Measuring Soft Power: A New Global Index

Serhan Cevik and Tales Padilha

No 2024/212, IMF Working Papers from International Monetary Fund

Abstract: Soft power is difficult to measure directly, and existing indicators—mostly subjective and not always transparent—fail to take into account the multidimensional nature of soft power. In this paper, we introduce a new comprehensive Global Soft Power Index (GSPI) composed of six dimensions for a broad sample of countries over a long span of time. The proposed framework allows for comparisons not only at the “headline” level of the GSPI, but also at the level of the sub-indices, which in turn helps identify and study how countries differ at a granular level of soft power. In a final step of the analysis, we present a possible macro-financial application to investigate the relationship between soft power and exchange rates. The results indicate that some dimensions of the GSPI play an important role in explaining exchange rate volatility. Overall, the composite GSPI presented in this paper provides a systematic approach to measure soft power along its multiple dimensions. By capturing the matrix of soft power characteristics, the GSPI offers significant advantages in comparative analysis of soft power across countries and over time.

Keywords: Soft power; composite indicators; comparative analysis; principal component analysis; K-Means clustering; exchange rate volatility; IMF working paper No. 24/212; composite GSPI; comprehensive Global Soft Power Index; GSPI score; Real exchange rates; Exchange rates; Real effective exchange rates; Exchange rate modelling; Global (search for similar items in EconPapers)
Pages: 24
Date: 2024-10-04
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