What is Power?

The Asia Power Index is an analytical tool for sharpening debate on power in Asia. Students of power are generally interested in three questions. What is it? Who has most of it? And how is it changing?

Asia’s economic transformation is reshaping the global distribution of power, with profound implications for war and peace in the twenty-first century. This project maps out the existing distribution of power as it stands today, and track shifts in the preponderance of power over time.

For the purposes of this Index, power is defined as the capacity of a state to direct or influence the behaviour of other states, non-state actors, and the course of international events. In short, the Index seeks to measure the ability of countries to shape and respond to their external environment.

Index Methodology

The Lowy Institute Asia Power Index consists of eight measures of power, 30 thematic sub-measures and 131 indicators. Over half of these indicators involve original Lowy Institute research, while the rest are drawn from hundreds of publicly available national and international sources.

Quantifying international power presents several key challenges. First, the relative importance of factors determining relative power is subject to debate. Second, it is difficult to obtain reliable and cross-comparable data across 27 countries.

The selection of indicators was driven by an extensive literature review and expert consultations designed to address these methodological hurdles. As such, each indicator represents a carefully selected proxy for a broader category of variables often more difficult, if not impossible, to measure comparatively.

The methodological framework of the Index is informed by the OECD’s Handbook on Constructing Composite Indicators. A distance-to-frontier approach is used to compare a country’s results with the best performing and worst performing countries in each data set.

The distance-to-frontier method allows for different indicators to be made comparable across a diverse set of metrics, while preserving the relative distance among the original data values. The method also reflects the notion that power in international relations is relative, measured as a comparative advantage in a given frame of reference.

Weightings

The Lowy Institute has assigned a set of weightings to the component parts of the Asia Power Index that reflect their relative importance for exercising state power.

These authoritative weightings reflect the collective judgement of Lowy Institute experts based on relevant academic literature and consultations with policymakers from the region. They take into account the dimensions of power considered most advantageous to countries given the current geopolitical landscape of the region.

While our weightings are consistent with broadly held views in the policy and scholarly communities, it is of course possible to reach other value judgements about the relative importance of the measures.

An innovative calculator on the digital platform enables users to adjust the principal weightings according to their own assumptions and reorder the rankings on that basis.

Sensitivity analysis has determined that the large number of indicators included in the Index, and variations across countries within those indicators, are quantitatively more important than our weighting scheme. The data points play the primary role in determining the rankings of the Lowy Institute Asia Power Index.

Review

The Index model underwent three stages of review after development. First, the analytical assumptions and findings were submitted through an extensive peer review process. Second, a team of fact checkers verified that the raw data points and their normalised scores were factually correct and drew on the latest available data. Third, PwC provided a limited integrity review of the spreadsheets and formulas used to calculate the eight measures of the Index.

Measures of Power

A country’s comprehensive power is calculated as a weighted average across eight measures of power, each of which aggregates data from three to five distinct sub-measures.

The Index’s measures and sub-measures seek to capture the diverse qualities that enable countries to pursue favourable geopolitical outcomes, as well as to shape and respond to their external environment.

Economic capability: Core economic strength and the attributes of an economy with the most geopolitical relevance; measured in terms of GDP at purchasing power parity (PPP), international leverage, technological sophistication and global connectivity.

• Size: The economic weight of a country as reflected by its GDP, which is the total value of all final goods and services produced annually within an economy. Purchasing power parity exchange rates are used to allow for a reliable comparison of real levels of production between countries.

• International leverage: Resources that give governments enhanced financial, legal and sanctioning powers abroad. These include global corporations and internationalised currencies, as well as sovereign wealth funds, export credit agencies and official reserves.

• Technology: The technological and scientific sophistication of countries. This is measured through indicators such as labour productivity, high-tech exports, supercomputers, renewable energy generation and input variables including R&D spending.

• Connectivity: The capital flows and physical means by which countries connect to and shape the global economy, including through international trade, global inward and outward investment flows, merchant fleets and international aviation hubs.

Military capability: Conventional military strength; measured in terms of defence spending, armed forces and organisation, weapons and platforms, signature capabilities and Asian military posture.

• Defence spending: Annual spending on military forces and activities. This sub-measure looks at current resources devoted to maintaining, renewing, replacing and expanding military capability, measured in terms of military expenditure at market exchange rates and estimated defence-sector PPP rates.

• Armed forces: Total active military and paramilitary forces, readiness and organisation. This sub-measure is principally focused on the size of armed forces, but also takes account of their combat experience, training and preparedness, as well as command and control structures.

• Weapons and platforms: A country’s stock of land, maritime and air warfare assets and capabilities. This sub-measure consists of a number of proxy indicators for capability across the three domains and assesses the sophistication of weapons and platforms.

• Signature capabilities: Military capabilities that confer significant or asymmetric tactical and strategic advantages in warfare. These include ballistic missile capabilities, long-range maritime force projection, intelligence networks, and defensive and offensive cyber capabilities.

• Asian military posture: The ability of armed forces to deploy rapidly and for a sustained period in the event of an interstate conflict in Asia. This sub-measure consists of qualitative expert-based judgements of a country’s ability to engage in either a maritime or continental military confrontation in the region.

Resilience: The capacity to deter real or potential external threats to state stability; measured in terms of internal institutional stability, resource security, geoeconomic security, geopolitical security and nuclear deterrence.

• Internal stability: Institutional and environmental factors that enhance domestic governance and provide protection from external interference in internal affairs. This sub-measure includes indicators assessing government effectiveness, political stability, major ecological threats, and the absence of internal conflict.

• Resource security: Secure access to energy and other critical resources essential to the functioning of a country’s economy. This sub-measure looks at dependency on energy imports, energy self-sufficiency levels, refined fuel security and the supply of rare-earth metals.

• Geoeconomic security: The ability to defend against other states’ economic actions on a country’s geopolitical interests and economic activity. This sub-measure looks at an economy’s diversity of export markets and products, as well as its levels of dependency on primary trade partners and global trade.

• Geopolitical security: Structural and political factors that minimise the risk of interstate conflict and enhance a country’s territorial security. This sub-measure includes indicators such as population size relative to neighbours and geographic deterrence based on landmass, as well as active border disputes and legacies of interstate conflicts with neighbours.

• Nuclear deterrence: Strategic, theatre and tactical nuclear forces that can be used to deter potential aggressors by threatening a retaliatory nuclear strike. This sub-measure assesses nuclear weapons range, ground-based nuclear missile launchers and nuclear second-strike capabilities.

Future resources: The projected distribution of future resources and capabilities, which play into perceptions of power today; measured in terms of estimated economic, defence and broad resources in 2035, as well as working-age population forecasts for 2050.

• Economic resources 2035: Future economic size and capabilities. This is measured by forecast GDP at purchasing power parity in 2035 and the Beckley formula for estimating economic power; multiplying forecast GDP by forecast GDP per capita.

• Defence resources 2035: Future defence spending and military capability enhancements. This sub-measure consists of two indicators. The first looks at forecasts of absolute levels of military expenditure in 2035, holding the current ratio of defence spending to GDP constant. The second looks at expected gains in military expenditure as a proxy for investments in military capability above replacement levels.

• Broad resources 2035: Estimated score for a country’s broad resources and capabilities in 2035. This sub-measure estimates broad resources in 2035, based on every country’s current ratio of GDP and military expenditure to their aggregate score for economic capability, military capability and resilience.

• Demographic resources 2050: Demographic variables that are expected to contribute to future GDP beyond 2030. This sub-measure consists of a forecast of the working-age population (15–64) in 2050 as well as the expected labour dividend from gains in the working-age population adjusted for quality of the workforce.

Economic relationships: The capacity to exercise influence and leverage through economic interdependencies; measured in terms of trade relations, investment ties and economic diplomacy.

• Regional trade relations: The ability to influence other countries through bilateral trade flows and relative dependencies. This sub-measure focuses on an economy’s relative importance as an importer, exporter and primary trade partner for other countries, based on annual bilateral trade flows.

• Regional investment ties: The ability to influence other countries through foreign direct investment flows and relative dependencies. This sub-measure focuses on an economy’s relative importance as a source and destination of foreign investment for other countries, based on ten-year cumulative flows of foreign capital investment.

• Economic diplomacy: The use of economic instruments to pursue collaborative interests and beneficial geopolitical outcomes. This sub-measure tracks economic diplomacy through free trade agreements and outward foreign assistance flows.

Defence networks: Defence partnerships that act as force multipliers of autonomous military capability; measured through assessments of alliances, regional defence diplomacy and arms transfers.

• Regional alliance network: Number, depth and combined strength of defence alliances in the region. This is measured in terms of codified security guarantees, military personnel deployed in Index countries, joint military training exercises, arms procurements from allied partners and combined operation years with allies.

• Regional defence diplomacy: Diversity and depth of defence diplomacy in the region. This sub-measure assesses defence dialogues, defence consultation pacts, foreign deployments between non-allied defence partners, joint military training exercises, combined operation years and arms procurements from non-allied countries.

• Global defence partnerships: Arms trade patterns indicative of global security partnerships and collaboration across defence industries, measured in terms of annual arms trade flows and number of arms export recipients over a five-year period.

Diplomatic influence: The extent and standing of a state’s or territory’s foreign relations; measured in terms of diplomatic networks, involvement in multilateral institutions and clubs, and overall foreign policy and strategic ambition.

• Diplomatic network: The regional and global reach of a country’s diplomatic offices, measured in terms of total number of embassies, high commissions, permanent missions and other representative offices.

• Multilateral power: A country’s participation and diplomatic clout in multilateral fora. This sub-measure examines membership in select summits, diplomatic clubs and intergovernmental organisations, as well as financial contributions to the United Nations and development banks, and voting alignment with other countries in UN resolutions.

• Foreign policy: The ability of government leaders and foreign policy bureaucracies to advance their country’s diplomatic interests. This sub-measure aggregates qualitative expert-based judgements of how effectively leaders pursue their country’s diplomatic interests, their demonstrated level of strategic ambition, and the wider efficacy of a country’s foreign policy bureaucracy. This year, the sub-measure includes a one-time indicator measuring expert perceptions of the handling of the Covid-19 pandemic and its reputational impact on countries.

Cultural influence: The ability to shape international public opinion through cultural appeal and interaction; measured in terms of cultural projection, information flows and people exchanges.

• Cultural projection: Cultural influences and exports that help to enhance a country’s reputation abroad. This sub-measure looks at online search trends in the region, exports of cultural services, global brands, and the international status of a country’s passports, cities and heritage sites.

• Information flows: The regional appeal of a country’s media outlets and universities. This sub-measure looks at the online search trends in the region for selected national news agencies, newspapers, television and radio broadcasters, as well as the number of inbound international students from the region enrolled in tertiary education.

• People exchanges: The depth and influence of a country’s people-to-people links in the region. This sub-measure tracks the size of regional diasporas, and the attractiveness of countries as travel and emigration destinations.

2024 Methodology Changes