Australia Lags on Internet Legal Protections

New Zealand continues to outpace Australia as one of the world’s most “globalized” countries after its government enacted strong legal protections for online transactions, giving it the second-highest number of secure servers per capita in the world.

According to the fourth annual AT Kearney/Foreign Policy Globalization Index, New Zealand is now the world’s eighth most globalized country. Our Kiwi cousins this year rose eight places, to leave Australia far behind in 13th place. The news is not all bad though. The index found Australia too advanced eight places up the list, as a surge of foreign direct investment (FDI) saw inflows more than doubled to reach $15.7 billion, quadrupling our share of global FDI. Much of this investment came as automobile companies such as Ford and Mitsubishi Motors chose Australia for their regional operations and research and development centres, reflecting the country's attractive combination of high productivity and low operating costs, the index reports.

The index puts Ireland (1), Singapore (2) and Switzerland (3) at the top of the list of globalized countries in the world, and finds Western Europe can claim six out of the 10 most globally integrated countries, on measures of economic integration (trade and foreign investment), technological connectivity (internet penetration and usage), personal contact (such as travel and telecommunicating) and political engagement (treaties, memberships of international organizations). And despite its rhetoric, the US's economic integration was lowest of all top 20 countries, suggesting the world’s only superpower remains weak on its ability to practice what it preaches.

If the index bills Ireland as the most global nation for the third year in a row, it is largely thanks to that nation’s continued major investments in high technology and pharmaceuticals, and continuing strong government support for its high tech sector. “In 2002 the nation defied the downward investment trend throughout most of Western Europe, registering it’s highest-ever FDI inflow of $24.7 billion, including notable new investments in the high-growth IT and pharmaceutical sectors,” the index finds. “Intel, for instance, announced that it would spend an additional $2 billion in Ireland over the coming years to manufacture new-generation semiconductor wafers.”

And it found that while Ireland's lead over other countries shrank in 2002, as portfolio capital investment dropped by a quarter from the year before, its strong showing in non-economic facets of global integration helped sustain the country's top position. It once again proved to be a leader in technological connectivity, for instance, ranking seventh worldwide in the number of secure servers per capita.

The index shows that Internet growth in poor countries and increased cross-border travel saw global links deepening even as the world economy slowed. And it finds that during a turbulent year when the prospects for global integration began to look very grim (with the collapse of the World Trade Organization (WTO) meeting in Cancún, Mexico, and the scaling back of plans for the Free Trade Area of the Americas (FTAA), amongst other omens) globalization endured in 2002.

“To be sure, it was a difficult year for global economic linkages, as a downturn in foreign direct investment (FDI) and a sharp drop in portfolio capital flows led to the lowest level of economic integration since 1998,” the index notes.

“But globalization involves far more than the ups and downs of economic cycles. That's why the AT Kearney/Foreign Policy Globalization Index uses several indicators spanning trade, finance, political engagement, information technology (IT), and personal contact to determine the rankings of 62 countries. We found that non-economic drivers of global integration, from travel to telephone traffic, remained remarkably resilient in 2002, while access to the Internet worldwide continued to surge. These variables helped compensate for the weakening of international economic ties and deepened global linkages overall.”

Within the developing world, the global economic slowdown and the Bali bombings didn’t stop Southeast Asia from remaining most globally integrated region. Both Singapore and Malaysia made it into the top 20. AT Kearney notes that thanks to global demand for electronic goods, Malaysia exported more than Australia, although our economy is four times as large.

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