Working Paper. IEPG 2012: methodology and new analytic tools

Transcription

1 Working Paper IEPG 2012: methodology and new analytic tools Iliana Olivié and Manuel Gracia Elcano Royal Institute

2 IEPG 2012: methodology and new analytic tools Iliana Olivié Senior Analyst for International Cooperation and Development, and Coordinator of the IEPG project, Elcano Royal Institute. Manuel Gracia Research Assistant, Elcano Royal Institute. Theme The Elcano Global Presence Index (IEPG, after its Spanish acronym) captures the changes in the global presence of 60 countries. This year s edition is especially focused on the European Union. Summary As in the two previous editions, the IEPG calculates the global presence of a selection of countries in the economic, military and soft fields. The 2012 edition of the IEPG widens the choice of countries to 60, as well as designing an IEPG for the European Union and a European presence index (IEPE, after its Spanish acronym) for each of the 27 member states. This document summarises the methodology underlying the IEPG. Secondly, it explains the methodological challenges and solutions in calculating an index to evaluate the global presence of a United States of Europe. Finally, it describes the methodology of the IEPE, which is calculated for the 27 EU member states in The Annex provides a list of estimated cases. Introduction This paper presents the methodology employed for the third edition of the Elcano Global Presence Index (IEPG). This 2012 IEPG aims to measure and order the global presence of 60 countries in the spheres of the economy (energy, trade and investments), the military and soft power (migration, tourism, sport, culture, information, technology, science, education and development cooperation). The methodology is obviously based on that of the previous edition (2011 IEPG),1 which had in turn been the result of the debates following the first edition (2010).2 The second edition had introduced changes to both the means of calculating global presence in certain dimensions and the way in which they were combined to build the final synthetic index though this did not involve changing the definition or the functionality of the index, or its methodological pillars. For this third edition, the IEPG methodology is now deemed to be consolidated. This year, efforts have focuded instead on making full use of the index s analytical and explanatory capacity. Of the many changes in the international scene, the most prominent has been the economic and increasingly political, and even military rise of 1 Iliana Olivié and Ignacio Molina (2012), Measuring the international presence of countries: the Elcano Institute's IEPG Index methodology revisited, WP, n 9/2012 (translated from Spanish), Elcano Royal Institute. 2 Iliana Olivié and Ignacio Molina (2011), Elcano Global Presence Index, Estudios Elcano, nº 2 (translated from Spanish), Elcano Royal Institute. 2

3 a significant group of developing countries. The most notable example is China, which is now the second largest global economy, but the number of cases is rapidly increasing. This goes beyond the debate over whether convergence is growing between the Southern and Northern blocs. Another hotly debated issue is Europe s present situation as a political, economic and social union. The current crisis and the problems in resolving it, and therefore with European governance, have dominated many of the analyses by academics and think tanks in recent years.3 Moreover, in its Action Plan for 2013, the Elcano Royal Institute set out priority lines of analysis which seek to define Spain s role in the world and in Europe, and the role of Europe itself on the global stage. Given its practical purpose to serve both the analyses conducted by the Elcano Royal Institute and those of other institutions the current edition of the IEPG seeks to respond, at least partially, to these research and analysis needs. It therefore complements the methodology of the previous two editions with three new additions. First, as well as updating the IEPG with a new 2012 edition, six new countries have been added to the selection for which the IEPG is calculated, bringing the total to 60. These are Algeria, Egypt, Pakistan, the Philippines, Singapore and the United Arab Emirates. The aim is to enhance the IEPG database with emerging and developing economies, increasing the index s scope as a tool for analysing international relations and the world economy (section 1). Secondly, to fulfil one of the aims envisaged since the first edition of the index, the IEPG 2012 is published together with the IEPG EU, which is the global presence index of the EU of 27 member states. In this exercise of political fiction, the aim is to measure the EU s global presence considering it as a political, economic and social union in other words, as a United States of Europe. The aim, as for individual countries, is to provide a tool and a measure to allow the real, objective and tangible presence of the EU to be valued and compared with its relative weight on the global stage (section 2). The specific issues concerning the EU can also be explored further with the third addition to the IEPG, which is actually a new index. In this edition, the IEPG includes the Elcano European Presence Index (IEPE). This IEPG on a European scale serves to measure the presence of each of the 27 member states in the specific sphere of the EU and since The aim is to offer an analytical tool to facilitate, for instance, the study of internal (im)balances within Europe, between central and peripheral countries (section 3). 3 For some recent examples see, for example, Fred Bergsten and Jacob Funk Kirkegaard (2012), The Coming Resolution of the European Crisis, Petersen Institute for International Economics, PB 12 1 INET Council on the Euro Zone Crisis (2012), Breaking the Deadlock: A Path Out of the Crisis, Institute for New EconomicThinking Steinberg, Federico (2012), Economía Política de la Reforma de la Gobernanza del Euro, Principios. Estudios de Economía Política, nº 21, pp Federico Steinberg and Ignacio Molina (2012), El nuevo gobierno del euro: ideas alemanas, intereses divergentes e ideas comunes, Revista de Economía Mundial, nº 30, pp Benjamin Cohen (2012), The Future of the Euro: Let s Get Real, Review of International Political Economy, vol. 19, nº 4, pp and Sebastien Dullien and José Ignacio Torreblanca (2012), What is the Political Union?, ECFR Policy Brief, nº 70, December. 3

4 (1) Main elements of the Elcano Global Presence Index (IEPG) By global presence we understand the effective positioning, in absolute terms, of the different countries in the world economy, society and political system. The IEPG thus measures the presence of a range of countries and not their power or influence in the spheres of the economy, defence and other soft areas of external presence such as culture, sport, tourism, migration, science, information, technology, education and international development cooperation. This measure is achieved using objective and tangible data and excluding opinions and perception related data. Similarly, the aim is not to measure the countries level of insertion in the globalisation process or their degree of openness towards it factors which are already measured by other indices of globalisation or economic freedom. Rather, it explores their total international presence and projection compared to other countries and in relation to their own track record. Finally, the focus is exclusively on results based presence, rather than on the efforts made by each country to achieve its presence through, for instance, its adherence to supranational governance structures or budgetary expenditure. In pursuit of these aims, the criteria used to select the variables and indicators of the index are as follows. First, presence is reflected in a single direction what could be deemed its unidirectionality. Secondly, it is the results of presence that are measured and not the means to achieve them. In addition, all the variables have an explicitly external component, in the sense that they reflect cross border presence. Presence is given in absolute and not relative terms in other words, the indicators are not proportional to the demographic or economic size of the country whose presence is being calculated. Next, the IEPG measures the quantity of presence and not its nature. Likewise, as for any other index, the best explanatory capacity is sought with the fewest variables or indicators possible. In seventh and final place, hard data on presence are taken and not data based on judgments or opinions. This year s edition of the IEPG covers the global presence of a selection of 60 countries. The initial selection for which the two previous editions were calculated comprised 54 countries including the 42 with the highest GDP in current price terms, according to World Bank data from That selection also included States which do not belong to this group but which are members of the Organisation for Economic Co operation and Development (OECD) and/or the EU. In addition, all the member countries of the G 20 happened to be represented in one or other of the groups of countries (Table 1). Algeria, Egypt, the Philippines, Pakistan, Singapore and the United Arab Emirates are the next six countries in the ranking of leading economies, according to the World Bank s calculations for Adding these six countries, however, is also a way of updating the 4 The year this project started at the Elcano Royal Institute. 4

5 list of countries for which the IEPG is calculated since they have moved up the ranking between 2008 and In 2011, the United Arab Emirates were the 28th world economy, with Singapore the 41st, Egypt the 43rd, the Philippines the 44th, Pakistan the 47th and Algeria the 49th. Thus, including these other countries the IEPG is calculated in this edition for the top 49 world economies by the 2011 GDP in current dollars, according to the World Bank. Aside from any other countries that might be incorporated into next year s edition, Croatia will be a definite addition, since it joins the EU in July Finally, in terms of country selection, bear in mind that by making calculations at time intervals that go back to 1990, the intention of the project is to show the two bloc world, even if in decline. Thus Russia s 1990 values refer to those of the Soviet Union, those of Germany to the German Federal Republic, those of the Czech Republic to Czechoslovakia, and those of Slovenia to Yugoslavia. Table 1. List of IEPG countries The areas of external presence included in the Index are those of Economic, Military and Soft presence. For each of these, indicators have been used which seek to capture all of the dimensions of external presence in each of these spheres. The variables, indicators and sources for this 2012 IEPG are the same as for the previous edition (Table 2). For more details on the debates and criteria that guided this selection, see Olivié & Molina (2011 and 2012). In the case of the Information variable, at the end of 2012 the series of the International Telecommunication Union continued to offer data only up to 2010 therefore, for the 5

6 2012 IEPG, the data included for the previous year is repeated. In the case of Technology, the series provided by the World Intellectual Property Organization includes data up until the year Nevertheless, the data since 2009 shows abnormalities due to pending updates. A decision was therefore taken to repeat the values used for the 2011 and 2012 IEPG editions. Regarding Development cooperation, it has not been possible to obtain data for any of the six new cases, either from national or other international sources, on the volume of cooperation disbursed or budgeted. It was therefore deemed preferable, as for the 2011 IEPG, to consider that development cooperation in those countries had no presence in the total rather than making an estimate.5 In this 2012 edition, around 400 figures have been estimated. Thus, the proportion of missing and estimated cases only reaches 7% of the database, which includes over 5,400 observations. Again, the hot deck method has been used for these estimates. This year, as in the 2011 edition, the performance of the variables is assumed to be linear with the exception of Sports, and the minimum and maximum limits on the scales have not changed either. When adding up the variables in the three groups of Presence and also for the final index, the weightings obtained in the survey carried out for the last edition are maintained. Table 2. IPEG variables, indicators and sources 5 In the case of Algeria, although it is assigned a zero value, some instances are known of disbursements to Saharan refugee camps, Palestine and Mali. A similar situation occurs with Pakistan: there are records of programmes in the education sector but the amounts assigned, budgeted or disbursed are unknown. The authors wish to thank Ventura Rodríguez and Bibian Zamora for this information. 6 Again this year, the authors are grateful to Thomson Reuters (Philipp Purnell and Sébastien Vellay) for their cooperation in providing data to build the Science indicator. 6

7 (2) Incorporating the EU into the IEPG7 One of the new features of this year s edition of the IEPG is its calculation for the EU 27. This exercise is designed to quantify the global projection of the Union, as if it were a political and economic union with its own identity. In general terms, the methodology involves totalling the global presence of each member state and deducting intra EU flows. As will be described below, however, the exercise has not been free of methodological challenges. (2.1) Methodological assumptions and challenges The first year for which the IEPG of the EU is calculated is This is the first time interval after the major 2004 enlargement to incorporate 10 new member states, which increased the EU to 25. To form the current EU 27, Romania and Bulgaria were also incorporated in 2007, thus creating the first methodological challenge. This has been resolved by calculating the IEPG of the EU in 2005 for a theoretical EU 27 which groups together the EU of the 25 existing members that year as well as Bulgaria and Romania. Moreover, to measure the EU s presence in the world, the same variables used in the IEPG calculations for the rest of the countries must always be maintained, insofar as possible, to facilitate comparison. For each of these variables and for each European country, the intra EU and extra EU flows must be differentiated, since merely totalling the results of each member state would also record their projection in other member states consider, for example, the intra and extra European trade in German goods. This distinction between flows has been made feasible by using additional sources of data, and especially Eurostat. In some cases the problem is not merely an accounting or a statistical one, as would again be the case with trade in goods. Some variables pose a conceptual challenge. Consider the cases of Sports, Information, Technology and Science, which are by definition variables of global projection, making it complicated to extract the intra or extra EU component from their global presence (see subheading 2.2). Finally, as previously shown (Olivié & Molina, 2011 and 2012), the scale used ranges between a theoretical minimum of 0 and a maximum of 1,000 points for the maximum value recorded in each series in This maximum value has been respected so that the EU as a whole can exceed the value of 1,000. (2.2) Variables in the IEPG EU: Economic presence For all of the variables within the economic dimension energy, trade in primary goods, manufactures, and services and investments using Eurostat has allowed a differentiation between intra and extra EU flows. The database itself makes it possible 7 In order to incorporate the EU into the IEPG and build the IEPE, a meeting to discuss methodology was held with various specialists in European, methodological and/or scientific and technological issues. The authors wish to thank them for their contributions and comments. The participants were Alfredo Arahuetes, Marisa Figueroa, Narciso Michavila and José Molero, as well as the analysts of the Elcano Royal Institute Ignacio Molina, Alicia Sorroza and Federico Steinberg, in addition to the authors. 7

8 to select the EU 27 as the origin of flows and the rest of the world (excluding the EU itself) as the destination. For all the variables, Eurostat data are offered in euros, while those recorded for the rest of the IEPG countries are in dollars. Therefore, the results in euros have been converted into dollars using the euro dollar exchange rate of the last month of the year, according to Eurostat. Military presence. Within Military presence, the IEPG includes the troops deployed throughout the world and the capacities required for their deployment. The same data source which is used for the IEPG as a whole (IISS) also provides the required data on the troops of each member country deployed outside EU territory. In the case of equipment, it is deemed in its entirety to be a tool of external projection, since the internal and external space of the EU cannot be distinguished here. Therefore, the decision was taken to combine the military capacities of each member state and grant this value to the EU as a whole. Soft presence Migrations. To measure the EU s presence in migration flows, the number of immigrants from outside the Union has been used for each member state. Eurostat provides data on the immigrants with European nationality in each member state, which is subtracted from the total immigration figure offered by the United Nations. The aggregate value of this result for each member state is the value accorded to the EU 27. Tourism. As in the case of migration, Eurostat offers data on the number of travellers originating from within the EU who stay in tourist establishments a figure which can be subtracted from the total. Nonetheless, the series has only been in existence since 2007, so that year has been used to build the IEPG EU for Sports. The Sports variable presents significant methodological difficulties when it comes to differentiating its presence inside and outside Europe given its intrinsic global dimension. It is measured on the results of the most recent summer Olympic Games and male professional soccer. In order to establish a proxy for sport projection outside Europe, television audiences have been used which also serve to weight each sporting modality within the total IEPG. The audience report drawn up by Kantar Media for FIFA8 puts the European audience at the last football World Cup final (South Africa 2010) at 33%, while the European audience for the opening ceremony of the Olympic Games in Pekin in 2008 was 30% of the total according to Nielsen.9 Therefore, we consider the EU s external projection in Sport to account for 70% of the combined projection of its member states. 8 ort.pdf

9 Culture. As for Economic presence, each member state s exports outside Europe of audiovisual works are combined. The data is available on Eurostat. Information. Many of the methodological discussions have centred on building an EU 27 indicator for the Information variable. Bearing in mind that the IEPG uses each country s bandwidth capacity, it is impossible to differentiate the intra and extra European presence using this same variable. At the same time, the EU includes the leading countries in information technology development, which have very high values in the series compared to other non European countries. Therefore, a decision was taken to keep the same variable and give the EU the maximum value registered by a member state in each year for which the IEPG is calculated. In the case of the IEPG 2012, this is the UK s. Technology. Measuring the EU s technological presence using the patents aimed at the external market has not been free of difficulties either. First, despite the fact that the World Intellectual Property Organization the source used for the indicator in the IEPG offers the possibility of selecting Europe as the patent issuer, it applies the geographical rather then the political conception of the region, thus including more countries than those in the EU 27. Therefore, a decision was taken to add up the values recorded for each member state of the EU 27. Secondly, however, the data do not distinguish between the patents registered inside or outside Europe, but rather simply record those aimed at the external market for each member state. One possible way of resolving this problem is to correct the series with that of patents registered in the European Patent Office (EPO) which only records those for European use but specialists in the field advise against the combined used of these two sources since they are not considered methodologically comparable.10 Finally, following the recommendation of the World Intellectual Property Organization itself, the data on patents aimed at the external market of each member state and registered in other European countries were selected in the same database, and then subtracted from the sum total of patents for each member of the EU 27. Science. In the case of Science, the EU value was reached by adding up the values of each member state. Scientific presence, measured through articles published in scientific journals, is considered of global reach, without it being posible to discount the presence in specific geographic spaces similarly, to calculate the IEPG for the US no attempt is made to deduct the scientific presence in some spaces from others. Education. Measuring the EU s presence in the educational sphere requires data on the number of non EU students in tertiary education. Eurostat gives the number of EU students11 following tertiary education in each member state. The difference between 10 The authors are especially grateful to Professor José Molero for his assistance with the methodological solution for this indicator. 11 The data provided by Eurostat also include students from EU candidate countries (Turkey, Macedonia, Iceland, Montenegro and Serbia), which cannot be deducted. 9

10 the sum of the figures used for each member state to calculate the IEPG total ie, the number of foreign students in tertiary education and the sum of the foreign but EU students gives the total number of non EU students taking tertiary education in the EU. Development cooperation. This is only concerned with cooperation aimed at developing countries, as defined by the OECD. None of those is a member of the EU, hence by definition the sum of the aid given by EU member states provides the indicator of the Union s global presence in this sphere. Table 3. IEPG EU variables, indicators and sources (3) Elcano European Presence Index (IEPE) The third new feature in this edition of the IEPG is the incorporation of a measure of the presence of the EU 27 member states within the Union itself: the Elcano European Presence Index (IEPE). To some extent, methodologically, this indicator is the flipside of the IEPG EU. In a similar way to the IEPG, it shows the cross border presence of the member states, which in the case of the IEPE is limited to the European (and not global) space. The methodology thus allows comparisons between member states, but not with the IEPG of other countries. It facilitates a comparative analysis of the current situation and recent evolution of the positioning of European countries within the Union. In addition, comparing member states positions in the IEPE and the IEPG can offer significant information. 10

11 (3.1) Methodological assumptions and challenges The IEPE aims to be an IEPG on a European scale, so the structure and methodology of the IEPG have been respected as far as possible, although some slight modifications have occasionally proved essential. Thus, in general terms, the IEPE modifies the IEPG by reducing the measures of presence on a global scale to the intra European scale for example, intra EU migration flows, exports to the rest of the EU or European foreign students. It almost always does so by using Eurostat data, just as for the calculation of the IEPG EU. Obviously, the change in scale also reduces the scaling: the value of 1,000 assigned to the maximum indicator of the 2010 series in the IEPG is given, in the case of the IEPE, to the maximum value registered in 2010 by a member state and for the intra European presence series. Just as for the IEPG EU, and with the same variables, conceptual problems emerge: how can we differentiate the intra EU presence of Sport when this is measured by Olympic medals and FIFA points? And the bandwidth that reflects presence in terms of information? Or academic publications? For the IEPE we have resolved this methodological problem by changing the scaling: the same values for each of the variables Sport, Information and Science are maintained, establishing the maximum value exclusively as that of the member state series. Finally, just like the IEPG EU, the IEPE is calculated from 2005 onwards for each member state of the EU 27. Although the 27 member EU was not formed until 2007 with the incorporation of Romania and Bulgaria, the IEPE of these countries is also calculated in (3.2) Changes in the variables Economic presence. To measure economic presence within the IEPE, the same variables have been maintained as in the IEPG. As in the calculation of the IEPG EU, using an alternative source Eurostat has facilitated the differentiation of intra EU exports of energy, primary goods, manufactures and services from the total, as well as the disaggregation of the investment stock of each member state in the EU 27 from the global amount (Table 4). Military presence. Military presence is not included as a variable in the IEPE: European troops are almost all deployed outwith European territory, as are their related capacities. In general terms, the military dimension can be considered uncharacteristic of intra European presence. It is therefore given a value of zero for each member state and each year in the calculation of the IEPE. Soft presence Migrations. The presence of each member state in migration flows is measured 11

12 according to the number of residents with the nationality of another EU 27 country. The data source is Eurostat. Tourism. Eurostat provides data on the number of travellers from within the EU staying in tourist establishments for all of the member states, with the exception of Ireland. The series has only been in existence since 2007, so that year has been used to build the IEPG EU for In the case of Ireland, the data have been obtained from the World Tourism Organization. Sport. The methodological problems that the Sport variable presents have already been discussed and they are the same here as for the construction of this series in the IEPG EU. As indicated under the earlier subheading, the problem is resolved by changing the scaling to adapt it to the European space. The data source is the same as for the IEPG. Culture. The presence of the member states in cultural matters within the EU 27 is measured by intra European exports of audiovisual services data obtained from Eurostat. Nevertheless, this source does not offer information on the intra European exports of Spain,12 Portugal,13, Greece14 and the UK.15 Therefore, national data sources have had to be used in these specific cases.16 Information. As has already been mentioned, this variable presents the methodological challenge of how to disaggregate a specific regional presence for a concept which is intrinsically global. As with Sport and Science, the figure recorded for the IEPG in this case, installed bandwidth capacity is maintained, even if its contribution to the IEPE changes in line with the change in scaling, which only includes the maximum and minimum values within the EU 27. Technology. While Technology in the IEPG is measured by the total external oriented patents, measuring the intra European presence involves using the data on patents registered with the European Patent Office, which Eurostat gathers. It records the patents valid in all of the signatory countries of the European Patent Convention, that is the 27 EU member states and another 11 countries.17 The indicator is not perfect since the European space of reference does not coincide exactly with that of the EU 27. Science. Here too, the IEPE is the result of the values that each member state records for the IEPG with a change in scale to the European space. The reference points remain the scientific publications in journals indexed by Thomson Reuters in the Web of Knowledge. 12 Data obtained from the Agencia Estatal de la Administración Tributaria. Departamento de Aduanas, Estadísticas de Comercio Exterior. The data include exports of films and hardware with audiovisual content. 13 Data obtained from the Estatísticas do Comércio Internacional (INE). Exports of hardware with audiovisual content. 14 Data obtained from the balance of payment statistics provided by the Bank of Greece. 15 Datos obtained from the Office for National Statistics of the United Kingdom. Exports of cinematographic and television services. 16 The authors wish to thank Dr Ángel Badillo for his invaluable help in collecting this data. 17 Albania, Switzerland, Croatia, Iceland, Liechtenstein, Monaco, Macedonia, Norway, Serbia, San Marino and Turkey. 12

13 Education. To measure presence in Education in the IEPE, data is used that shows the number of EU students18 in tertiary education in each member state, according to Eurostat. Development cooperation. For the same reasons as Military presence, Development cooperation presence has been left out of the IEPE. By definition, the aid flows channelled from the EU and its member states cannot be directed to other members of the Union. Here too, a value of zero is assigned to this variable in each member state and for each year. Table 4. IEPE variables, indicators and sources 18 The data provided by Eurostat also include students from EU candidate countries (Turkey, Macedonia, Iceland, Montenegro and Serbia), which cannot be deducted. 13

14 Appendix A. Estimated cases 14

15 Appendix A. Estimated cases (cont.) 15

16 Appendix A. Estimated cases (cont.) 16

17 Appendix A. Estimated cases (cont.) 17 Elcano Royal Institute / Real Instituto Elcano Príncipe de Vergara, Madrid - Spain info[at]rielcano.org