The signification and the feasibility of measuring globalization of economy

Purpose – To introduce the systemic approach towards measuring globalization of the economy that is based on the theory of systemic framework of national competitiveness and economic growth. Design/methodology/approach – Construction of a composite index of global economy by the principal components analysis (PCA) on the basis of 83 individual indicators, linked into the seven spheres of national competitiveness in the period of contemporary globalization. The weights of single indicators in the composite index are determined by two levels: on the first level, the weights of the indicators in the subindices are determined, whereas on the second level the weights of the sub‐indices in the joint composite index of global economy are determined. Reliability of the composite indices is verified by Cronbach's α . Findings – The results of the PCA indicate the high reliability of the joint composite index on the basis of five subindices, whereas the inclusion of the remaining two subindices – international business activities and government role – has lowered the reliability of the joint composite index. This finding is combined with many statistical limitations in the field of measuring globalization of economies. Research limitations/implications – The unavailability and incomparability of statistical data in the field of international business activities presented great obstacles to deeper analysis. Such analysis would be attainable above all by the international harmonization of hard data collecting and greater emphasis on development of qualitative surveys in the field of activities of transnational enterprises. Originality/value – This paper develops the concept for monitoring and benchmarking globalization of economies which is founded on the comprehensive theory and solid methodology. It offers a useful tool for national policymaking.