The Changing Role of the State amid Economic Globalization Processes - Essay Example

Economic Globalization and Role of the This essay seeks to establish the extent to which economic globalization has led to changes in the role of the state. Due to economic globalization, states have adopted a raft of measures to ensure they continue to gain from the interconnectedness of the global economy. The quest to attract the benefits of globalization to a nation has resulted in adopting strategic measures and policies seen as necessary for the domestic markets to be interlinked with global economies. Given the new economic realities that states have to operate in, this essay will investigate the question: How far has the states gone to attract these benefits into their domestic markets? The term globalization can be traced back to the late 1980s when it became fashionable idea that described contexts related to historical processes where world economic and societal integration was taking place rapidly in what is seen as structural globalization in addition to contexts related to policies underlying the historical processes which represents ideological globalization (Kacowicz 12). Superficially globalization can be considered as the deepening, expanding and accelerating international interconnectedness through exchange of information, ideas, technologies, goods and services in all aspects of contemporary social life which covers such diverse contexts as cultural to the criminal and from the financial to the spiritual undertakings. That a computer programmer located in India at the moment is able to offer services to an employer in situated in Europe or USA in real time. In addition to the fact that farming of poppies in Burma can have a connection with drug abuse in Berlin is a good enough example of how globalization links one geographical location to another in a different continent (Saxena and Omoniyi 96). The state participate in matters of globalization both actively and inactively but will generally influence issues covering areas such as facilitate the free flow of technology, elimination of trade barriers to facilitate free flow of goods and services on a global scale. Moreover, engender environment conducive to free flow of capital outside state borders, and making it easy for labor to flow freely from domestic to international markets (Tisdell and Sen 106). These are the essential areas where states have played active roles in facilitating globalization. Having a role to play in these issues has further broadened the role of nation-states, which is as a result of the need to for international players to set normality processes guiding interaction of forces enabling free flow of goods and services. Governments from different states are therefore increasingly monitoring the participation of their citizens and the global economy through their regulatory roles, which are performed through consultation and formal negotiations. These changes are reflected mostly in the functioning of the states where hands-on management traditionally seen in the direct participation of government in the production processes towards adopting strategic planning. The shift in role of the state has seen it adopt the function of an enabler of production activities undertaken by private enterprises and individuals. Additionally there has been a shift in the way states exercise power by moving from exercising a centralized system of power. Globalization has led to states adopting several measures to improve the levels of participation by domestic factors of production in the global markets. Such measures in changing exercise of power include adopting systems of decentralization, deregulation and debureaucratization. Such move by the government has led to the accommodation of other actors such as local government and non-state actors for example the civil society in outsourcing or devolving power. National bureaucracies have adopted a raft of changes in their functioning to include input by inter-governmental or supranational agencies the performance of different tasks and policy decisions making to help in the management of increased flows of goods, capital, labour and information between countries (Bernstein and Cashore 349; Allan and Sen 172). The changes brought by economic globalization has resulted in a new reality where the state acts as a “linking pin” in a processes that involves planning, consultation, negotiation and decision-making between various state and non-state actors (Mooslechner, Schuberth and Weber 55). At the different levels that include sub-national, national and international, the state performs its roles that include enabling meetings by multiple partners and stakeholders from diverse fields, professions, regions, interests, cultures and occupations. States that seem to benefit from the economic globalization wave are those that have been able to adopt policies that readily lead factors of productions to be channelled towards the embracing the uncertainty, ambiguity and change that comes with globalization. Such states have strategized their institutions to scrutinize the rapidly changing global markets for creating policy inventions that improves the process of decision-making necessary for them to take advantage of emerging opportunities. This position is also essential when analysing short-term failures to create capacity for the state to take advantage of long-term sustainable opportunities. As a result of economic globalization, many of the problems that were traditionally perceived as being domestic in nature have been transformed into areas of global interest. Such issues include poverty, environmental pollution as a result of industrialization, global economic crises and issues to do with organized crime syndicates as well as terrorism (Dator, Pratt and Seo 167). States have therefore been forced to tackle these issues through instituting collaborative that results from working with other concerned states. These problems especially that of terrorism and financial crimes such as money laundering has to be handled from an international perspective since they concern non-state players who are able to exert their activities throughout different borders. Consequently, states increasingly favour approaching these issues through multinational decision-making processes. The result of such engagements is that in states have to cede some of their functions leading to a situation where there are multiple levels of decision-making. These levels include making decision affecting international affairs on that level while the states also decide on issues affecting them at the domestic level. As well as decision making processes being undertaken at sub-national level, the consequence of globalization is that there is a multi-layered system of governance. An important aspect of the economic globalization discourse is the role played by transnational corporations (TNCs) also known as multinational corporations (MNCs) which have been seen as minimizing the role of states in international trade. MNCs are business organizations that have taken advantage of the interconnectedness of states on a global scale to establish subsidiaries in different countries (Ursul et al 140-145). Although these business organizations have their headquarters in their mother countries, they still have an established management structure in all the other states where their operations are located. Due to their presence in multiple states, MNCs have played an essential role in the acceleration of an integrated global economy. Since the 1960’s and ’70’s, foreign direct investments (FDI) by MNCs has been increasing especially from developed and the newly industrialized countries that have encouraged their entrepreneurs to transcend domestic markets and further seek to boost trade at an international level. The consequence of continued growth of MNCs is that that there is a shift of power from states to powerful firms that have ownership of expansive quantities of resources in multiple countries. Expansion of business organizations to overseas markets is in most cases followed by formation of corporate alliances with companies from other countries therefore increasing their influence in multiple countries (Ursul et al 140-145). The increased activities of the MNCs have an influence on the capital flow between different countries. The operations of MNCs has resulted in transformation of financial markets seen in the especially with the increase of financial flows. The result of this transformation is that what was previously national capital is incorporated into a global financial capital. The implication of this integration is that states are not able to control their own financial markets with national currencies being circulated both within and outside a country’s borders. The evidence of lack of state control in the financial markets was previously seen in the global financial crisis where a meltdown in a particular market possesses risks to the global economy. States found it difficult to protect their domestic markets from the consequences of the crisis since investments of MNCs in their own countries could not be protected what was happening in other countries. Consequently, many would argue that the failure by states to shield their economies from global financial crisis represents the waning powers of the state as economic globalisation through the activities of non-state actors such as MNCs takes over the control of international financial flows (Jensen 145). Inter-state cooperation and regulation efforts have led to many scholars in international relations to proclaim an end of national state power. To facilitate increased role of the state with the aim of benefiting from increased market to trade national goods and services that results from economic globalization, countries have had to give up on their sovereign duties to allow international players to control affairs previously reserved for the government policy makers. International institutions such as the World Bank and International Monitory Funds are some of the results of economic globalization that have impacted on the way states are organized and function (Riesenhuber 304). The Structural Adjustment Programs (SAPs) which dictate the way countries organize their internal institutions. Using SAPs the international Monetary Fund (IMF) and the World Bank have forced developing countries to give up part of their national autonomy by being asked to implement de-regulation, liberalization, privatization policies. Many researchers who are against international trade have argued that this interference into internal matters of a country presents serious intrusion as countries are supposed to be left to construct internal institutions based on their own economic, social and political profile (Degen 191). Further opposition to the introduction of SAPs has been due to the implication it has in a country since many are forced to abandon the welfare state as due to closing down of domestic programs such as health services, education, and environmental protection measures. The result of such moves in developing countries has down downsizing human resource in public service resulting in high unemployment levels. Those left without employment further sink into poverty especially since the private sector in these countries lack the capacity to absorb the high number of unemployed due to high costs of capital for operating businesses that result from high interest rates from banks influenced by IMF policies. When barriers to foreign trade are eliminated, domestic markets in developing countries are left vulnerable to subsidized and therefore low priced goods that enter their markets from developed countries destroying local industries whose output cannot compete with the low priced imports (Van Kersbergen 22). Even as states continue to see their sovereignty being infringed upon as a result of introduction of international bodies such as the World Bank and international monitory fund, there authors who insist states remain the powerful force that it has always been. All the domestic and international affairs have to be handled by the state in a manner that protects the interests of the states. State interests refer to the gains states seek to achieve when undertaking economic activities with others. When dealing with outside forces be it governments or private entities, the state must ensure the aspirations of the people are taken care of through negotiations for terms that are favourable to them (Cragg 136). Consequently, states have to possess coercive powers that will limit any negative outcome that might result from their engagement with international players (Ritzer and Atalay 95). Economic globalization discourse is based on what proponents see as the ability of trade liberalization, which is the removal of cross border barriers to trade, to improve the economic development of a country therefore transforming lives of the people within a jurisdiction. In this respect, economic development as perceived by trade liberalists involved the measurement of the average per capita income of citizens of a given country to determine their standard of living (Thirlwall and Pacheco-López 1). The neoclassical assumption that informs the quest for trade liberalization asserts that people will always act in a manner that is most likely to guarantee protection of their interests since they are in the best position to assess their needs and the means to achieve such needs (Rapley 20). Consequently, the state as a representative of the people will seek to achieve what the population sees as the most important in their dealings with other states. Although it is widely accepted that economic globalization has affected the performance of the state, supporters argue that this should not be seen as undermining the power of the state. The most important role of the state when engaging with international stakeholders is to protect national interests (Cragg 136). Consequently, the perception that economic globalization undermines the role of the state is wrong since it has only affected the role of the government which has shifted concerns on domestic issues to working together with international state and non-state actors. The state is still central to all the engagements. When the state participates in matters on international platforms to facilitate engagement with others on a global scale, this does not reflect ceding of power but it is still a representation of an exercise of state sovereignty. This is because the state will always seek to assert the position of the country on important issues such as allowing access of imports into the country. The participation of the state in international arena is an important exercise that will ensure citizens are not left out from the sharing of benefits accrued from the interlinking of global economies. From the foregoing, economic globalization has led to changes in the role of the state, which is now perceived as a facilitator of economic engagements in the global markets. To benefit from new opportunities presented by the global market, states have to transform their institutions to be open to free flow of factors of production and other resources. These changes have increased the role played by non-state actors such as MNCs who now control the financial flows between states. Works Cited Bernstein, Steven, and Benjamin Cashore. "Can non‐state global governance be legitimate? An analytical framework." 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