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Economics

Does globalization undermine the role of the state?

Globalization could be defined as the increased interaction and integration among people, organizations, and governments all over the world. Though globalization is usually associated with a rise in international economic activity, it also has impact on other issues such as environment, cross-cultural interaction, and living standards around the world (SUNY Levin Institute). Our world has changed in such a radical way over the last few decades due to globalization that one cannot help but wonder about its impact on the role and power of the state. Since different states are always at different stages of economic development, political stability, and social development, it is reasonable to assume that they all have been affected to varying degrees. While most political analysts and individual observers do not deny the fact that globalization has changed the role of the state, they do seem to have difficulty in reaching a consensus whether globalization has increased or reduced the power of the states.

Hans Morgenthau, a prominent figure in the field of international politics, argued over four decades ago that modern technology such as transportation and communications will render the concept of nation state obsolete. Similarly, Jean Monnet and Robert Schuman, pioneers of the European Union, also believed that habits of cooperation in non-sensitive areas like economic and cultural activity will eventually spill over into sensitive areas. We are also seeing the emergence of several international treaties like the Kyoto Protocol which reflect the idea that human communities around the world share common interests which transcend geographical borders (Dhanapala). It appears that individuals like Hans Morgenthau, Jean Monnet, and Robert Schuman would have replied that globalization will undermine the role of the states over time if asked the question. Their opinion might have been shaped by the idea that globalization strengthens economic interdependence among nations, resulting in lower bargaining power as well as autonomy.

The Economist’s John Micklethwait and Adrian Wooldridge also argued in their book A Future Perfect that globalization will continue to undermine the role of the state, both from within and outside. First of all, groups within the state will pursue self-interests and government and secondly, international supranatural bodies and international authorities like World Trade Organization (WTO) and United Nations will focus on global social, economic, and trade policies irrespective of their impact on local national interests (Buffin Partners, Inc.). It is possible that Micklethwait and Wooldridge were also reminding us that businesses now outsource in search of lower costs irrespective of the impact of their actions on local economies including employment levels.

Modern technology has also been causing the decline of nation-state in the era of globalization. We are witnessing the emergence of capitalist economies around the world which lessen the involvement of state in economic affairs. Similarly, various NGOs are having a significant impact on the lives of the citizens of nation-states. These trends have reduced the states’ “capacities for governance”. We are also witnessing the emergence of a singular global culture which can be exemplified by George Ritzer’s “McDonaldization of society” argument (Ardic).

The debate so far has supported the argument that globalization is undermining the role of the state, there are opposing voices as well. Economist Paul Evans argues that the nation- states are essential for the growth of globalization as they provide organizational structure, predictable rules, and infrastructure. Economists Paul Hirst and Grahame Thompson state that globalization is not a new phenomenon but has been active since the 19th century and even prefer the term international in place of globalization because states manage both domestic economies as well as economic relations beyond national boundaries. Anthony Giddens claim that states gain greater global influence at the expense of autonomy so globalization is just a trade-off (Ardic). One could take China as an example. The country has indeed lost some autonomy by joining WTO but at the same time has also gained greater influence in global political affairs due to its economic might.

Another argument that dispels the notion of declining state influence is that globalization has not undermined the state but just changed its role from “control-oriented” to “steering”. Examples include shift of focus from production of goods and services to creating the right economic environment, focus on protection of public goods, focus on issues of global governance, and improving the capabilities of the state to match its role. In addition, states are also important for particularly protecting vulnerable groups like infant industries, poor people, and the environment (United Nations Technical Corporation). One can conclude from these arguments that the role of states has not declined, just its nature has just changed due to the changing realities on the ground.

I believe that globalization has undermined the role of the state and we have several examples to support the position. First of all, the American corporations continue to be one of the most efficient and profitable in the world yet they choose to outsource and there is little U.S. Government can do to persuade them to create jobs at home except through costly incentives. We have also witnessed the power of social networking during the events of Arab Spring as to how it has become difficult for states to suppress the voice of their people due to monitoring and even intervention by international entities such as NGOs and foreign governments. States could keep their internal affairs secret with great degree of success in the past but the advancements in technology has made it difficult for them to escape accountability for potential violations of human rights or other unethical conducts.

We also know that more and more countries are seeking common standards such as IFRS in Accounting to encourage economic integration. Similarly, China has historically been a closed economy but now it cannot protect its local industries from foreign competition in the same manner due to WTO membership. The fact that states have lost some power is also evident in the EU crisis as countries like Italy, Spain, and Greece had fewer options to deal with their economic woes because they could not use certain economic tools like currency devaluation. Thus, I believe that the states will continue to lose power and our world will become quite like the European Union, with power mostly residing in the hands of few organizations rather than the states.

Globalization has significantly changed the world we live. It has even led some observers to argue that the role of the states has been declining though critics of this position state that states continue to be important and their role has not declined but only changed. Given the historical events over the last few decades, I believe that globalization has indeed undermined the role of the state and the trend will continue into the future.

References

Ardic, Nurullah. “Friend or Foe? Globalization and Turkey at the Turn of the 21st Century.” Journal of Economic and Social Research 2009: 17-42.

Buffin Partners, Inc. Globalization and the Nation-State. August 2008. 8 February 2013 <http://www.buffinfoundation.org/Commentary_2008_08.pdf>.

Dhanapala, Jayantha. “Globalization and the Nation State.” The Colorado Journal of International Environmental Law and Policy 7 April 2001: 1-8.

SUNY Levin Institute. What Is Globalization? 7 February 2013 <http://www.globalization101.org/what-is-globalization/>.

United Nations Technical Corporation. Globalization and State capacity in the Asia-Pacific region. 9 February 2013 <http://esa.un.org/techcoop/flagship.asp?Code=RAS01061>.