Indian Council for Research on International Economic Relations

Seminar Details

29 Nov 2005

VIP2 : A Simple Measure of a Nation’s (Natural) Global Power
November 29, 2005
A seminar on ‘VIP2: A Simple Measure of a Nation’s (Natural) Global Power’ by Dr. Arvind Virmani organized by ICRIER on November 29, 2005.
The USA is often referred to as the most powerful ‘Nation on Earth’, particularly since the collapse of the USSR in 1990. It is well known that the US economy is the largest in the world. But does the size of an economy measure a nation’s power in a global context? During the cold war between the US and NATO and the USSR and Soviet Bloc the world was bi-polar, that is, the two countries USA and USSR were recognized to be the two most powerful in the world of the time. The most visible part of their competition was in space, nuclear, defense and other technology. The possession of advanced military equipment such as ICBMs, submarines, aircraft carriers, bombers and fighters was also an important determination of the relative power of these two nations. Since then complex models have been built to define and measure a nation’s global power. Economic and technological factors play a major role in these models [see eg. Tellis et al (2000)]. Other factors are natural resources, education & skills and investment in R&D and technology development. 

State power is the “extent that (one) effects others more than they affect [one]”[Waltz (1979)]. It is therefore a “combination of its capacity to resist the unwelcome influence of others and conversely to influence others to behave as it wants them to.” International relations experts have been divided on the relative importance of economic strength and military might in the global power of a nation. We resolve this conflict by decomposing national power into two elements: (a) ‘The power potential’ of a country, which depends on economic strength and general technological capability, and (b) military capability. This includes defense and strategic equipment and specific technologies needed for attaining military superiority. Together these define the actual power of a country. International ambition and determination, the ‘Will to power’ play a role in transforming the ‘power potential’ into ‘actual power.’ 

Virmani (2004, 2005) proposed a simple index of ‘power potential’. In this paper we present the index (christened VIP2), discuss its rationale and calculate the value of this index for all the medium and large countries in the world. We also define an index of actual power (VIP) based on VIP2, which requires a separate measure of military capability. 

The paper starts with a discussion on the economic basis of national power. It then defines the VIP2 (the index of power potential). This index is then calculated for about 110 countries. The paper also analyses the implications for permanent, veto bearing membership of the UN Security Council. 

Dr. Sanjaya Baru, Media Adviser to the Prime Minister chaired the seminar.



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