional 2-SLS. Figures in
the 2nd row are standard error of estimates.

Structural Equation Coefficients based on Conventional 2-SLS

E1 = 0.0867E2 - 0.1246S1 - 0.1520PCL06 + 0.1721CP06 + 0.6295HD06 + 0.0946PCY06 + 1.1074 ; R2= 0.5338

[0.4416 0.3006 0.1338 0.2098 0.4074 0.0851 0.8696]

E2 = -1.6849S2 + 0.0748S3 + 0.4677P + 0.0223EPP06 - 0.0423PPN06 + 0.1577CP06 + 1.8505HD06 + 0.5884 ; R2= 0.6266
[0.6781 0.0721 0.3723 0.0205 0.0530 0.0755 0.5959 1.7255]

S1 = -1.2730E1 + 0.2712S3 - 0.1795FOG06 - 0.1008PCL06 - 0.0246CVL06 + 0.6649CP06 + 1.2937HD06 + 1.4017 ; R2= 0.6794
[0.6973 0.1288 0.0694 0.1731 0.1143 0.1766 0.5043 1.8460]

S2 = -0.3332E2 + 0.0021PPN06 + 0.0284PCL06 + 0.0588CVL06 + 0.9389HD06 + 0.0659PCY06 + 0.9355 ; R2= 0.8341

[0.1968 0.0224 0.0587 0.0387 0.1590 0.0274 0.4344]

S3 = 4.2123P - 1.3758PCL06 + 0.9656CP06 + 2.1926HD06 - 22.0713 ; R2= 0.6902

[1.0359 0.4660 0.3107 0.4750 2.8674]

P = -0.5449E1 + 0.2950E2 - 0.1128S1 + 0.2904S2 + 0.0653S3 + 0.0756PCY06 + 3.9656 ; R2= 0.2035

[0.2997 0.3903 0.1904 0.3470 0.1179 0.1131 1.2918]

DI16 = 1.7965E2 + 0.0748S1 - 0.9651S2 - 0.0911S3 + 1.8591P - 7.1053 ; R2= 0.7815

[0.2541 0.1214 0.2408 0.0689 0.2439 1.3829]

CP16 = -0.1142E1 + 1.3943E2 + 1.0962S1 - 1.5450S2 - 0.1005S3 + 0.4666P - 0.7490 ; R2= 0.7966
[0.2737 0.2621 0.1197 0.2829 0.0724 0.2852 1.5387]

HD15 = 0.1109E1 + 0.8247S2 - 0.0205S3 - 1.8695 ; R2= 0.9658

[0.0533 0.0598 0.0119 0.1799]

GI10 = 0.1028CP06 + 0.2957HD06 + 0.1003PCY06 + 0.0802DI06 + 1.7130 ; R2= 0.8485

[0.0452 0.0897 0.0257 0.0349 0.3057]

SP16 = 0.0916DI16 + 0.0792CP16 + 0.5984HD15 + 0.0646GI10 + 0.0083PCY06 + 2.0611 ; R2= 0.9407

[0.0290 0.0456 0.1091 0.2180 0.0250 0.4869]

We observe that in explaining E1 (Actual economic flows such as trans-border trade, direct
investment and portfolio investment) most of the predictor variables bear statistically insignificant
coefficients. The coefficients that are not statistically different from zero even at 10% level of
significance have been underlined. Only HD06 (human development index) has the coefficient
significantly different from zero at 10% significance. Relaxation of restrictions on trans-border trade

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as well as capital movement by means of taxation, tariff, etc (E2) has a negative coefficient
(significant at 5%) associated with S2 (flow of information) which is not expected. Similarly, effects of
trans-border trade, flow of finance etc (E1) and functioning of the government (FOG) affect S1
(trans-border personal contacts) adversely, which is contrary to expectation. Flow of information
(S2) is adversely affected by relaxation of restrictions on trans-border trade and capital movement
(E2), cultural proximity (S3) is adversely affected by political culture (PCL), political aspect of
globalization (P) is adversely influenced by trans-border flow of goods, services and capital (E1) and
so on which are contrary to expectation. In short, the conventional 2-SLS gives the results that are
unexpected or contrary to expectation.

However, the structural coefficients associated with all predictor variables estimated by the
Shapley value based 2-SLS (presented below) are positive as expected and except for a few (viz. FOG
in predicting S1 and PPN in predicting S2) all others are significant at 5% or less (1% or even 0.1%).
None of the coefficients is statistically insignificant (beyond 10% level of significance). It may be
noted that for the coefficients (estimated structural parameters) of the Shapley value regression,
there is no straightforward method to obtain standard error of estimate and, therefore, Student’s t
values, too, which may be used for testing the maintained hypothesis. Hence, in this study, the
standard error of estimates (row 2 for every equation) for the estimated structural parameters
obtained by Shapley value regression have been worked out by jackknife resampling and the
associated t values (row 3 for every equation) are based on those standard error of estimates.

Structural Equation Coefficients based on Shapley Value Regression based 2-SLS

E1 = 0.2191E2 + 0.1069S1 + 0.1011PCL06 + 0.0968CP06 + 0.2062HD06 + 0.0456PCY06 + 0.9308; R2=0.5031

(0.0333) (0.0116) (0.0198) (0.0114) (0.0324) (0.0077) (0.3240)
6.59(0.01%) 9.23(0.01%) 5.10(0.01%) 8.50(0.01%) 6.36(0.01%) 5.88(0.01%) 2.87(0.05%),

E2 = 0.1769S2 + 0.0412S3 + 0.2695P + 0.0105EPP06 + 0.0295PPN06 + 0.0942CP06 + 0.1881HD06 + 0.7475; R2=0.5866

(0.0182) (0.0051) (0.0448) (0.0064) (0.0138) (0.0154) (0.0243) (0.2870)
9.70(0.01%) 8.14(0.01%) 6.01(0.01%) 1.65(5%) 2.14(2.5%) 6.10(0.01%) 7.75(0.01%) 2.60(0.05%)

S1 = 0.3116E1 + 0.0804S3 + 0.0533FOG06 + 0.1877PCL06 + 0.0920CVL06 + 0.2239CP06 + 0.3261HD06 - 1.3218; R2=0.6342

(0.0290) (0.0089) (0.0325) (0.0394) (0.0264) (0.0269) (0.0435) (0.4084)
10.76(0.01%) 9.08(0.01%) 1.64(10%) 4.77(0.01%) 3.49(0.01%) 8.31(0.01%) 7.50(0.01%) -3.24(0.01%)

S2 = 0.2704E2 + 0.0344PPN06 + 0.1143PCL06 + 0.0580CVL06 + 0.2875HD06 + 0.0580PCY06 + 0.7868; R2=0.7787

(0.0204) (0.0219) (0.0175) (0.0165) (0.0230) (0.0049) (0.1588)
13.26(0.01%) 1.57(10%) 6.52(0.01%) 3.51(0.01%) 12.52(0.01%) 11.87(0.01%) 4.95(0.01%)

S3 = 2.5375P + 0.5987PCL06 + 0.6933CP06 + 1.4443HD06 - 18.8778; R2=0.6207

(0.3369) (0.1354) (0.0786) (0.1631) (1.4670)
7.53(0.01%) 4.42(0.01%) 8.82(0.01%) 8.86(0.01%) -12.87(0.01%)

P = 0.0773E1 + 0.0713E2 + 0.0285S1 + 0.0593S2 + 0.0175S3 + 0.0153PCY06 + 3.1874; R2=0.1630

(0.0293) (0.0393) (0.0125) (0.0305) (0.0068) (0.0062) (0.2359)
2.64(0.05%) 1.82(5%) 2.28(2.5%) 1.94(5%) 2.58(0.05%) 2.45(1%) 13.51(0.01%)

DI16 = 0.3713E2 + 0.0814S1 + 0.1827S2 + 0.0464S3 + 0.7067P - 1.6545; R2=0.6373

(0.0592) (0.0209) (0.0269) (0.0055) (0.1237) (0.5239)
6.27(0.01%) 3.90(0.01%) 6.81(0.01%) 8.47(0.01%) 5.71(0.01%) -3.16(0.01%)

CP16 = 0.1368E1 + 0.2605E2 + 0.2023S1 + 0.1936S2 + 0.0388S3 + 0.2510P - 0.5910; R2=0.6308

(0.0253) (0.0402) (0.0262) (0.0211) (0.0057) (0.1077) (0.5047)
5.41(0.01%) 6.48(0.01%) 7.72(0.01%) 9.16(0.01%) 6.85(0.01%) 2.33(1%) -1.17(>10%)

HD15 = 0.2646E1 + 0.3106S2 + 0.0612S3 - 0.5945; R2=0.9406

(0.0100) (0.0095) (0.0023) (0.0708)
26.33(0.01%) 32.76(0.01%) 26.17(0.01%) -8.40(0.01%)

GI10 = 0.1523CP06 + 0.2759HD06 + 0.0705PCY06 + 0.1323DI06 + 1.5274; R2=0.8414

(0.0109) (0.0215) (0.0047) (0.0151) (0.1326)
13.95(0.01%) 12.84(0.01%) 15.13(0.01%) 8.74(0.01%) 11.52(0.01%)

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SP16 = 0.1063DI16 + 0.1115CP16 + 0.2175HD15 + 0.1997GI10 + 0.0398PCY06 + 1.9393; R2=0.9182

(0.0086) (0.0057) (0.0113) (0.0088) (0.0017) (0.0846)
12.40(0.01%) 19.67(0.01%) 19.30(0.01%) 22.78(0.01%) 23.30(0.01%) 22.92(0.01%)

6.2. Estimated Structural Equations for the Optimistic Scenario of Globalization

The reduced form coefficients for the optimistic scenario of globalization are presented in
appendix Table-A-6. Here we discuss the estimated structural equation coefficients only.

Structural Equation Coefficients based on Conventional 2-SLS

E1 = -0.2781E2 - 0.1626S1 - 0.2172PCL06 + 0.3275CP06 + 0.5875HD06 + 0.0492PCY06 + 2.9741; R2 = 0.3351

[0.5333 0.3063 0.1252 0.1832 0.4848 0.0792 0.8412]

E2 = -1.0636S2 + 0.0632S3 - 0.0332P + 0.0012EPP06 + 0.0381PPN06 + 0.1861CP06 + 1.1882HD06 + 2.7324 ; R2 = 0.6503

[0.5188 0.0546 0.3756 0.0199 0.0424 0.0701 0.3899 1.5804]

S1 = -0.5193E1 + 0.1369S3 - 0.1285FOG06 - 0.0747PCL06 + 0.0942CVL06 + 0.5033CP06 + 0.8058HD06 + 0.7127 ; R2 = 0.6901

[0.4077 0.0911 0.0599 0.1658 0.0892 0.1611 0.3457 1.8352]

S2 = -0.2673E2 + 0.0337PPN06 + 0.0005PCL06 - 0.0150CVL06 + 0.7537HD06 + 0.0825PCY06 + 1.7271; R2 = 0.8332

[0.2195 0.0207 0.0530 0.0333 0.1701 0.0246 0.4198]

S3 = 5.1359P - 1.4324PCL06 + 0.4062CP06 + 3.0841HD06 - 27.6722 ; R2 = 0.6838

[1.5817 0.5067 0.3314 0.4628 4.8116]

P = 0.0895E1 + 0.4338E2 - 0.1234S1 - 0.1982S2 - 0.0565S3 + 0.1352PCY06 + 3.0562; R2 = 0.2201

[0.1699 0.3114 0.1898 0.2957 0.0700 0.0814 1.0815]

DI16 = 1.9196E2 + 0.1973S1 - 1.7623S2 + 0.0592S3 + 1.5784P - 4.2575; R2 = 0.7436

[0.2937 0.1685 0.3234 0.0586 0.3065 1.5561]

CP16 = -0.0461E1 + 1.0973E2 + 1.2227S1 - 1.5718S2 - 0.1300S3 + 0.9546P - 2.3406 ; R2 = 0.7624

[0.1921 0.2888 0.1670 0.3203 0.0581 0.3031 1.5771]

HD15 = -0.0358E1 + 0.8084S2 + 0.0307S3 - 1.3796 ; R2 = 0.9519

[0.0495 0.0640 0.0128 0.2542]

GI10 = 0.1173CP06 + 0.2686HD06 + 0.0756PCY06 + 0.0511DI06 + 2.0800 ; R2 = 0.8525

[0.0379 0.0752 0.0216 0.0292 0.2563]

SP16 = 0.0949DI16 + 0.0854CP16 + 0.6199HD15 + 0.0136GI10 + 0.0133PCY06 + 2.1679 ; R2 = 0.9407

[0.0269 0.0421 0.0824 0.1387 0.0175 0.3643]

The highlights of the findings based on the structural coefficients estimated by the
conventional 2-SLS are: (i) political culture (PCL) affects E1 (trans-border trade and flow of capital)
adversely; (ii) flow of information (s2) affects relaxation of restriction on flow of trans-border trade,
capital, etc adversely; (iii) functioning of the government (FOG) affects trans-border personal
contacts (S1) adversely; (iv) political culture (PCL) affects cultural proximity (S3) adversely; (v) trans-
border flow of information (S2) affects democracy adversely (DI) and (vi) trans-border flow of
information (S2) and cultural proximity (S3) affect corruption perception (CP) adversely. These
findings are contrary to our expectation and hence misguiding.

However, as in the case of the pessimistic scenario noted earlier, the structural coefficients
associated with all predictor variables estimated by the Shapley value based 2-SLS (presented below)
are positive as expected and except one (EPP in predicting E2) all others are statistically significant at
5% (or less) level of significance. None of the structural coefficients is statistically insignificant
(beyond 10% level of significance). As mentioned before, the standard error of estimates for the
estimated structural parameters obtained by Shapley value regression have been worked out by
jackknife resampling and the associated t values are based on the standard error of estimates.

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Structural Equation Coefficients based on Shapley Value Regression based 2-SLS

E1 = 0.1288E2 + 0.0677S1 + 0.0687PCL06 + 0.0721CP06 + 0.1092HD06 + 0.0255PCY06 + 2.2979; R2 = 0.2994

(0.0248) (0.0126) (0.0248) (0.0144) (0.0245) (0.0059) (0.3085)
5.20(0.01%) 5.36(0.01%) 2.76(0.05%) 5.02(0.01%) 4.46(0.01%) 4.33(0.01%) 7.45(0.01%)

E2 = 0.1805S2 + 0.0356S3 + 0.2978P + 0.0083EPP06 + 0.0301PPN06 + 0.0889CP06 + 0.1804HD06 + 0.7549; R2 = 0.6113

(0.0178) (0.0039) (0.0368) (0.0055) (0.0072) (0.0127) (0.0244) (0.2680)
10.13(0.01%) 9.10(0.01%) 8.09(0.01%) 1.51(10%) 4.16(0.01%) 7.00(0.01%) 7.41(0.01%) 2.82(0.05%)

S1 = 0.3940E1 + 0.0785S3 + 0.0569FOG06 + 0.1825PCL06 + 0.1005CVL06 + 0.2029CP06 + 0.3477HD06 - 1.7141; R2 = 0.6548

(0.0393) (0.0087) (0.0289) (0.0306) (0.0300) (0.0244) (0.0474) (0.3749)
10.01(0.01%) 9.02(0.01%) 1.97(2.5%) 5.97(0.01%) 3.35(0.01%) 8.32(0.01%) 7.34(0.01%) -4.57(0.01%)

S2 = 0.2692E2 + 0.0345PPN06 + 0.1043PCL06 + 0.0450CVL06 + 0.2492HD06 + 0.0542PCY06 + 1.0607; R2 = 0.7776

(0.0194) (0.0105) (0.0153) (0.0136) (0.0197) (0.0046) (0.1492)
13.85(0.01%) 3.30(0.01%) 6.83(0.01%) 3.31(0.01%) 12.66(0.01%) 11.85(0.01%) 7.11(0.01%)

S3 = 2.9327P + 0.5145PCL06 + 0.6073CP06 + 1.6646HD06 - 20.9113; R2 = 0.5998

(0.3861) (0.1492) (0.0741) (0.1958) (1.6362)
7.59(0.01%) 3.45(0.01%) 8.19(0.01%) 8.50(0.01%) -12.78(0.01%)

P = 0.0650E1 + 0.0730E2 + 0.0327S1 + 0.0570S2 + 0.0121S3 + 0.0168PCY06 + 3.2792; R2 = 0.2029

(0.0241) (0.0257) (0.0059) (0.0133) (0.0022) (0.0053) (0.1990)
2.70(0.05%) 2.84(0.05%) 5.51(0.01%) 4.28(0.01%) 5.60(0.01%) 3.14(0.01 16.48(0.01%)

DI16 = 0.3937E2 + 0.0954S1 + 0.2359S2 + 0.0411S3 + 0.6754P - 1.9679; R2 = 0.5856

(0.0797) (0.0226) (0.0413) (0.0072) (0.1306) (0.6259)
4.94(0.01%) 4.21(0.01%) 5.71(0.01%) 5.70(0.01%) 5.17(0.01%) -3.14(0.01%)

CP16 = 0.1741E1 + 0.2614E2 + 0.1980S1 + 0.2251S2 + 0.0368S3 + 0.4877P - 1.9664; R2 = 0.6318

(0.0470) (0.0423) (0.0272) (0.0294) (0.0058) (0.1417) (0.6529)
3.71(0.01%) 6.17(0.01%) 7.27(0.01%) 7.65(0.01%) 6.33(0.01%) 3.44(0.01%) -3.01(0.05%)

HD15 = 0.3420E1 + 0.3611S2 + 0.0642S3 - 1.1973; R2 = 0.9157

(0.0253) (0.0129) (0.0027) (0.1189)
13.50(0.01%) 27.93(0.01%) 24.16(0.01%) -10.07(0.01%)

GI10 = 0.1333CP06 + 0.2350HD06 + 0.0594PCY06 + 0.1100DI06 + 1.9826; R2 = 0.8452

(0.0083) (0.0183) (0.0039) (0.0115) (0.1164)
15.99(0.01%) 12.85(0.01%) 15.42(0.01%) 9.56(0.01%) 17.03(0.01%)

SP16 = 0.1084DI16 + 0.1121CP16 + 0.2258HD15 + 0.2238GI10 + 0.0396PCY06 + 1.7957; R2 = 0.9179

(0.0089) (0.0056) (0.0128) (0.0111) (0.0017) (0.0907)
12.12(0.01%) 19.88(0.01%) 17.70(0.01%) 20.22(0.01%) 23.42(0.01%) 19.80(0.01%)

6.3. A Summary of the Findings on the Estimated Structural Coefficients of the Model

To summarize, we find that the structural coefficients of the model (for both the scenarios)
are poorly estimated by the conventional 2-SLS owing to the collinearity among the predictor
variable. Once we treat the collinearity problem by using the Shapley value regression (at the second
stage of 2-SLS) we obtain much better and unambiguous results. On the ground of the findings
(based on the Shapley value regression based estimation) we note that FOG in predicting S1 and PPN
in predicting S2 are weak in the pessimistic scenario while EPP in predicting E2 is weak in the
optimistic scenario, although their coefficients are positive (but significant only at 10%) . All the
three are sub-indices of democracy. However, other two sub-indicators of democracy (viz. political
culture, PCL and civil liberties, CVL) unwaveringly affect the measures of globalization in a positive
and statistically significant manner. On the other side, globalization affects democracy, social capital,
human capital and social progress positively and in a statistically significant manner.

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6.4. The Sum of Elasticities

e d
The structural equations in our model are all log-linear (or = ∏ in the natural
form) and, therefore, may be interpreted as the elasticity of with respect to . The sum total of
elasticities (X = ∑ W ) determines the degree of homogeneity of a function. If every is
multiplies by a constant (say, f) then will be multiplies by fT . In the Table-1 below we have
presented the sum of elasticities for different endogenous variables under the alternative
procedures of estimation. The sum of elasticities for E1, E2, S2, P, HD15, GI10 and SP16 are all below
unity. A 10% increase (f = 1.1) in the present values of their predictors would give rise to less than
10% (or fT ; 0 < X < 1) increase in the quantity of those endogenous (response) variables. The
elasticity in case of P and GI are only slightly more than 0.5. However, the value of X for S3, DI and CP
is greater than unity and, therefore, 10% increase in the present values of their predictors would
give rise to greater than 10% (or fT ; X > 1) increase in the quantity of those endogenous (response)
variables. It suggests that CP is elastic and S3 is hyper-elastic (X > 5). As to S1 the conventional 2-SLS
and Shapley value based 2-SLS give quite different results. However, in view of better performance
of the latter, we tend to conclude that S1 is elastic (since X for both the scenarios is greater than
unity). These results clearly suggest that even if the pace of globalization would be tapering off over
time, its impacts on trans-border personal connections (S1), acculturation or cultural proximity,
democratization (DI) and social capital (corruption perception, CP) will continue increasing with
acceleration. It may suggest that globalization will have more impact on socio-cultural and political
spheres than economic sphere.

Table-1. Degree of homogeneity or Sum of Elasticities (the Structural Coefficients) for Endogenous Variable
Scenario Estimator E1 E2 S1 S2 S3 P DI16 CP16 HD15 GI10 SP16
Pessimistic Conventional 0.7063 0.8458 0.6519 0.7609 5.9947 0.0686 2.6742 1.1974 0.9151 0.5790 0.8421
Scenario Shapley 0.7757 0.8099 1.2750 0.8226 5.2738 0.2692 1.3885 1.0830 0.6364 0.6310 0.6748
Optimistic Conventional 0.3063 0.3800 0.8177 0.5881 7.1938 0.2804 1.9922 1.5267 0.8033 0.5126 0.8271
Scenario Shapley 0.4720 0.8216 1.3630 0.7564 5.7191 0.2566 1.4415 1.3831 0.7673 0.5377 0.7097

7. Concluding Remarks

We began with the vexed and much debated relationships among globalization, political
regime type, human capital, social capital (especially corruption) and social progress. Among the
researchers, there are the protagonists of globalization who believe that globalization will help
democracy, building up of human and social capital and promote social progress. There are
antagonists of globalization who believe the just opposite. It may often be so that the train of
thought depends on how one argues and what one believes. Man is not a rational animal but a
rationalising animal. He can think up a reason for anything he wants to believe. There are empirical
evidences in favour of both the camps. Nevertheless, empirical evidences are based on data and
the methods used to process them for drawing conclusions. Therefore, accuracy of data is as
important as the correct choice of methods. In matters of the secondary data (especially the country
level data for a large number of countries) a researcher does not have much choice (even though
one knows that such data are collected with differently accountable systems). But, the choice of
analytical methods is well within the reach of a researcher.

We formulated a simultaneous equation model connecting globalization, political regime

type, human capital, corruption, per capita income and the social progress index. The specification
of our model depended partly on the literature review and partly on reasoning. As to the structural
equations, we chose the endogenous variables to be connected to the predictor variables in a log-
linear form. We estimated the model by the conventional 2-SLS method. We found that many

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among the estimated parameters in different equations (in the pessimistic as well as the optimistic
scenario) are either insignificant or bear the sign opposite to what reasoning may be able to uphold.
They together suggested that globalization forces are non-conformal among themselves as well as
they are unexpectedly correlated with other variables.

We suspected that such unexpected results obtained from the conventional 2-SLS have been
due to collinearity among the predictor variables in almost all structural equations. Hence, at the
second stage of the 2-SLS, we used the Shapley value regression to estimate the structural
parameters. The results were spectacular. All the estimated structural parameters bore the expected
sign. Additionally, only a few of them were significant at 10% or 5% while most of them were
significant at 1% level of significance.

Our findings confirm that globalization measures are consistent and conformal among
themselves. Globalization positively influences and is influenced by democracy, human development
and social capital. Globalization reduces corrupt practices and integrity promotes globalization.
Finally, democracy, social capital (integrity) human development and globalization affect social
progress positively. We have also found that trans-border personal connection (S1), cultural
proximity (S3) democracy (DI) and social capital (CP) are elastic (with the degree of homogeneity
larger than unity) with respect to their predictors.

Electronic copy available at: [Link]

 16

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Appendix
[Data Used in the Present Study]

Table-A-1. Scores Obtained by Countries on the Measures in Different Dimensions of Democracy

[Source: [Link]
Dimensions of Democracy – 2006 Democracy Democracy
SL Country Index 2006 Index 2016
EPP FOG PPN PCL CVL DI06 DI16
1 Albania 7.33 5.07 4.44 5.63 7.06 5.91 5.91
2 Argentina 8.75 5.00 5.56 5.63 8.24 6.63 6.96
3 Australia 10.00 8.93 7.78 8.75 10.00 9.09 9.01
4 Austria 9.58 8.21 7.78 8.75 9.12 8.69 8.41
5 Azerbaijan 3.08 0.79 3.33 3.75 5.59 3.31 2.65
6 Burundi 4.42 3.29 3.89 6.25 4.71 4.51 2.40
7 Belgium 9.58 8.21 6.67 6.88 9.41 8.15 7.77
8 Benin 6.83 6.43 3.89 6.88 6.76 6.16 5.67
9 Burkina_Faso 4.00 1.79 2.78 5.63 4.41 3.72 4.70
10 Bulgaria 9.58 5.71 6.67 5.00 8.53 7.10 7.01
11 Bolivia 8.33 5.71 4.44 3.75 7.65 5.98 5.63
12 Brazil 9.58 7.86 4.44 5.63 9.41 7.38 6.90
13 Bhutan 0.08 4.64 1.11 3.75 3.53 2.62 4.93
14 Botswana 9.17 7.86 5.00 6.88 9.12 7.60 7.87
15 C._Afr_Rep 0.42 1.43 1.67 1.88 2.65 1.61 1.61
16 Canada 9.17 9.64 7.78 8.75 10.00 9.07 9.15
17 Switzerland 9.58 9.29 7.78 8.75 9.71 9.02 9.09
18 Chile 9.58 8.93 5.00 6.25 9.71 7.89 7.78
19 China 0.00 4.64 2.78 6.25 1.18 2.97 3.14
20 Cote_d'Ivoire 1.25 2.86 3.33 5.63 3.82 3.38 3.81
21 Cameroon 0.92 3.21 2.78 5.63 3.82 3.27 3.46
22 Congo_Rep. 4.58 0.36 2.78 3.75 2.35 2.76 2.91
23 Colombia 9.17 4.36 5.00 4.38 9.12 6.40 6.67
24 Costa_Rica 9.58 8.21 6.11 6.88 9.41 8.04 7.88
25 Cyprus 9.17 6.79 6.67 6.25 9.12 7.60 7.65
26 Germany 9.58 8.57 7.78 8.75 9.41 8.82 8.63
27 Denmark 10.00 9.64 8.89 9.38 9.71 9.52 9.20
28 Domin_Rep 9.17 4.29 3.33 5.63 8.24 6.13 6.67
29 Algeria 2.25 2.21 2.22 5.63 3.53 3.17 3.56
30 Ecuador 7.83 4.29 5.00 3.13 7.94 5.64 5.81
31 Egypt 2.67 3.64 2.78 6.88 3.53 3.90 3.31
32 Spain 9.58 7.86 6.11 8.75 9.41 8.34 8.30
33 Ethiopia 4.00 3.93 5.00 6.25 4.41 4.72 3.60
34 Finland 10.00 10.00 7.78 8.75 9.71 9.25 9.03
35 Fiji 6.50 5.21 3.33 5.00 8.24 5.66 5.64
36 France 9.58 7.50 6.67 7.50 9.12 8.07 7.92
37 Gabon 0.50 3.21 2.22 5.63 2.06 2.72 3.74
38 U.K. 9.58 8.57 5.00 8.13 9.12 8.08 8.36
39 Ghana 7.42 4.64 4.44 4.38 5.88 5.35 6.75
40 Guinea 1.00 0.79 2.22 3.75 2.35 2.02 3.14
41 Gambia 4.00 4.64 4.44 5.63 3.24 4.39 2.91
42 Greece 9.58 7.50 6.67 7.50 9.41 8.13 7.23
43 Guatemala 8.75 6.79 2.78 4.38 7.65 6.07 5.92
44 Guyana 8.33 5.36 4.44 4.38 8.24 6.15 6.25
45 Honduras 8.33 6.43 4.44 5.00 7.06 6.25 5.92
46 Haiti 5.58 3.64 2.78 2.50 6.47 4.19 4.02
47 Hungary 9.58 6.79 5.00 6.88 9.41 7.53 6.72
48 Indonesia 6.92 7.14 5.00 6.25 6.76 6.41 6.97
49 India 9.58 8.21 5.56 5.63 9.41 7.68 7.81
50 Ireland 9.58 8.93 7.78 8.75 10.00 9.01 9.15
51 Iceland 10.00 9.64 8.89 10.00 10.00 9.71 9.50
52 Israel 9.17 6.64 7.78 7.50 5.29 7.28 7.85
53 Italy 9.17 6.43 6.11 8.13 8.82 7.73 7.98
54 Jamaica 9.17 7.14 5.00 6.25 9.12 7.34 7.39
55 Jordan 3.08 3.79 3.89 5.00 3.82 3.92 3.96
56 Japan 9.17 7.86 5.56 8.75 9.41 8.15 7.99

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57 Kenya 4.33 4.29 5.56 6.25 5.00 5.08 5.33

58 Cambodia 5.58 6.07 2.78 5.00 4.41 4.77 4.27
59 South_Korea 9.58 7.14 7.22 7.50 7.94 7.88 7.92
60 Kuwait 1.33 4.14 1.11 5.63 3.24 3.09 3.85
61 Lebanon 7.92 2.36 6.11 6.25 6.47 5.82 4.86
62 Lesotho 7.92 6.43 4.44 6.25 7.35 6.48 6.59
63 Luxembourg 10.00 9.29 7.78 8.75 9.71 9.10 8.81
64 Morocco 3.50 3.79 2.78 5.63 3.82 3.90 4.77
65 Moldova 9.17 4.29 6.11 5.00 7.94 6.50 6.01
66 Madagascar 5.67 5.71 5.56 6.88 5.29 5.82 5.07
67 Mexico 8.75 6.07 5.00 5.00 8.53 6.67 6.47
68 Mali 8.25 5.71 3.89 5.63 6.47 5.99 5.70
69 Malta 9.17 8.21 6.11 8.75 9.71 8.39 8.39
70 Myanmar 0.00 1.79 0.56 5.63 0.88 1.77 4.20
71 Montenegro 9.17 5.71 5.00 5.63 7.35 6.57 5.72
72 Mongolia 9.17 6.07 3.89 5.63 8.24 6.60 6.62
73 Mauritania 1.83 4.29 2.22 3.13 4.12 3.12 3.96
74 Mauritius 9.17 8.21 5.00 8.13 9.71 8.04 8.28
75 Malawi 6.00 5.00 3.89 4.38 5.59 4.97 5.55
76 Malaysia 6.08 5.71 4.44 7.50 6.18 5.98 6.54
77 Niger 5.25 1.14 1.67 3.75 5.88 3.54 3.96
78 Nigeria 3.08 1.86 4.44 4.38 3.82 3.52 4.50
79 Nicaragua 8.25 5.71 3.33 3.75 7.35 5.68 4.81
80 Netherlands 9.58 9.29 9.44 10.00 10.00 9.66 8.80
81 Norway 10.00 9.64 10.00 8.13 10.00 9.55 9.93
82 Nepal 0.08 3.57 2.22 5.63 5.59 3.42 4.86
83 New_Zealand 10.00 8.57 8.33 8.13 10.00 9.01 9.26
84 Pakistan 4.33 5.36 0.56 4.38 5.00 3.92 4.33
85 Panama 9.58 7.14 5.56 5.63 8.82 7.35 7.13
86 Peru 8.75 3.29 5.56 5.00 7.94 6.11 6.65
87 Philippines 9.17 5.36 5.00 3.75 9.12 6.48 6.94
88 Poland 9.58 6.07 6.11 5.63 9.12 7.30 6.83
89 Portugal 9.58 8.21 6.11 7.50 9.41 8.16 7.86
90 Paraguay 7.92 5.00 5.00 4.38 8.53 6.16 6.27
91 Romania 9.58 6.07 6.11 5.00 8.53 7.06 6.62
92 Rwanda 3.00 3.57 2.22 5.00 5.29 3.82 3.07
93 Saudi_Arabia 0.00 2.36 1.11 4.38 1.76 1.92 1.93
94 Senegal 7.00 5.00 3.33 5.63 5.88 5.37 6.21
95 Singapore 4.33 7.50 2.78 7.50 7.35 5.89 6.38
96 Sierra_Leone 5.25 2.21 2.22 3.75 4.41 3.57 4.55
97 El_Salvador 9.17 5.43 3.89 4.38 8.24 6.22 6.64
98 Sweden 10.00 10.00 10.00 9.38 10.00 9.88 9.39
99 Swaziland 1.75 2.86 2.22 3.13 4.71 2.93 3.03
100 Syr_Arab_Rep 0.00 1.79 1.67 6.88 1.47 2.36 1.43
101 Chad 0.00 0.00 0.00 5.00 3.24 1.65 1.50
102 Togo 0.00 0.79 0.56 5.63 1.76 1.75 3.32
103 Thailand 4.83 6.43 5.00 5.63 6.47 5.67 4.92
104 Trinid&Tobago 9.17 6.79 6.11 5.63 8.24 7.18 7.10
105 Tunisia 0.00 2.36 2.22 6.88 3.82 3.06 6.40
106 Turkey 7.92 6.79 4.44 3.75 5.59 5.70 5.04
107 Tanzania 6.00 3.93 5.06 5.63 5.29 5.18 5.76
108 Uganda 4.33 3.93 4.44 6.25 6.76 5.14 5.26
109 Uruguay 10.00 8.21 5.00 6.88 9.71 7.96 8.17
110 U.S.A. 8.75 7.86 7.22 8.75 8.53 8.22 7.98
111 Venezuela_RB 7.00 3.64 5.56 5.00 5.88 5.42 4.68
112 Vietnam 0.83 4.29 2.78 4.38 1.47 2.75 3.38
113 Yemen_Rep. 2.67 2.71 2.78 4.38 2.35 2.98 2.07
114 South_Africa 8.75 7.86 7.22 6.88 8.82 7.91 7.41
115 Congo_D_Rep. 4.58 0.36 2.78 3.75 2.35 2.76 1.93
116 Zambia 5.25 4.64 3.33 6.25 6.76 5.25 5.99

Electronic copy available at: [Link]

 24

Table-A-2. Corruption Perception Index, Human Development Index, Per Capita Income, Social Progress Index,
Democracy Index and Overall Globalization Index in the Countries under Study
SL# Country Corruption Human PC Social Democracy Overall Globalization Index
Perception Development Income Progress Index (AEMC)
CP06 CP16 HD06 HD15 PCY06 SP16 DI06 DI16 GI (Min) GI (Max)
1 Albania 26 39 7.03 7.64 4.90 69.79 5.91 59.10 50.86 61.61
2 Argentina 29 36 7.88 8.27 13.70 75.20 6.63 69.60 57.09 59.19
3 Australia 87 79 9.18 9.39 32.00 89.13 9.09 90.10 82.24 84.03
4 Austria 86 75 8.60 8.93 32.90 86.60 8.69 84.10 91.36 93.95
5 Azerbaijan 24 30 7.08 7.59 4.70 63.76 3.31 26.50 52.78 54.69
6 Burundi 24 20 3.09 4.04 0.60 37.33 4.51 24.00 26.92 34.79
7 Belgium 73 77 8.71 8.96 31.90 86.19 8.15 77.70 92.32 93.75
8 Benin 25 36 4.38 4.85 1.10 50.03 6.16 56.70 41.61 48.99
9 Burkina_Faso 32 42 3.34 4.02 1.20 49.34 3.72 47.00 41.27 49.12
10 Bulgaria 40 41 7.55 7.94 9.00 72.14 7.10 70.10 69.36 76.34
11 Bolivia 27 33 6.26 6.74 2.70 64.74 5.98 56.30 53.62 56.38
12 Brazil 33 40 7.00 7.54 8.40 71.70 7.38 69.00 55.59 58.16
13 Bhutan 60 65 5.50 6.07 1.40 65.65 2.62 49.30 35.44 47.07
14 Botswana 56 60 6.30 6.98 10.00 67.04 7.60 78.70 49.05 60.64
15 C._Afr_Rep 24 20 3.30 3.52 1.10 30.03 1.61 16.10 34.45 37.27
16 Canada 85 82 8.94 9.20 32.90 89.50 9.07 91.50 86.39 87.51
17 Switzerland 91 86 9.11 9.39 35.30 88.87 9.02 90.90 91.37 93.18
18 Chile 73 66 7.97 8.47 11.30 82.12 7.89 77.80 69.54 72.77
19 China 33 40 6.59 7.38 6.30 62.11 2.97 31.40 55.12 56.85
20 Cote_d'Ivoire 21 34 4.18 4.74 1.50 48.97 3.38 38.10 48.82 53.08
21 Cameroon 23 26 4.56 5.18 1.90 47.22 3.27 34.60 40.16 42.75
22 Congo_Rep. 22 20 5.17 5.92 0.70 49.74 2.76 29.10 47.78 57.31
23 Colombia 39 37 6.75 7.27 7.10 70.84 6.40 66.70 54.44 58.23
24 Costa_Rica 41 58 7.34 7.76 10.10 80.12 8.04 78.80 61.03 63.45
25 Cyprus 56 55 8.36 8.56 20.30 80.75 7.60 76.50 78.44 89.36
26 Germany 80 81 8.98 9.26 29.80 86.42 8.82 86.30 85.16 87.44
27 Denmark 95 90 9.04 9.25 33.40 89.40 9.52 92.00 88.85 91.90
28 Domin_Rep 28 31 6.85 7.22 6.60 65.66 6.13 66.70 55.44 67.20
29 Algeria 31 34 6.90 7.45 7.20 61.19 3.17 35.60 42.36 53.32
30 Ecuador 23 31 6.96 7.39 3.90 69.57 5.64 58.10 51.64 56.77
31 Egypt 33 34 6.44 6.91 4.40 60.75 3.90 33.10 53.67 59.62
32 Spain 68 58 8.49 8.84 25.20 85.88 8.34 83.00 84.60 86.71
33 Ethiopia 24 34 3.62 4.48 0.80 43.50 4.72 36.00 37.47 39.87
34 Finland 96 89 8.73 8.95 30.60 90.10 9.25 90.30 85.04 87.36
35 Fiji 40 40 6.98 7.36 6.10 66.50 5.66 56.40 57.81 61.30
36 France 74 69 8.73 8.97 30.00 84.79 8.07 79.20 87.32 89.36
37 Gabon 30 35 6.45 6.97 5.80 60.22 2.72 37.40 51.79 59.46
38 U.K. 86 81 8.89 9.10 30.90 88.58 8.08 83.60 88.15 89.91
39 Ghana 33 43 5.19 5.79 2.40 60.38 5.35 67.50 50.64 55.67
40 Guinea 19 27 3.64 4.14 2.20 41.66 2.02 31.40 40.45 46.82
41 Gambia 25 26 4.20 4.52 1.80 50.30 4.39 29.10 51.12 54.92
42 Greece 44 44 8.55 8.66 22.80 78.27 8.13 72.30 80.21 83.44
43 Guatemala 26 28 5.78 6.40 5.20 61.69 6.07 59.20 56.59 57.71
44 Guyana 25 34 6.20 6.38 3.80 60.00 6.15 62.50 49.78 59.99
45 Honduras 25 30 5.90 6.25 2.80 60.65 6.25 59.20 57.05 60.57
46 Haiti 18 20 4.58 4.93 1.60 43.15 4.19 40.20 34.53 38.47
47 Hungary 52 48 8.09 8.36 16.10 76.88 7.53 67.20 86.30 87.02
48 Indonesia 24 37 6.38 6.89 3.70 62.28 6.41 69.70 54.53 57.96
49 India 33 40 5.46 6.24 3.40 53.92 7.68 78.10 47.98 50.87
50 Ireland 74 73 9.02 9.23 34.10 87.94 9.01 91.50 89.89 95.20
51 Iceland 96 78 8.87 9.21 34.90 88.45 9.71 95.00 71.77 81.39
52 Israel 59 64 8.72 8.99 22.30 75.32 7.28 78.50 75.13 80.79
53 Italy 49 47 8.62 8.87 28.40 82.49 7.73 79.80 81.77 83.57
54 Jamaica 37 39 7.14 7.30 4.20 71.94 7.34 73.90 62.05 66.57
55 Jordan 53 48 7.36 7.42 4.80 65.44 3.92 39.60 69.18 73.94
56 Japan 76 72 8.77 9.03 30.70 86.54 8.15 79.90 65.61 68.81
57 Kenya 22 26 4.94 5.55 1.20 53.72 5.08 53.30 42.55 45.80
58 Cambodia 21 21 4.95 5.63 2.20 54.29 4.77 42.70 49.02 54.22
59 South_Korea 51 53 8.67 9.01 20.40 80.92 7.88 79.20 61.36 66.05
60 Kuwait 48 41 7.87 8.00 22.80 71.84 3.09 38.50 67.03 72.18

Electronic copy available at: [Link]

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61 Lebanon 36 28 7.31 7.63 5.30 64.43 5.82 48.60 67.36 74.20

62 Lesotho 32 39 4.40 4.97 3.00 52.39 6.48 65.90 36.96 48.77
63 Luxembourg 86 81 8.77 8.98 55.60 91.00 9.10 88.10 83.89 89.59
64 Morocco 32 37 5.81 6.47 4.30 61.93 3.90 47.70 56.51 64.33
65 Moldova 32 30 6.56 6.99 2.10 64.74 6.50 60.10 58.36 61.70
66 Madagascar 31 26 4.83 5.12 0.90 45.91 5.82 50.70 39.25 42.98
67 Mexico 33 30 7.31 7.62 10.10 70.03 6.67 64.70 57.99 61.61
68 Mali 28 32 3.63 4.42 1.00 46.24 5.99 57.00 44.06 46.72
69 Malta 64 55 8.08 8.56 19.00 84.60 8.39 83.90 76.39 78.24
70 Myanmar 19 28 4.84 5.56 1.60 49.84 1.77 42.00 32.04 38.40
71 Montenegro 28 45 7.62 8.07 2.70 68.17 6.57 57.20 56.97 66.92
72 Mongolia 28 38 6.61 7.35 2.20 62.81 6.60 66.20 46.41 55.63
73 Mauritania 31 27 4.75 5.13 2.00 46.08 3.12 39.60 43.65 52.55
74 Mauritius 51 54 7.20 7.81 13.20 73.24 8.04 82.80 60.47 66.81
75 Malawi 27 31 3.87 4.76 0.60 53.44 4.97 55.50 40.16 46.09
76 Malaysia 50 49 7.36 7.89 10.40 70.08 5.98 65.40 79.14 81.07
77 Niger 23 35 2.93 3.53 0.80 41.63 3.54 39.60 41.05 50.86
78 Nigeria 22 28 4.77 5.27 1.00 46.49 3.52 45.00 48.17 52.53
79 Nicaragua 26 26 6.01 6.45 2.40 63.04 5.68 48.10 51.57 53.56
80 Netherlands 87 83 8.99 9.24 30.60 88.66 9.66 88.00 93.78 95.24
81 Norway 88 85 9.34 9.49 42.40 88.70 9.55 99.30 85.24 86.83
82 Nepal 25 29 4.86 5.58 1.50 57.41 3.42 48.60 34.44 36.70
83 New_Zealand 96 90 8.91 9.15 24.20 88.46 9.01 92.60 78.48 80.12
84 Pakistan 22 32 5.05 5.50 2.40 49.13 3.92 43.30 48.64 51.16
85 Panama 31 38 7.43 7.88 7.10 73.02 7.35 71.30 65.63 67.56
86 Peru 33 35 6.96 7.40 6.10 70.10 6.11 66.50 62.50 65.24
87 Philippines 25 35 6.48 6.82 5.10 65.93 6.48 69.40 55.98 59.19
88 Poland 37 62 8.08 8.55 12.70 79.76 7.30 68.30 76.61 79.32
89 Portugal 66 62 7.97 8.43 18.60 83.88 8.16 78.60 83.54 88.21
90 Paraguay 26 30 6.49 6.93 4.90 67.45 6.16 62.70 56.32 59.39
91 Romania 31 48 7.66 8.02 8.40 72.24 7.06 66.20 64.99 73.36
92 Rwanda 25 54 4.24 4.98 1.30 51.91 3.82 30.70 34.22 43.83
93 Saudi_Arabia 33 46 7.73 8.47 12.90 66.31 1.92 19.30 66.57 69.75
94 Senegal 33 45 4.25 4.94 1.70 55.65 5.37 62.10 51.75 54.59
95 Singapore 94 84 8.73 9.25 29.90 82.19 5.89 63.80 87.04 91.52
96 Sierra_Leone 22 30 3.57 4.20 0.90 44.22 3.57 45.50 36.81 48.29
97 El_Salvador 40 36 6.57 6.80 5.10 66.37 6.22 66.40 59.25 64.02
98 Sweden 92 88 8.95 9.13 29.80 88.80 9.88 93.90 89.13 91.73
99 Swaziland 25 43 5.08 5.41 5.50 51.76 2.93 30.30 47.23 51.92
100 Syr_Arab_Rep 29 13 6.44 5.36 3.40 52.10 2.36 14.30 45.17 50.02
101 Chad 20 20 3.06 3.96 1.80 36.38 1.65 15.00 39.14 41.70
102 Togo 24 32 4.43 4.87 1.70 49.03 1.75 33.20 47.25 54.25
103 Thailand 36 35 6.87 7.40 8.30 67.44 5.67 49.20 62.95 71.71
104 Trinid&Tobago 32 35 7.60 7.80 12.90 69.00 7.18 71.00 59.84 65.62
105 Tunisia 46 41 6.95 7.25 7.60 68.01 3.06 64.00 58.22 60.63
106 Turkey 38 41 6.97 7.67 7.90 67.83 5.70 50.40 65.92 69.88
107 Tanzania 29 32 4.57 5.31 0.70 49.99 5.18 57.60 34.91 37.42
108 Uganda 27 25 4.42 4.93 1.70 50.69 5.14 52.60 42.80 45.69
109 Uruguay 64 71 7.60 7.95 16.00 80.12 7.96 81.70 66.74 68.14
110 U.S.A. 73 74 9.01 9.20 42.00 84.62 8.22 79.80 78.47 81.15
111 Venezuela_RB 23 17 7.28 7.67 6.50 63.46 5.42 46.80 48.92 55.45
112 Vietnam 26 33 6.25 6.83 3.00 63.47 2.75 33.80 42.59 54.98
113 Yemen_Rep. 26 14 4.77 4.82 0.80 41.76 2.98 20.70 42.64 46.66
114 South_Africa 46 45 6.12 6.66 12.10 67.61 7.91 74.10 64.93 67.54
115 Congo_D_Rep. 20 21 3.70 4.35 0.80 46.23 2.76 19.30 24.95 42.31
116 Zambia 26 38 4.92 5.79 0.90 50.00 5.25 59.90 46.41 54.04
Sources: Wikipedia for Corruption Perception, Human Development, Per-capita Income (in Int$1000), Social Progress and Democracy
Indices. For Overall Globalization Index, GI(Max) and GI(Min) based on AEMC principle, see Tables 3 and 4 below.

Electronic copy available at: [Link]

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Table-A-3. Economic, Social and Political Dimensions and Overall Indices of Globalization in Different Countries
[Source: [Link]
SL Country Year-H E1 E2 S1 S2 S3 P KOF AEMC
1 Albania 2009 56.57 73.00 52.55 73.90 2.42 80.69 61.60 61.61
2 Argentina 2008 45.92 39.11 43.30 71.50 41.47 92.07 59.95 59.19
3 Australia 2007 74.79 81.24 73.40 87.55 94.03 89.71 83.80 84.03
4 Austria 2007 89.34 86.56 87.06 92.06 95.54 96.86 91.87 93.95
5 Azerbaijan 2007 67.38 63.70 37.92 77.61 34.96 54.01 57.02 54.69
6 Burundi 2014 23.53 33.37 21.02 37.22 3.10 62.17 35.04 34.79
7 Belgium 2007 96.71 82.81 81.94 96.39 91.22 97.67 92.41 93.75
8 Benin 2014 53.79 42.92 28.55 39.46 2.48 75.17 46.67 48.99
9 Burkina_Faso 2014 59.67 46.84 19.43 44.62 2.17 76.88 48.69 49.12
10 Bulgaria 2013 80.04 72.93 51.55 77.71 85.30 84.96 76.98 76.34
11 Bolivia 2006 62.03 59.79 39.52 51.01 3.78 75.69 54.42 56.38
12 Brazil 2014 51.77 52.82 24.46 70.50 39.58 94.30 61.40 58.16
13 Bhutan 2014 60.64 56.77 46.83 45.54 6.87 38.85 43.58 47.07
14 Botswana 2008 77.58 59.64 59.54 57.17 5.88 59.28 55.50 60.64
15 C._Afr_Rep 2014 49.56 28.29 13.44 40.71 2.24 58.39 36.34 37.27
16 Canada 2007 76.20 82.03 80.78 94.74 96.09 92.91 87.15 87.51
17 Switzerland 2014 95.02 70.51 91.77 87.57 94.47 93.40 88.79 93.18
18 Chile 2007 82.68 87.08 41.25 77.69 41.18 87.67 74.31 72.77
19 China 2014 43.49 62.19 18.71 65.65 78.37 84.26 62.02 56.85
20 Cote_d'Ivoire 2007 63.35 40.17 41.85 52.15 2.85 70.72 49.83 53.08
21 Cameroon 2014 44.96 38.31 16.91 52.02 2.24 73.16 44.20 42.75
22 Congo_Rep. 2014 96.24 41.58 35.45 43.93 1.25 63.67 51.83 57.31
23 Colombia 2013 58.32 57.38 33.46 69.69 38.12 79.65 60.15 58.23
24 Costa_Rica 2007 64.79 73.30 60.37 78.75 45.65 58.63 63.66 63.45
25 Cyprus 2008 93.50 84.06 88.10 95.69 93.84 78.36 87.32 89.36
26 Germany 2007 81.36 84.49 76.35 87.52 92.57 92.43 86.48 87.44
27 Denmark 2007 87.80 89.09 83.64 89.59 93.06 93.75 90.01 91.90
28 Domin_Rep 2014 64.15 59.56 53.70 64.97 79.14 73.31 66.45 67.20
29 Algeria 2006 55.36 52.55 32.39 64.92 1.93 80.65 54.00 53.32
30 Ecuador 2006 55.97 46.00 36.82 65.37 38.22 79.01 57.39 56.77
31 Egypt 2013 42.96 48.68 27.64 66.78 77.77 93.01 63.10 59.62
32 Spain 2007 78.33 81.36 74.93 87.72 90.22 95.93 85.92 86.71
33 Ethiopia 2014 24.93 28.39 19.32 33.17 2.85 82.51 39.33 39.87
34 Finland 2007 85.16 87.39 72.07 90.60 91.67 91.64 87.22 87.36
35 Fiji 2014 74.43 25.70 56.98 57.20 43.56 69.68 57.56 61.30
36 France 2007 76.99 87.19 80.56 88.36 91.79 97.96 88.23 89.36
37 Gabon 2014 75.55 42.75 52.22 63.44 2.36 72.30 55.96 59.46
38 U.K. 2006 81.91 89.75 79.57 90.54 93.30 94.90 89.06 89.91
39 Ghana 2014 62.30 54.48 27.85 45.77 3.96 85.72 54.17 55.67
40 Guinea 2014 57.21 31.29 21.72 41.38 2.73 76.19 44.40 46.82
41 Gambia 2006 70.76 49.68 45.63 57.79 6.31 61.86 51.78 54.92
42 Greece 2007 68.15 83.53 76.51 83.41 85.44 92.38 82.59 83.44
43 Guatemala 2014 48.00 74.96 26.23 57.23 42.95 83.01 60.42 57.71
44 Guyana 2006 80.52 62.07 56.43 55.51 44.10 43.34 56.44 59.99
45 Honduras 2014 74.61 71.19 28.45 58.46 39.51 71.84 61.42 60.57
46 Haiti 2010 34.21 62.93 28.71 50.84 1.00 45.88 39.36 38.47
47 Hungary 2009 92.14 85.86 65.93 89.31 89.62 91.47 86.99 87.02
48 Indonesia 2014 56.25 71.79 20.40 49.92 33.89 86.83 59.65 57.96
49 India 2014 43.78 44.93 14.10 45.12 32.98 91.23 52.38 50.87
50 Ireland 2014 99.52 89.78 89.37 91.72 91.88 90.47 92.15 95.20
51 Iceland 2008 89.32 64.89 81.47 80.36 91.88 70.11 77.86 81.39
52 Israel 2010 71.59 83.51 75.06 67.25 90.37 80.29 78.15 80.79
53 Italy 2007 68.17 83.24 70.46 78.72 86.52 97.92 82.85 83.57
54 Jamaica 2007 80.64 70.00 63.13 69.52 7.11 68.56 62.72 66.57
55 Jordan 2006 79.36 59.47 67.97 71.54 41.11 84.27 70.31 73.94
56 Japan 2014 50.41 76.54 43.39 75.59 87.91 88.10 72.26 68.81
57 Kenya 2007 27.19 46.79 29.61 46.02 3.72 82.92 46.46 45.80
58 Cambodia 2014 85.86 50.76 29.52 48.48 1.31 62.36 50.69 54.22
59 South_Korea 2014 62.52 63.76 43.81 73.55 42.42 89.58 67.03 66.05
60 Kuwait 2008 61.31 75.01 78.96 76.28 90.41 59.54 70.76 72.18
61 Lebanon 2006 86.92 62.30 70.38 81.04 43.26 74.55 70.50 74.20
62 Lesotho 2014 80.48 41.22 25.58 48.74 6.87 54.09 45.94 48.77
63 Luxembourg 2007 100.00 88.46 96.09 97.51 48.25 80.06 85.62 89.59
64 Morocco 2014 60.71 53.68 45.87 83.86 37.71 89.50 65.95 64.33

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65 Moldova 2007 67.96 69.67 44.90 84.17 39.27 67.22 64.04 61.70
66 Madagascar 2014 62.47 36.71 11.21 48.02 2.73 65.10 42.90 42.98
67 Mexico 2014 63.45 68.45 44.30 68.92 40.12 71.72 62.29 61.61
68 Mali 2014 50.97 41.67 22.46 44.10 1.12 75.98 46.07 46.72
69 Malta 2009 99.76 87.06 83.18 96.04 49.74 52.58 76.16 78.24
70 Myanmar 2014 56.93 56.33 11.89 42.07 1.00 44.74 39.03 38.40
71 Montenegro 2010 81.65 79.55 72.69 94.41 5.08 56.33 65.48 66.92
72 Mongolia 2014 84.88 65.73 16.76 59.40 1.43 71.89 56.91 55.63
73 Mauritania 2014 79.30 58.16 19.77 51.82 1.37 66.99 51.45 52.55
74 Mauritius 2014 91.12 84.89 58.78 82.06 42.61 45.32 66.61 66.81
75 Malawi 2013 49.90 52.47 26.25 41.95 6.99 64.35 45.40 46.09
76 Malaysia 2010 89.03 69.62 64.71 75.92 87.52 83.17 79.12 81.07
77 Niger 2014 54.67 50.44 32.41 35.30 1.74 74.33 47.92 50.86
78 Nigeria 2009 65.10 47.51 12.39 52.93 3.47 89.37 54.36 52.53
79 Nicaragua 2012 61.15 61.69 34.97 56.57 40.24 57.38 53.99 53.56
80 Netherlands 2014 97.64 88.48 85.98 93.26 92.75 95.41 92.84 95.24
81 Norway 2013 80.32 72.93 81.74 85.52 91.68 92.27 84.48 86.83
82 Nepal 2013 13.26 39.95 24.97 44.85 2.79 70.69 38.18 36.70
83 New_Zealand 2008 76.62 90.04 79.32 91.46 50.44 80.05 79.17 80.12
84 Pakistan 2007 40.85 43.25 23.40 44.12 32.38 87.55 51.83 51.16
85 Panama 2009 89.59 71.32 50.84 81.17 47.74 60.74 67.70 67.56
86 Peru 2011 69.02 82.53 32.33 58.27 36.87 84.74 66.14 65.24
87 Philippines 2006 65.22 52.73 30.26 49.70 39.96 81.96 58.39 59.19
88 Poland 2014 77.73 76.38 57.40 92.23 89.22 88.82 81.32 79.32
89 Portugal 2007 82.71 87.10 76.48 91.10 88.73 93.85 87.61 88.21
90 Paraguay 2012 62.44 56.59 36.33 65.09 39.86 77.61 60.13 59.39
91 Romania 2014 60.67 83.22 48.07 82.02 82.39 89.82 76.51 73.36
92 Rwanda 2014 34.81 63.91 17.27 39.87 7.05 71.53 45.56 43.83
93 Saudi_Arabia 2009 62.95 76.19 69.00 71.18 83.25 60.43 68.43 69.75
94 Senegal 2012 57.58 47.32 29.33 58.91 3.53 87.90 54.64 54.59
95 Singapore 2009 99.01 95.35 92.18 88.25 96.12 71.77 88.27 91.52
96 Sierra_Leone 2011 69.70 46.89 19.84 38.92 3.16 65.10 45.90 48.29
97 El_Salvador 2007 61.06 72.79 49.35 64.68 40.80 75.40 63.79 64.02
98 Sweden 2007 88.33 86.26 80.84 84.38 94.73 96.03 89.41 91.73
99 Swaziland 2014 77.83 43.61 59.31 60.20 6.37 36.55 47.48 51.92
100 Syr_Arab_Rep 2011 53.48 55.43 51.94 65.49 1.00 52.73 48.93 50.02
101 Chad 2006 55.49 27.21 23.94 32.35 2.91 60.04 38.37 41.70
102 Togo 2014 78.62 46.54 25.04 57.99 3.72 73.38 53.70 54.25
103 Thailand 2012 83.87 59.54 42.90 72.93 80.93 81.22 72.06 71.71
104 Trinid&Tobago 2012 86.13 68.86 58.65 67.24 41.73 53.54 63.09 65.62
105 Tunisia 2008 70.83 48.71 41.68 76.78 2.67 86.29 60.45 60.63
106 Turkey 2014 51.09 66.13 50.76 72.49 81.59 91.88 71.33 69.88
107 Tanzania 2007 35.61 53.20 16.78 31.93 3.04 55.74 37.71 37.42
108 Uganda 2013 44.01 58.02 21.59 37.01 4.52 70.23 45.48 45.69
109 Uruguay 2008 65.66 68.87 51.35 65.92 42.10 85.45 67.23 68.14
110 U.S.A. 2007 65.17 85.34 67.13 82.45 91.90 92.10 81.80 81.15
111 Venezuela_RB 2006 62.32 47.83 38.48 68.43 41.65 65.68 56.17 55.45
112 Vietnam 2014 80.26 49.28 16.43 63.78 31.92 71.13 56.69 54.98
113 Yemen_Rep. 2008 53.37 63.83 23.57 41.91 1.68 62.24 46.51 46.66
114 South_Africa 2014 72.64 65.18 41.53 61.39 41.93 88.04 66.72 67.54
115 Congo_D_Rep. 2013 69.13 37.26 6.23 43.38 1.00 62.03 41.67 42.31
116 Zambia 2007 64.24 63.96 27.92 45.69 4.09 73.93 52.96 54.04
E1, E2, S1, S2, S3, P and KOF are for the Year-H when the overall index AEMC attained maximum (Gmax) during 2006-2014.
AEMC Indices are computed by the author.

Electronic copy available at: [Link]

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Table-A-4. Economic, Social and Political Dimensions and Overall Indices of Globalization in Different Countries
[Source: [Link]
SL Country Year-L E1 E2 S1 S2 S3 P KOF AEMC
1 Albania 2006 35.89 58.68 52.56 69.39 2.24 67.63 51.18 50.86
2 Argentina 2012 41.13 30.68 43.54 72.69 40.54 92.83 57.89 57.09
3 Australia 2013 68.41 78.01 73.79 85.80 92.90 90.42 81.97 82.24
4 Austria 2013 85.52 76.50 86.51 91.31 95.46 96.36 89.09 91.36
5 Azerbaijan 2009 59.96 57.99 38.90 78.95 34.51 55.51 55.35 52.78
6 Burundi 2006 24.06 35.17 16.96 35.39 4.15 36.97 27.89 26.92
7 Belgium 2013 95.51 73.19 84.04 96.99 91.01 96.51 90.70 92.32
8 Benin 2006 28.32 40.26 28.88 35.40 2.54 71.83 40.22 41.61
9 Burkina_Faso 2006 16.39 50.78 32.95 36.90 3.90 71.57 40.68 41.27
10 Bulgaria 2010 71.76 74.41 50.21 82.83 40.81 83.13 70.59 69.36
11 Bolivia 2011 56.44 50.56 37.79 58.44 2.91 76.81 52.76 53.62
12 Brazil 2008 48.27 53.34 20.26 68.50 38.23 92.27 59.38 55.59
13 Bhutan 2007 34.97 56.40 46.37 41.28 5.32 21.18 33.12 35.44
14 Botswana 2012 60.07 53.50 56.45 55.16 4.95 39.77 45.21 49.05
15 C._Afr_Rep 2007 40.14 22.02 15.27 32.43 2.24 57.98 32.80 34.45
16 Canada 2013 74.03 77.68 81.23 92.24 94.97 92.94 85.60 86.39
17 Switzerland 2011 94.70 60.22 91.35 89.06 94.96 92.44 86.84 91.37
18 Chile 2013 77.71 75.92 38.21 76.16 40.69 88.74 71.11 69.54
19 China 2012 41.21 56.27 16.75 65.54 78.02 84.80 60.42 55.12
20 Cote_d'Ivoire 2013 56.86 36.44 29.24 53.69 2.61 74.19 47.92 48.82
21 Cameroon 2010 35.79 41.44 16.83 51.95 2.73 70.25 42.67 40.16
22 Congo_Rep. 2008 91.35 37.23 31.94 40.90 1.74 39.88 42.91 47.78
23 Colombia 2008 54.98 42.87 30.73 70.80 38.22 78.48 56.48 54.44
24 Costa_Rica 2013 62.90 66.25 55.31 81.31 45.89 59.43 62.05 61.03
25 Cyprus 2006 91.53 84.62 86.55 95.34 47.57 59.05 76.11 78.44
26 Germany 2013 75.94 73.34 79.32 85.40 92.01 91.93 83.41 85.16
27 Denmark 2013 84.52 80.70 81.47 88.35 93.53 91.65 86.99 88.85
28 Domin_Rep 2009 54.07 57.06 53.37 67.39 36.62 56.88 55.00 55.44
29 Algeria 2007 49.62 47.76 33.94 64.81 2.05 48.49 43.47 42.36
30 Ecuador 2014 40.55 36.53 34.14 62.25 38.21 80.97 52.78 51.64
31 Egypt 2012 41.62 46.07 22.45 66.66 35.94 93.45 56.99 53.67
32 Spain 2013 75.24 74.68 73.88 86.21 89.60 95.51 83.68 84.60
33 Ethiopia 2011 28.98 21.94 10.54 29.29 2.17 81.88 36.82 37.47
34 Finland 2009 77.81 86.19 72.26 88.86 91.36 90.25 85.08 85.04
35 Fiji 2009 64.73 25.64 56.01 50.18 43.87 66.56 53.75 57.81
36 France 2013 73.58 78.12 81.13 89.14 92.48 97.29 86.09 87.32
37 Gabon 2011 75.77 31.78 51.97 61.25 2.36 51.11 47.92 51.79
38 U.K. 2014 80.71 85.27 76.35 87.66 93.64 94.67 87.26 88.15
39 Ghana 2008 36.37 51.83 35.82 43.80 4.52 83.98 49.19 50.64
40 Guinea 2010 35.70 31.29 21.36 39.92 4.15 71.90 39.38 40.45
41 Gambia 2009 50.86 50.47 45.99 61.95 5.38 64.80 50.18 51.12
42 Greece 2012 61.28 77.37 75.14 84.24 84.42 91.33 79.82 80.21
43 Guatemala 2010 46.46 68.40 27.08 56.03 43.98 82.47 58.89 56.59
44 Guyana 2013 61.74 58.98 48.79 58.06 5.76 44.66 47.60 49.78
45 Honduras 2010 63.36 65.10 30.16 60.23 39.72 70.29 58.38 57.05
46 Haiti 2014 35.21 68.47 6.41 51.82 1.00 48.28 38.81 34.53
47 Hungary 2011 91.22 81.45 66.67 89.18 90.33 90.93 86.05 86.30
48 Indonesia 2008 49.64 69.02 17.85 47.95 33.79 84.05 56.64 54.53
49 India 2006 35.28 43.76 13.64 46.46 32.53 89.37 50.22 47.98
50 Ireland 2008 97.80 88.49 91.12 92.11 48.10 87.41 85.93 89.89
51 Iceland 2013 89.48 59.80 80.56 78.37 50.11 54.09 67.32 71.77
52 Israel 2011 69.88 76.98 75.38 66.87 90.37 65.01 72.46 75.13
53 Italy 2013 64.98 75.44 70.42 78.44 88.21 97.52 80.94 81.77
54 Jamaica 2014 73.94 51.72 57.00 67.13 6.93 72.58 58.43 62.05
55 Jordan 2013 72.22 61.91 52.07 69.51 42.37 86.09 67.93 69.18
56 Japan 2011 43.92 65.57 42.19 76.22 87.85 88.66 69.25 65.61
57 Kenya 2012 25.69 44.87 19.21 48.47 3.59 82.94 45.16 42.55
58 Cambodia 2011 70.40 50.86 26.14 44.44 2.17 59.93 46.83 49.02
59 South_Korea 2006 54.55 65.58 39.06 76.10 41.38 83.59 63.92 61.36
60 Kuwait 2013 53.45 65.47 70.68 73.63 89.69 60.31 66.44 67.03
61 Lebanon 2011 77.07 56.80 70.26 90.02 45.95 60.76 65.70 67.36
62 Lesotho 2006 59.43 37.57 24.70 45.45 6.68 33.39 35.69 36.96

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63 Luxembourg 2006 99.72 87.43 96.37 96.87 48.06 60.97 80.05 83.89
64 Morocco 2006 49.22 40.66 35.46 67.40 37.20 87.73 57.63 56.51
65 Moldova 2014 60.52 63.40 40.67 84.06 37.77 69.00 61.39 58.36
66 Madagascar 2011 56.71 28.24 8.15 49.42 2.67 63.64 39.71 39.25
67 Mexico 2008 55.23 60.32 42.67 70.30 41.09 70.95 59.27 57.99
68 Mali 2007 44.08 41.64 20.96 36.32 2.17 73.60 43.06 44.06
69 Malta 2006 97.19 87.13 83.62 96.07 50.17 47.77 74.50 76.39
70 Myanmar 2009 47.20 49.84 9.82 27.94 1.00 36.00 31.86 32.04
71 Montenegro 2006 52.52 76.75 73.23 94.86 6.25 46.57 57.31 56.97
72 Mongolia 2006 54.54 60.02 19.54 57.15 2.05 65.31 48.72 46.41
73 Mauritania 2006 72.75 40.60 25.64 43.51 1.37 45.02 40.79 43.65
74 Mauritius 2006 57.62 70.87 59.49 85.06 40.57 57.79 61.85 60.47
75 Malawi 2009 32.32 44.30 27.07 39.17 6.74 61.73 39.76 40.16
76 Malaysia 2014 88.91 66.95 57.96 77.28 87.65 83.69 78.14 79.14
77 Niger 2007 24.17 37.19 32.59 30.52 1.68 71.94 38.88 41.05
78 Nigeria 2014 46.48 52.49 9.46 46.64 1.43 90.79 50.24 48.17
79 Nicaragua 2008 53.72 63.14 35.68 56.50 39.11 55.74 52.42 51.57
80 Netherlands 2009 95.28 88.51 84.91 90.53 92.90 93.23 91.35 93.78
81 Norway 2006 81.16 70.67 79.65 83.91 91.99 88.88 82.87 85.24
82 Nepal 2008 11.40 31.69 25.16 37.96 3.35 68.10 34.85 34.44
83 New_Zealand 2013 72.83 85.72 78.84 89.57 50.42 80.03 77.41 78.48
84 Pakistan 2014 33.87 45.27 19.22 48.01 32.32 87.30 51.02 48.64
85 Panama 2006 91.07 65.78 50.23 73.96 47.74 56.13 64.69 65.63
86 Peru 2006 66.78 67.15 32.70 54.46 37.01 84.09 62.39 62.50
87 Philippines 2014 58.47 49.32 24.22 54.23 41.28 82.83 56.84 55.98
88 Poland 2011 72.22 68.03 56.29 91.86 87.36 89.58 78.67 76.61
89 Portugal 2013 79.89 82.09 68.63 91.19 89.70 88.98 84.05 83.54
90 Paraguay 2008 53.18 57.92 36.26 60.83 37.09 75.13 57.14 56.32
91 Romania 2006 60.44 60.73 44.18 78.72 38.69 89.91 66.50 64.99
92 Rwanda 2006 19.54 34.11 23.81 38.03 4.27 60.31 34.49 34.22
93 Saudi_Arabia 2006 52.82 76.19 70.24 69.12 82.06 57.24 65.22 66.57
94 Senegal 2006 40.99 38.14 40.60 58.22 4.09 86.13 50.65 51.75
95 Singapore 2014 99.01 96.53 93.20 85.75 96.53 54.77 83.64 87.04
96 Sierra_Leone 2009 30.15 41.28 19.63 33.56 3.22 61.16 36.20 36.81
97 El_Salvador 2011 57.17 63.11 35.53 66.64 41.19 78.63 60.89 59.25
98 Sweden 2013 85.48 75.35 81.30 81.02 93.46 94.65 86.05 89.13
99 Swaziland 2007 63.20 36.36 61.97 54.71 6.37 33.68 42.40 47.23
100 Syr_Arab_Rep 2007 49.06 38.95 43.38 63.66 1.00 54.93 44.26 45.17
101 Chad 2011 50.22 28.12 19.94 36.74 2.91 58.55 37.11 39.14
102 Togo 2008 53.50 37.49 28.74 54.91 3.53 71.19 46.93 47.25
103 Thailand 2008 74.06 55.41 39.67 68.67 37.94 78.48 62.87 62.95
104 Trinid&Tobago 2007 79.71 71.95 61.64 66.92 5.76 47.01 56.82 59.84
105 Tunisia 2011 68.94 42.49 40.06 78.34 2.48 83.92 58.35 58.22
106 Turkey 2006 46.77 69.54 40.93 72.69 78.12 89.96 69.07 65.92
107 Tanzania 2006 27.06 50.59 17.16 33.54 2.61 55.17 35.78 34.91
108 Uganda 2006 35.99 52.16 24.19 35.24 3.53 67.77 42.31 42.80
109 Uruguay 2012 60.28 67.75 52.98 69.97 42.11 84.09 66.43 66.74
110 U.S.A. 2009 59.05 78.48 66.91 81.46 91.77 91.43 79.14 78.47
111 Venezuela_RB 2010 40.82 37.04 38.46 70.34 40.30 66.51 50.75 48.92
112 Vietnam 2006 70.58 39.35 17.13 59.33 3.04 50.33 43.21 42.59
113 Yemen_Rep. 2014 35.99 54.18 26.38 44.10 1.12 65.01 42.99 42.64
114 South_Africa 2011 67.26 63.98 39.51 61.09 40.86 86.20 64.64 64.93
115 Congo_D_Rep. 2006 19.87 28.69 8.76 34.02 1.00 44.96 26.11 24.95
116 Zambia 2012 50.36 55.83 16.51 43.66 3.78 73.04 47.36 46.41
E1, E2, S1, S2, S3, P and KOF are for the Year-L when the overall index AEMC attained minimum (Gmin) during 2006-2014.
AEMC Indices are computed by the author.

Electronic copy available at: [Link]

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Table-A-5. Coefficients of the Reduced Form Equation with their Standard Error of Estimate (SEE): Pessimistic Scenario
Endo- Exogenous / Predetermine Variables (Predictors at 2-SLS Stage-1)
Constant R2
genous EPP06 FOG06 PPN06 PCL06 CVL06 CP06 HD06 PCY06 DI06
E1 0.0353 -0.0880 -0.0779 -0.2510 -0.3210 0.2066 0.7242 0.0561 0.4427 1.0808 0.5649
(SEE) 0.0351 0.0590 0.0706 0.1780 0.1642 0.1192 0.2361 0.0645 0.3166 0.8970

E2 0.0093 0.0414 -0.1017 -0.1346 -0.1563 0.1731 0.5338 -0.0120 0.4174 0.9137 0.6268
SEE 0.0263 0.0443 0.0529 0.1335 0.1231 0.0894 0.1771 0.0484 0.2374 0.6728

S1 0.0538 -0.0133 0.0376 0.2887 0.5016 0.3852 0.6971 0.1551 -0.9627 -0.9281 0.6954
(SEE) 0.0440 0.0742 0.0887 0.2236 0.2063 0.1498 0.2967 0.0810 0.3978 1.1271

S2 0.0039 -0.0384 0.0397 0.0642 0.0830 -0.0389 0.7784 0.0656 -0.1078 0.5895 0.8359
(SEE) 0.0171 0.0287 0.0343 0.0866 0.0799 0.0580 0.1149 0.0314 0.1540 0.4363

S3 0.0452 0.0456 -0.3037 -0.8856 -0.2577 0.0937 0.8872 0.7382 1.3123 -4.0018 0.7214
(SEE) 0.1046 0.1761 0.2107 0.5311 0.4899 0.3558 0.7047 0.1925 0.9447 2.6769

P -0.0140 -0.0413 0.0590 0.1266 0.0154 -0.1374 -0.1605 0.0990 0.2297 3.5050 0.2545
(SEE) 0.0317 0.0533 0.0638 0.1607 0.1483 0.1077 0.2133 0.0582 0.2859 0.8101

DI16 -0.0383 0.1010 -0.0229 0.0314 0.2141 0.0861 0.0778 -0.0198 0.5551 0.0727 0.8427
(SEE) 0.0220 0.0370 0.0443 0.1117 0.1030 0.0748 0.1482 0.0405 0.1987 0.5630

CP16 0.0026 0.0985 -0.0403 0.0812 0.1666 0.6498 -0.1923 0.0657 -0.1688 1.3076 0.8135
(SEE) 0.0244 0.0410 0.0491 0.1237 0.1141 0.0829 0.1641 0.0448 0.2200 0.6233

HD15 0.0025 -0.0054 -0.0162 0.0176 -0.0085 0.0002 0.8315 -0.0015 0.0510 -1.6935 0.9822
(SEE) 0.0044 0.0075 0.0090 0.0226 0.0208 0.0151 0.0300 0.0082 0.0402 0.1138

GI10 0.0138 -0.0258 -0.0116 -0.0043 -0.0235 0.1206 0.3406 0.0936 0.0985 1.6204 0.8527
(SEE) 0.0149 0.0251 0.0300 0.0756 0.0697 0.0507 0.1003 0.0274 0.1345 0.3810

SP16 -0.0103 0.0007 -0.0031 -0.0005 0.0125 0.0715 0.4939 0.0169 0.1301 1.2664 0.9420
(SEE) 0.0075 0.0127 0.0151 0.0382 0.0352 0.0256 0.0507 0.0138 0.0679 0.1924

.
Table-A-6. Coefficients of the Reduced Form Equation with their Standard Error of Estimate (SEE): Optimistic Scenario
Endo- Exogenous / Predetermine Variables (Predictors at 2-SLS Stage-1)
Constant R2
genous EPP06 FOG06 PPN06 PCL06 CVL06 CP06 HD06 PCY06 DI06
E1 0.0720 -0.1249 -0.0406 -0.2353 -0.3101 0.2985 0.4259 0.0228 0.2710 2.7392
0.4213
(SEE) 0.0317 0.0534 0.0639 0.1611 0.1486 0.1079 0.2138 0.0584 0.2866 0.8120

E2 0.0055 0.0438 -0.0611 -0.1000 -0.0985 0.1624 0.5962 -0.0295 0.2559 0.9869
0.6512
SEE 0.0231 0.0389 0.0466 0.1174 0.1083 0.0786 0.1557 0.0425 0.2088 0.5916

S1 0.0331 0.0119 -0.0114 0.2058 0.4477 0.2694 0.8125 0.1278 -0.7073 -1.1285
0.7051
(SEE) 0.0407 0.0686 0.0821 0.2069 0.1908 0.1386 0.2745 0.0750 0.3680 1.0427

S2 0.0051 -0.0192 0.0634 0.0511 0.0611 0.0081 0.6361 0.0736 -0.1898 1.3097
0.8366
(SEE) 0.0154 0.0260 0.0311 0.0783 0.0723 0.0525 0.1040 0.0284 0.1394 0.3949

S3 0.0601 0.0847 -0.3366 -1.0896 -0.5415 -0.1104 1.3049 0.7577 1.5880 -4.1574
0.7269
(SEE) 0.1062 0.1789 0.2139 0.5394 0.4975 0.3614 0.7157 0.1955 0.9594 2.7185

P 0.0164 -0.0399 0.0444 0.1394 -0.0656 -0.0102 -0.1109 0.0651 0.1193 3.7019
0.2994
(SEE) 0.0231 0.0389 0.0465 0.1173 0.1082 0.0786 0.1556 0.0425 0.2086 0.5912

DI16 -0.0383 0.1010 -0.0229 0.0314 0.2141 0.0861 0.0778 -0.0198 0.5551 0.0727
0.8427
(SEE) 0.0220 0.0370 0.0443 0.1117 0.1030 0.0748 0.1482 0.0405 0.1987 0.5630

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CP16 0.0026 0.0985 -0.0403 0.0812 0.1666 0.6498 -0.1923 0.0657 -0.1688 1.3076 0.8135
(SEE) 0.0244 0.0410 0.0491 0.1237 0.1141 0.0829 0.1641 0.0448 0.2200 0.6233

HD15 0.0025 -0.0054 -0.0162 0.0176 -0.0085 0.0002 0.8315 -0.0015 0.0510 -1.6935 0.9822
(SEE) 0.0044 0.0075 0.0090 0.0226 0.0208 0.0151 0.0300 0.0082 0.0402 0.1138

GI10 0.0332 -0.0379 -0.0074 0.0012 -0.0758 0.1441 0.3184 0.0739 0.0590 2.1082
0.8716
(SEE) 0.0118 0.0199 0.0238 0.0600 0.0553 0.0402 0.0796 0.0217 0.1066 0.3022

SP16 -0.0103 0.0007 -0.0031 -0.0005 0.0125 0.0715 0.4939 0.0169 0.1301 1.2664 0.9420
(SEE) 0.0075 0.0127 0.0151 0.0382 0.0352 0.0256 0.0507 0.0138 0.0679 0.1924
.
Table-A-7. Correlation between Observed, Expected (C-2-SLS) and (SV-2-SLS) for Pessimistic Globalization Scenario

Variable E1 E2 S1 S2 S3 P DI16 CP16 HD15 GI10 SP16

Panel-1: Observed Response Variable and Expected Response Variable (Conventional 2-SLS or C-2-SLS) or i j, j^)
E1 0.731 0.760 0.790 0.896 0.821 0.376 0.678 0.759 0.970 0.904 0.951
E2 0.701 0.792 0.754 0.853 0.811 0.403 0.790 0.788 0.944 0.889 0.952
S1 0.700 0.732 0.824 0.863 0.806 0.388 0.690 0.829 0.915 0.904 0.930
S2 0.712 0.740 0.782 0.913 0.807 0.396 0.676 0.708 0.982 0.893 0.950
S3 0.703 0.760 0.783 0.883 0.831 0.430 0.771 0.770 0.944 0.905 0.953
P 0.590 0.707 0.706 0.805 0.791 0.451 0.807 0.724 0.859 0.830 0.887
DI16 0.551 0.708 0.628 0.693 0.712 0.463 0.884 0.759 0.761 0.780 0.836
CP16 0.601 0.698 0.769 0.723 0.729 0.377 0.756 0.893 0.771 0.831 0.843
HD15 0.724 0.737 0.782 0.914 0.801 0.389 0.653 0.700 0.983 0.893 0.946
GI10 0.713 0.764 0.809 0.886 0.831 0.422 0.740 0.814 0.948 0.921 0.958
SP16 0.709 0.778 0.787 0.894 0.820 0.417 0.767 0.780 0.973 0.908 0.970
b
Panel-2: Observed Response Variable and Expected Response Variable (Shapley Value 2-SLS or SV-2-SLS) or i j, j
E1 0.709 0.762 0.813 0.875 0.812 0.411 0.730 0.832 0.941 0.916 0.953
E2 0.695 0.766 0.783 0.879 0.822 0.446 0.794 0.786 0.943 0.908 0.957
S1 0.701 0.778 0.796 0.867 0.820 0.427 0.787 0.832 0.938 0.914 0.959
S2 0.695 0.774 0.783 0.882 0.819 0.441 0.795 0.793 0.954 0.909 0.965
S3 0.671 0.748 0.778 0.850 0.788 0.453 0.784 0.819 0.911 0.897 0.941
P 0.733 0.763 0.805 0.895 0.837 0.404 0.703 0.779 0.960 0.919 0.953
DI16 0.692 0.765 0.780 0.876 0.831 0.456 0.798 0.784 0.938 0.909 0.954
CP16 0.721 0.766 0.809 0.894 0.835 0.420 0.739 0.794 0.957 0.922 0.959
HD15 0.738 0.757 0.792 0.902 0.832 0.397 0.682 0.740 0.970 0.911 0.949
GI10 0.702 0.771 0.802 0.871 0.824 0.431 0.779 0.832 0.935 0.917 0.958
SP16 0.698 0.771 0.803 0.872 0.828 0.431 0.784 0.830 0.936 0.916 0.958
^ b
Panel-3: C-2-SLS based Expected Response Variable and SV-2-SLS,Expected Response Variable or i j, j
E1 0.971 0.961 0.965 0.965 0.925 0.990 0.954 0.982 0.990 0.968 0.968
E2 0.963 0.968 0.983 0.978 0.945 0.964 0.966 0.968 0.956 0.974 0.974
S1 0.982 0.944 0.966 0.949 0.946 0.973 0.947 0.976 0.958 0.974 0.974
S2 0.957 0.960 0.948 0.966 0.929 0.977 0.957 0.976 0.984 0.953 0.955
S3 0.961 0.991 0.975 0.982 0.948 0.979 0.984 0.985 0.976 0.981 0.980
P 0.889 0.925 0.911 0.933 0.904 0.895 0.944 0.909 0.881 0.916 0.929
DI16 0.846 0.891 0.896 0.896 0.909 0.812 0.903 0.843 0.788 0.887 0.886
CP16 0.922 0.880 0.927 0.885 0.907 0.870 0.878 0.890 0.829 0.923 0.923

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HD15 0.955 0.956 0.944 0.960 0.925 0.977 0.951 0.974 0.987 0.948 0.947
GI10 0.994 0.984 0.992 0.988 0.975 0.993 0.986 0.996 0.982 0.996 0.996
SP16 0.982 0.986 0.989 0.994 0.967 0.983 0.983 0.990 0.979 0.987 0.988
Note: = Observed response variable; O = Expected response variable (C-2-SLS); k = Expected response variable (SV-2-SLS)
.
Table-A-8. Correlation between Original, Expected (C-2-SLS) and (SV-2-SLS) for Optimistic Globalization Scenario
Variable E1 E2 S1 S2 S3 P DI16 CP16 HD15 GI10 SP16
Panel-1: Observed Response Variable and Expected Response Variable (Conventional 2-SLS or C-2-SLS) or i j, j^)
E1 0.579 0.748 0.797 0.867 0.784 0.392 0.613 0.783 0.913 0.888 0.907
E2 0.540 0.806 0.781 0.861 0.807 0.436 0.776 0.775 0.958 0.888 0.958
S1 0.555 0.767 0.831 0.878 0.813 0.440 0.716 0.812 0.942 0.912 0.949
S2 0.541 0.761 0.799 0.913 0.815 0.431 0.654 0.709 0.977 0.895 0.944
S3 0.575 0.776 0.794 0.894 0.827 0.452 0.716 0.732 0.962 0.910 0.947
P 0.552 0.750 0.782 0.837 0.797 0.469 0.691 0.827 0.889 0.902 0.913
DI16 0.469 0.725 0.674 0.686 0.715 0.480 0.862 0.791 0.777 0.801 0.845
CP16 0.496 0.717 0.779 0.755 0.717 0.461 0.785 0.873 0.813 0.850 0.873
HD15 0.548 0.765 0.810 0.913 0.820 0.433 0.665 0.727 0.976 0.902 0.948
GI10 0.555 0.777 0.825 0.887 0.821 0.468 0.733 0.821 0.946 0.923 0.957
SP16 0.536 0.796 0.810 0.889 0.821 0.455 0.767 0.780 0.973 0.906 0.970
Panel-2: Observed Response Variable and Expected Response Variable (Shapley Value 2-SLS or SV-2-SLS) or i j, j
b
E1 0.547 0.776 0.822 0.876 0.800 0.469 0.732 0.836 0.938 0.917 0.952
E2 0.554 0.782 0.800 0.880 0.815 0.489 0.774 0.792 0.943 0.917 0.955
S1 0.556 0.790 0.809 0.864 0.814 0.482 0.787 0.828 0.935 0.919 0.956
S2 0.528 0.789 0.803 0.882 0.815 0.481 0.788 0.791 0.956 0.907 0.965
S3 0.538 0.762 0.793 0.856 0.774 0.504 0.756 0.822 0.916 0.908 0.940
P 0.580 0.775 0.823 0.896 0.835 0.450 0.696 0.781 0.958 0.926 0.951
DI16 0.556 0.784 0.810 0.885 0.826 0.485 0.765 0.794 0.953 0.923 0.961
CP16 0.575 0.779 0.821 0.891 0.828 0.474 0.733 0.795 0.955 0.930 0.957
HD15 0.600 0.764 0.806 0.894 0.830 0.441 0.657 0.739 0.957 0.921 0.936
GI10 0.547 0.782 0.816 0.871 0.817 0.482 0.777 0.833 0.935 0.919 0.958
SP16 0.543 0.783 0.819 0.871 0.821 0.478 0.781 0.831 0.937 0.918 0.958
Panel-3: C-2-SLS based Expected Response Variable and SV-2-SLS,based Expected Response Variable or i j
^, j
b
E1 0.945 0.929 0.933 0.916 0.900 0.964 0.930 0.949 0.960 0.940 0.936
E2 0.961 0.970 0.979 0.978 0.944 0.961 0.972 0.967 0.949 0.970 0.971
S1 0.985 0.960 0.974 0.966 0.953 0.985 0.973 0.982 0.966 0.983 0.983
S2 0.954 0.961 0.943 0.966 0.933 0.978 0.969 0.972 0.975 0.951 0.951
S3 0.949 0.984 0.967 0.973 0.937 0.983 0.982 0.984 0.987 0.965 0.964
P 0.972 0.945 0.962 0.944 0.960 0.960 0.959 0.959 0.940 0.969 0.966
DI16 0.868 0.888 0.919 0.891 0.893 0.832 0.887 0.865 0.803 0.901 0.900
CP16 0.940 0.902 0.942 0.908 0.932 0.888 0.909 0.910 0.846 0.940 0.941
HD15 0.961 0.967 0.952 0.970 0.937 0.985 0.974 0.979 0.981 0.959 0.960
GI10 0.995 0.983 0.989 0.985 0.977 0.992 0.992 0.994 0.973 0.996 0.995
SP16 0.981 0.983 0.986 0.994 0.966 0.981 0.990 0.987 0.965 0.986 0.988
Note: = Observed response variable; O = Expected response variable (C-2-SLS); k = Expected response variable (SV-2-SLS)

Electronic copy available at: [Link]