Analysis of Whether Globalization has Caused the Decline of the States Economic Importance - Term Paper Example

ANALYSIS OF WHETHER GLOBALIZATION HAS CAUSED THE DECLINE OF THE S ECONOMIC IMPORTANCE Introduction Globalization, defined the growth of integration of the world economy that contributes to an increase in the level of communication, products, ideas, services and expertise exchange across boards has had both positive and negative impacts. Globalization has had dual effects on the sovereignty of states and countries. With the increased level of world integration, characterized by large volumes of cross-border business, there has been subsequent erosion of the indigenous cultures resultant from infiltration of foreign cultures. Experts argue that globalization has also contributed to the loss of business for indigenous companies and firms. Additionally, with the increased level of information exchange facilitated by modern forms of communication such as the internet, faxes and world audio-visual news reporting on the digital platform, there has been an increase in the number of cross boarder crimes. However, the loss of state economic importance, especially with the increased international trading, regarded as one of the most adverse effects of globalization to countries. While globalization contributes to the expansion and growth of local economies, exposing the local manufacturers to the rest of the world, the reality is that this has had adverse effects on the sovereignty of certain countries. While discussing the contribution of globalization on the decline of the state’s economic importance, this essay will analyze various ways in which globalization has influenced the global economy since the post-world war II era. Sovereignty of a state Sovereignty, defined as the absolute authority over a certain territory stems from the independence of nations. However, various factors challenge this authority. Among these, include the threat of global terrorism, the climate change, and the powers of international organizations and the influence of the global market. Globalization however, is one of the biggest obstacles to the sovereignty of states. Changing concepts of sovereignty in the recent past agree to the existence of pure state sovereignty and human sovereignty. While the pure state sovereignty seeks to protect the interests of the individual state in the international front, human sovereignty protects the interest of the people within a state, which is paramount, and which the state should guarantee (Margdalena, 1996, p.2). Pure state of sovereignty defines a situation where the state directs its political, economic and social life according to its values, free of external influence, pressure or coercion by other states. Recent developments in the global scenario make this not only impossible, but also limit the influence of the state within its own territory. Since the end of the Second World War, the normative framework of human rights creates a sense of obligation by the state towards its citizens (Margdalena, 1996, p. 2). However, economic integration of the country to the rest of the world considerably limits the options available to sates, subsequently limiting the range of policy options available to the states. This considerably limits the capacity of states to meet their obligations to their citizens. Ways in which globalization impacts on this sovereignty Post World War II states’ economic power then and now Historians argue that the Second World War laid the foundation for the high level of world economic, political and social integration currently experienced by the world. Were it not for the various factors necessitating the collaboration of different countries, probably, the world would never enjoy the high level of integration it enjoys today (Meyer 2000, p. 233). Increased cross-border communication and ideas sharing between various countries taking part in the war characterized the Second World War. Further, the high demand for weapons, firearms, ammunition, tankers, and war crafts and submarines necessitated increased need for communication among the various countries. In an effort to amass weapons for use during the war, non-manufacturing countries procured these weapons from the manufacturing countries. Fought in various fronts, through the land, the sea and air, there was a high demand for countries to offer each other support especially with the battlegrounds, seaports for tankers docking among other needs. Additionally, there were increased pacts signed before and after the Second World War. Most popular of these packs was the Germany and Austria-Hungary pact, the allied front, among others. These later formed the basis for the post world war trading pacts, especially in the European countries, America and African countries (Bordo et al. 2003, p. 144). When the war set in, some of the economies suffered significantly. The war interrupted communication and transport lines between the countries. Further, it affected the running of the economies, as there was massive destruction of infrastructure, death of workers as well as increased expenditure in the war. There was the need for countries to establish proper relations with each other to recover from the impact of the war. Cohen (2001, p. 75) argues that while the war had adverse effects in the global economy, it opened the world to unimaginable levels. However, the impact of the increased level of integration then was not as defined as it is currently. Countries then did not engage in the level of business, ideas and information sharing, as it is the case currently. Although there were high levels of integration in those times between the allied countries then, there were little economic interests between countries. Interestingly though, economic interests was one of the contributing factors to the outbreak of the war (Meyer 2000, p. 234). While some countries fought for colonies, especially in the African continent, others wanted to show their economic and military superiority. More importantly, the era of industrial revolution, which took place in the 19th century, between 1840s to late 1800s created fertile grounds for the events that took place during the Second World War. While initially there was a high demand for labor to work in plantations and manufacturing companies, the end of the war saw an increased uptake of technology in the production of goods and services provision. With the surplus production by different countries, it became necessary for companies to look for new markets for their products. The rate at which the global economy grew at after the Second World War was amazing (Bordo et al. 2003, p. 146). Perhaps due to the rise of new methods of production, with better performance and more efficient, coupled with the evolution of the concept of management and new ways of doing business contributed to this growth. Catapulting the world to a new level of production, especially in the European and United States countries, there was the need for countries to export products. As such, governments started getting into trading pacts with their allied nations. This father necessitated the protection of different countries’ interests in their trading partners, hence the establishment of foreign dockets in these countries (Barrow 2005, p. 136). Diplomatic relations between countries sored in this era. Every country wanted to establish proper relationships with each other. While the trading pacts then allowed for equitable trade between the partners, the increased need for profitability and economic gains from these pacts has seen an increased level of exploitation of the developing countries by the developed countries. Developed countries saw this as an opportunity to exploit their colonies, thus leading to the era of neo-colonialism. The resultant impacts of the war were far more reaching than they were then. After the war, the world started looking for ways of maintaining peace and preventing the outbreak of a new war (Bordo et al. 2003, p. 146). This led to the formation of the United Nations, which had different organs, all working hand in hand with different member countries. It also saw the formation of umbrella organizations such as the international criminal court, the Red Cross society, among others. The agreements signed during this era, in an effort to prevent further war had considerable influence in the sovereignty of different countries. Despite the sovereignty holding that governments of different countries had the authority to make their own rules and regulations, these pacts undermined this condition. States had to adhere to various conditions in the pacts, which did not observe the sovereignty of the state (Cohen 2001, p. 75). Perhaps what fueled the current need for global integration was the cold war. The cold war divided the various countries into two major ideologies, capitalism and communism. States, aligning themselves along these two ideologies had to show loyalty to their allies. This considerably undermined the sovereignty of different countries. While the communist states advocated for socialism, opposed to the capitalism, capitalist states believed in competition and indirect exploitation. However, the collapse of the United Soviets States, which saw the death of communism, opened these countries to the global competition. The impact of globalization in the current era The fact that states have to formulate their policies in line with the rest of the world undermines the state sovereignty. The wide varieties of policy options available to states after the World War II are no longer available. The infiltration of the world ideologies, policies that the various states should adhere to, in an effort to maintain global peace, economic stability and growth limits the powers of local governments. Influence of policy formulation within a state goes deeper than the interests of the people within the state represented by the government (Oji & Ozioko, 2011, p. 262). Largely, it considers the global requirements, whether in the production of goods, the formulation of laws governing human rights and the methods of production. The most affected form of sovereignty is the economic policy formulation by states across the world. The world, more than ever has to rely on predetermined conditions before formulating their own policies. Through trade and economic integration, financial markets and the competition for new markets, states have to align their policies along the global set standards. While countries now compete for the new markets, raw materials and labor just as organizations do, the financial accounting and reporting standards, capital markets regulation and carbon emission requirements further constrain sovereignty of states (Barrow 2005, p. 136). Additionally, due to the increase in the level of competition at the global platform, countries have resulted to reduced costs of goods, reduced labor costs, and reduced taxation levels in an effort to make their local markets more competitive. Hence, the country indirectly has to conform to the local trends against its own will. According to Oji & Ozioko (2011, p. 264), the UN argues that for the world to achieve economic growth, and then countries should remove trade tariffs to allow free movement of goods and services in these countries. This has further weakened the sovereignty of different states as countries adhere to this directive. Different points of view of globalization Researchers have developed three major theoretical points of view explaining globalization in the world economy. Hyperglobalists, Skeptics and Transformationalists are the main points of view on the increased level of globalization of the world economy. Hyperglobalists perspective of globalization considers globalization as a new epoch in the history of human kind. The new epoch points out to the declining need and diminishing relevance of the nation-states authorities, largely brought about by the economic interest of a globalized market. According to this perspective, there is an increase in the denationalization of the local economies, increasingly becoming more international. Although the Hyperglobalists agree on the general, factors fueling the rise of the globalization, hey disagree on whether these forces are good or bad. Neo-liberals see the increased level of globalization as a good thing to states. They agree that although there are two groups in the globalization process, the winners of the globalized world economy exceeds the losers. On the other hand, the neo-Marxist orientation to globalization hold a lot of skepticism to the neo-liberal thought. According to the neo-Marxists, globalization will only lead to increased levels of exploitation and reinforce inequalities in the global economy (Sally 2000, p. 235). Skeptics approach Proponents of this approach view current trends in the globalization process and international approaches to globalization as more fragmented than globalized. According to these people, the golden age of globalization occurred towards the end of the 19th century and as such, the current trends show regionalization of the global economy. These authors also argue that the old cleavages are have not lost their relevance among the people. They disagree that the world does not draw the third world into the increasingly global economy that destroys old lives due to exploitation. Instead of the increased exploitation as suggested by a number of critics of globalization concept, these authors argue that there is an increased level of marginalization of the third world. As such, these authors see global capitalism as a myth. They disagree with the thought that the growth of multinational corporations render the governance of economic flows and benefits irrelevant (Sally 2000, p. 235). Transformationalists approach According to proponents of this argument, the view of globalization differences from that of the Hyperglobalists and Skeptics mainly because there is no single cause of globalization and that there is no possible way of measuring the outcomes of globalization. Despite the fact that these authors describe the various changes taking place resultant from globalization, their approach is less certain about the historical trajectories caused by these changes. According to these authors, there are much greater factors influencing globalization, against less certain outcomes (Sally 2000, p. 235). Conclusion Globalization, regarded as both a blessing and a vice is here to stay. There is no indication that the rate of the current global integration is likely to slow down. With the need for countries to compete for the global economy and an effort to expand their economies, there is likely to be an increase in the level of integration, exchange of ideas and information. Further, this integration has created yet another form of interaction, that of global policies those countries ought to adhere. While global economy increasingly becomes more liberal, with countries trading with each other at tremendous rates, it has increased the chances of crime, complexity of doing business and the demand for expertise knowledge. As such, the world now, more than ever requires joint policies, despite the fact that they affect the sovereignty of state-nations. Although sovereignty describes the state of complete authority over a particular territory, the reality is that these policies and global requirements more than ever undermine this authority. States cannot enjoy the independence they had during the post-world war II era, if the recent trends in the sharing of information, ideas, products and services. Different perspectives of globalization have sought to explain factors contributing to the growth of the level if globalization in the global economy. Hyperglobalists, Skeptics and Transformationalists are the most common perspectives of globalization. Of these three, transformationalists perspective best explains the factors contributing to the growth of globalization and the possible outcomes. The reality is that althpugh there are numerous factors explaining the increased level of globalization, there are no certain outcomes of the globalization process. Works Cited Barrow, CW 2005, The Return of the State: Globalization, State Theory, and the New Imperialism *, New Political Science, 27, 2, pp. 123-145, Academic Search Premier, EBSCOhost, viewed 21 March 2014. Bordo, M. D., Taylor, A. M., & Williamson, J. G 2003, Globalization in historical perspective. Chicago: University of Chicago Press. Cohen, ES 2001, Globalization and the Boundaries of the State: A Framework for Analyzing the Changing Practice of Sovereignty,Governance, 14, 1, p. 75, Academic Search Premier, EBSCOhost, viewed 21 March 2014. Margdalena, M. M. M 1996, National sovereignty and international organizations. The Hague [u.a.: Kluwer Law Internat. Meyer, J. W 2000, Globalization Sources and Effects on National States and Societies. International Sociology, 15(2), 233-248. Oji, A. E., & Ozioko, M. V. C 2011, Effect of Globalization on Sovereignty of States. Nnamdi Azikiwe University Journal of International Law and Jurisprudence, 257-272. Sally, R 2000, Globalization and policy response: Three perspectives, Government & Opposition, 35, 2, p. 235, Academic Search Premier, EBSCOhost, viewed 21 March 2014. Read More