Globalization
One index of globalization is the "KOF Index of Globalization", which measures three important dimensions of globalization: economic, social, and political. Another is the A.T. Kearney / Foreign Policy Magazine Globalization Index.
Measurements of economic globalization typically focus on variables such as trade, Foreign Direct Investment (FDI), Gross Domestic Product (GDP), portfolio investment, and income. However, newer indices attempt to measure globalization in more general terms, including variables related to political, social, cultural, and even environmental aspects of globalization.
The Commanding Heights
The authors take the thesis that prior to World War I the world effectively lived in a state of globalization, which they term the First Era of Globalization. The authors define globalization as periods when free markets predominate and countries place few if any limits on exports, immigration, imports, or exchanges of information. Overall, they see globalization as a positive movement that improves the standard of living for all the people connected to it—from the richest to poorest. According to the authors, the rise of communism and fascism, not to mention the Great Depression, nearly extinguished capitalism, which rapidly lost popularity. After World War II, the authors note that the work of economist John Maynard Keynes came to be widely accepted in Western economies. Keynes believed in government regulation of the economy and the authors underline this as Keynes' great influence and prestige. In the authors' opinion, these so-called commanding heights were often owned or severely regulated by governments in accordance with Keynes' ideas.
The authors then discuss how the political changes of the 1980s ushered in accompanying changes in economic policy. The old trend changed when Margaret Thatcher became Prime Minister of the United Kingdom and when Ronald Reagan was elected President of the United States. Both these leaders parted ways with Keynesian economics and they rather governed more in the tradition of the works of Friedrich Hayek, who opposed government regulation, tariffs and other infringements on a pure free market; and of Milton Friedman, who emphasized the futility of using inflationary monetary policies to influence rates of economic growth. In practice, Hayek's policies were applied only selectively as Reagan's 1986 income tax reforms substantially increased taxes on the lowest quintile of wage-earners while dramatically decreasing rates for the upper two quintiles. In contrast to Hayek's, Reagan's policies also continued and expanded tax write-offs, rebates and subsidies for many large corporations.. Friedman's monetarism was also abandoned in practice as government-issued debt as a percentage of GDP rose dramatically throughout the 1980s. While Thatcher, Reagan and their successors made sweeping reforms, the authors argue that the current era of globalization finally began around 1991 with the collapse of the Soviet Union. Since then, they assert countries embracing free markets have prospered on the whole while those adhering to central planning have failed.