REPRESENTATION-CONSTRAINED CANONICAL CORRELATION-ANALYSIS: A HYBRIDIZATION OF CANONICAL CORRELATION AND PRINCIPAL COMPONENT ANALYSIS

The classical canonical correlation analysis is extremely greedy to maximize the squared correlation between two sets of variables. As a result, if one of the variables in the dataset-1 is very highly correlated with another variable in the dataset-2, the canonical correlation will be very high irrespective of the correlation among the rest of the variables in the two datasets. We intend here to propose an alternative measure of association between two sets of variables that will not permit the greed of a select few variables in the datasets to prevail upon the fellow variables so much as to deprive the latter of contributing to their representative variables or canonical variates. Our proposed Representation-Constrained Canonical correlation (RCCCA) Analysis has the Classical Canonical Correlation Analysis (CCCA) at its one end (t=0) and the Classical Principal Component Analysis (CPCA) at the other (as t tends to be very large). In between it gives us a compromise solution. By a proper choice of t, one can avoid hijacking of the representation issue of two datasets by a lone couple of highly correlated variables across those datasets. This advantage of the RCCCA over the CCCA deserves a serious attention by the researchers using statistical tools for data analysis.Representation, constrained, canonical, correlation, principal components, variates, global optimization, particle swarm, ordinal variables, computer program, FORTRAN versus detection.

Almost equi-marginal principle based composite index of globalization: China, India and Pakistan

Abstract. The present study proposes an alternative method to construct an index of globalization which is based on the principle of almost equi-marginal contributions (AEMC) or Shapley values of the constituent variables to the overall index rather than the correlation coefficients among the constituent variables and the overall index (the KOF index based on the principal component scores). This has been done by minimization of the Euclidean norm of the Shapley values of the constituent variables. As an exercise, secondary time series data (1970-2013) on the measures of globalization in three different dimensions (economic, social and political) of three economies (China, India and Pakistan) have been used. A comparison of the AEMC index with the KOF index reveals that while the former is more inclusive, the latter is more elitist in matters of inclusion of the weakly correlated constituent variables in the overall (composite) index.  As a consequence, the AEMC index is more sensitive than the KOF index of globalization. Both indices capture the trends in globalization in the countries under study and are highly correlated between themselves. Thus, AEMC is an alternative or perhaps a better method to construct composite indices. Keywords. Globalization, KOF index, Equi-marginal, Shapley value, Global optimization, China, India, Pakistan.JEL. C43, C61, C71, F60, P52

Are democratic regimes antithetical to globalization?

Abstract. In this study we have made an attempt to investigate into the relationship between political regime type (that ranges from authoritarian to democratic) and the extent of globalization which of late has been considered as a path to development. We have made use of the Democracy index (and its constituent indicators) provided by the Economist Intelligence Unit and the globalization index (and its constituent indicators) of the KOF. Applying canonical correlation analysis on the data we have made an attempt to look into the response of globalization to the quantitative measures of democratic (versus authoritarian) practices of the governments in 116 countries distributed over Asia, Africa, Australia, Europe and the Americas. We have also tested the Lee thesis in the context of globalization as a path to development.  Our findings indicate that the empirical support to Lee’s thesis if extended to globalization as a path to development is superficial and does not withstand critical analysis. Contrary to Lee’s thesis, democracy promotes globalization. In African countries political discordance (at the national as well as international level) is not much favourable while in the Asian countries, political will, irrespective of regime type,  is in concordance with globalization. Therefore, it appears that democracies thwart development and by implication, globalization as a means to development.Keywords. Globalization, Democracy, Authoritarian regime, Lee thesis, Canonical correlation, Asia, Africa, Europe, the Americas, Australia.JEL. F63, O54, O55, O56, O57

Trends in globalization of select Asian countries

Abstract. In this study we have constructed a composite index of globalization of select Asian countries during 1970-2014 by minimizing the Euclidean norm of Shapley values of indicator variables contributing to the overall index. As a consequence, the mean expected marginal contributions of constituent variables to the overall index are approximately equal and thus, the overall composite index represents the constituent variables optimally. We call this index the Almost Equal Marginal Contribution (AEMC) index. We find that AEMC index and the KOF index of globalization are highly correlated (Pearson’s r=0.982).  We find that Singapore, Cyprus, Israel, Qatar, Malaysia, Jordan, Lebanon, Turkey, Kuwait, Bahrain and Japan have done very well and scored above 0.7. At the other end, Yemen, Tajikistan, Bangladesh, Bhutan, Iran, Nepal and Myanmar have scored below 0.5. Trends in globalization are increasing in general, but the rate of globalization, which accelerated after 1991, lost its momentum after 2007. Disparities in globalization, as measured by Gini coefficient over the countries under study, were more or less constant up to 1985 but after that they started declining. We have found that the index of globalization goes well with other socio-economic measures such as Economic Freedom Index, International Innovation Index, Social Progress Index, Human Development Index and Corruption Perception Index, showing high values of Kendall’s Tau and Spearman’s Rho. Its association with Democracy Index is rather weak but positive. It is almost uncorrelated with the Gender Gap Index. We observe, therefore, that globalization index is moving well with the indices of socio-economic condition in the Asian countries. Keywords. Globalization, Synthetic index, Asian countries, Shapley values, Equi-marginal contribution.JEL. C43, C71, F02, F60, O53

Globalization under hysteresis: A study of Eastern Bloc Countries, China and India

Abstract. This study is concerned with a great socio-economic experiment in history that replaced the naturally evolved market economy with the humanly designed command economy to achieve a socialist triumph over capitalism, experienced a setback and ultimately returned to the market economy for managing the material aspects of the society. Efforts to open the subject economies in the aftermath of the said experiment are on the contemporary agenda worldwide. Yet, the past pulls the present causing hysteresis that thwarts the momentum of globalization. Using KOF and AEMC indices of globalization (based on KOF data 1991-2014), the paper concludes that most of the countries to the south of Russian Federation (Armenia, Azerbaijan, Tajikistan, Kyrgyzstan, Kazakhstan) have performed rather poorly in globalization efforts. On the other hand, the countries in the north-western side of the Russian Federation (except Moldova) have on the whole performed better. In comparison, China has performed fairly while India lags behind. In spite of all proclamations, unless the political will to globalization is there, globalization cannot progress much further. However, such a political will has not been strong in India. India has remained protectionist of vested interests of politicians, industrialists, business houses and perhaps the intelligentsia, a coalition of the dominant proprietary classes that benefit from the status quo or stagnancy of the Indian economy and society. Globalization in India is under a strong spell of hysteresis on account of the pre-1991 pseudo-socialistic nostalgia as well as age-old internal contradictions.Keywords. Globalization, KOF index, Equi-marginal, Shapley value, Global optimization, China, India, Eastern Bloc.JEL. C43, C61, C71, F60, P52

A Nostalgic Socioeconomic History of Tarar

Abstract. This paper uses an autobiographical mode in narrating the evolution and role of institutions in the development and the subsequent decline of a village economy in Bihar, India. It shows how cooperation helps and later envy, discordance and destructive attitudes overpower the constructive attitudes to life, how such attitudes enter into the cultural fabric of the people and how such changes make the village fall on its knees. The paper highlights the role of social capital in economic development.Keywords. Autobiographical, Village economy, Envy-barrier to development, Cultural economics, Destructive leadeship.JEL. B40, P36, P37, P49, Z13

A Study on Regime Type and Globalization in Simultaneous Equation Framework

In this study we build a simultaneous equation model in which the measures of different aspects of globalization (attributable to KOF) and different aspects of democracy (attributable to EIU) are related in seven structural equations. A bi-directional relationship between democracy and globalization is visualized. The model is estimated by the conventional 2-SLS as well as a modified 2-SLS in which Shapley value regression is used at the second stage of 2-SLS. On the basis of our analysis, we document several findings. First, we find that democracy and globalization promote each other and hence there is a bi-directional causality with positive relationships running both ways between democracy and globalization. At a national level, there may be various intermediary conditions that modify the relationship as well as set in motion a complex of positive and/or negative feedbacks to accelerate or retard the pace of globalization and democratization in a country-specific manner. However, when a large number of countries are studied, a clear relationship emerges out. Second, there is a need to estimate the structural coefficients of the model cautiously since the regression equations may be suffering from collinearity among the predictor variables. The Shapley value regression based 2-SLS has performed better than the conventional regression in estimating the structural parameters of the model. Third, the system methods of estimation of the model gives better results than what are obtained by the single equation methods of estimation of structural parameters of the model

A note on computing the standard errors of estimate of composite index

Abstract. This short note proposes working out of the standard errors of estimate of composite indices when they are constructed by using intrinsically derived weights. It illustrates the proposed method, using the jackknife re-sampling technique, by an example that relates to crime of different types in Uttar Pradesh (India). Improvements are suggested through bootstrapping. Keywords. Composite index, Standard error of estimate, Jackknife resampling, Crime data, Uttar Pradesh, India.JEL. C43, C61, C71