An Economic Globalization - Report Example

Question 2 Implications of a Globalized Economy for the Nation State Name Institution Course Date Question 2 Implications of a globalised economy for the nation state Introduction Economic globalization has been present for a long period to make sure that a lot of its innovative analytical promise as well as explanatory capacity has been obscured by publicity and tainted by overinflated arguments. In a number of the extreme states, which is referred to as hyper-globalization, there has been argument that people are now living in a world where institutions and social processes operate largely at a global level. National economies, particularly, are drowned in global waves and overtaken by international economic actors (Hoek, 2011). Consequently, significant disparities involving state economies are now corroded as emergence of standardized global economy occurs. Principally, the argument is presented that the autonomy and sovereignty of nation-states are being reduced radically (Zahariadis, 2008). These allegations have frequently been connected with neoliberal states that receive the surfacing of rightly global markets that are open and free in goods and capital, celebrate their effectiveness, and delight within the equivalent decrease of a fundamentally damaging state power. This paper discusses the implications of a globalized economy for the nation state. Globalization in relation to economy Globalization represents a change within the spatial structure and degree of human interaction and organization to an interregional or transcontinental level (Hoek, 2011). It entails extension of social interactions across space and time in a manner that daily activities are progressively controlled by occurrences on the different part of the world and the decisions and practices of extremely localized institutions and groups can have considerable reverberations. Globalization is not a linear process or a singular situation; it is neither an ultimate end point of social shift. Instead, it is perfectly considered as a multidimensional event relevant to various types of social practices; cultural, political, economic or social activity sites, such as the environment (Feenstra & Taylor, 2008). Every one of these globalization’s form has its unique logic, geography, and dynamics. Each of them takes a specific form in special historical period (Hoek, 2011). Various types of globalization can be differentiated in some ways: their extensiveness in terms of geography – the extent of the world these social and relations flows traverse; the strength of these interactions and flows in relation to extensively spatial restricted interactions; the extent to which the interactions and flows affect the power and behavior of local and national actors and organizations; and the extent to which international networks have gained an established interaction infrastructure and their institutionalization (Hoek, 2011). Global economy is economies’ expansion beyond national and state borders, specifically, the extension of production through transnational businesses to various nations all over the world (Smick, 2008). Generally, global economy encompasses globalization of labor force, communications, finance, markets, and the production. Global flows and patterns lay transversely and on both sides of the territorially bordered power networks that originate from nation-states (Feenstra & Taylor, 2008). Constantly, this has been the scenario. Political power which comes from state organizations has constantly been territorially bordered; even though it is simply with the arrival of nation-states which the outside contact of that authority has been strongly circumscribed by globally agreed and locally established and policed margins (Hoek, 2011). Networks of cultural and economic relations have never efficiently matched with the political states’ space, be they nation-states, imperial states, or city-states (Smick, 2008). Neither have they corresponded and related with national networks and patterns in standardized ways. Constantly, states have been controlled by and ought to deal with outside actors as well as territorially general networks of cultural, military, and economic power. Nation-states might have maintained the autonomous power to legislate autonomously for and control a particular territory, however the degree of the argument has infrequently, if ever, essentially signified the actual abilities of those nations to establish independently the public policy character or to execute it effectively (Hoek, 2011). This is a statement that formerly hegemonic and hegemonic states have specific hardship with; the other percentage of the globe works under decreased illusion concerning the correspondence involving autonomous realities and sovereign assumptions. With respect to the above definitions and considerations, the following economic globalization dimensions are explored in three major areas; finance, multinational companies, and trade (Hoek, 2011). Trade Constantly, trade has flowed across civilizations, states, and cultures, binding together economic fortunes and serving as a channel for thoughts, social practices, and technologies (Hoek, 2011). The developing communications and transport infrastructure of modern trade has lessened the expenses and improbabilities of exchange as well as decreased the investment needed to penetrate overseas markets (Smick, 2008). The authorized system’s infrastructure lay down by GATT as well as WTO which is its successor, has devised a system which is more transparent than former schemes; and tariffs are considerably lower (Vietor, 2007). Regardless of protectionist rumbling, usage of nontariff obstacles to limit trade, in addition to increase of agreements of regional trading, trade keeps on growing faster compared to the global output (Feenstra & Taylor, 2008). Finance capital Even though global bank lending was regarded the major factor of worldwide capital markets during the 1960s, currently it makes up a much lesser factor of global financial transactions (Alexander et al., 2006). Equity and bond markets are dwarfed by derivative markets’ emergence as well. Assets’ demand that facilitated hedging against market volatility and risks, together with technical improvement and stiff competition among institutions of finance, fostered the development of global derivatives markets. Prices of these assets are grounded on, or imitation of, movements within the worth of different assets like currencies, interest rates, stock-market complexes, and bonds (Alexander et al., 2006). Multinational corporations Multinational corporations (MNCs) are thought to be the key players of the modern global economy; if not anything else, this, distinguishes the present period from the previous era (Hoek, 2011). The end of 19th and start of 20th centuries definitely saw high degrees of global investment, additionally, that period witnessed composite, global corporations; a number of significant antiquities, managing trade and finance (Smick, 2008). On the other hand, modern MNCs, regardless of some shortcomings to being the major international actors depicted within neoliberal globalization accounts, are qualitatively and quantitatively more general within their functioning, and more thorough in their significance compared to their predecessors. They MNCs are more important political and economic actors (Feenstra & Taylor, 2008). Implications The above survey of modern economic globalization implies some principal things. For starters, to consider globalization entirely as the presence of open international markets, internationally oriented users, and international, foot-loose businesses misconceives globalization as final point instead of process, also as unidimensional instead of multidimensional (Vietor, 2007). It is important to note that power is regarded a concept that is relative. It is imperative to center on the way globalization changes the stability between nations-state and various actors. Power’s balance and hence the relative sovereignty of nations differs, with respect to both the kind of guidelines the nations are seeking and the institutions and actors’ identity past the involved nation-state (Hoek, 2011). States are involved with the international economy as immediate market actors (like central bank functions in bond markets and currency), as administrative and authorized market regulators (both locally as well as in reference to international economic organizations such as the European single market and WTO) and as spending and taxing agencies which provide a lot of the international economic relations’ infrastructure and collect its impacts with respect to public and welfare services (Feenstra & Taylor, 2008). With this, the most significant change in power is considered to be the historic extension of exit choices for capital within financial markets in relation to state capital controls, regulation of national banking, and strategies of national investment, and the complete volume of secretly held capital corresponding to the national reserves (Feenstra & Taylor, 2008). It is seldom the situation that globalization has made any strategy impossible; neither has it lessened autonomy altogether (Feenstra & Taylor, 2008). Instead, it is somewhat effective to view the changes in relation to changing balance of expenses and profits of whichever given policy (Burns, 2010). Hence, national governments maintain the ability to invoke protectionist limitations of different types of trade (Hoek, 2011). On the other hand, the advantages of doing that have been decreased by the rising reliance of national institutions as well as markets on inputs that are imported, and the expenses of doing that have risen as nation-states have turned out to be more strongly entangled in global free-trade obligations with considerable disciplinary powers accessible to participants (Burns, 2010). Correspondingly, governments may consider pursuing managed or fixed exchange-rate strategies and, via legal regulations and central banks, upholding the equipments for doing that. Economic globalization weakens the local political alliances which have traditionally strengthened progressive economic and social policies (Burns, 2010). This is done through profound alteration of the political and economic interests and related social and economic power of social classes and groups. The reliance of a rising number of institutions on foreign markets as well as investments might reduce the collection of strong followers for protectionist strategies (Feenstra & Taylor, 2008). Therefore, the general impact of economic globalization on the independence of nation-states is basically more compound and multicolored than skeptics and hyperglobalizers would allow. Autonomy state has constantly been restricted and held back by international actors and global forces (Zahariadis, 2008). Conclusion In conclusion, this paper has discussed various issues in relation to globalised economy for the nation state. It is imperative to understand that setting the global economy’s ground rules requires that choices are made. This means that nations’ rights should be accepted in order to maintain their regulations in health, labor markets, safety, taxation and finance. Nation-states should have the ability to prevent local financial rules from being weakened by jurisdictions with unstable regulations, business tax strategies from being corroded by opposition with tax refuge, or local labor principles from being loosened by imports coming from nations that have exploitative labor standards. This way, the global economy would not impact the nation-state in a negative way. Reference list Alexander, K, Dhumale, R, & Eatwell, J, 2006, Global governance of financial systems: The international regulation of systemic risk, Oxford: Oxford University Press. Burns, T, 2010, Capitalism, modernity and the nation state: A critique of Hannes Lacher, Capital & Class, 34, 2, 235-255. Feenstra, RC, & Taylor, AM, 2008, International economics, New York: Worth Publishers. Hoek, MP, 2011, A global economy, Papendrecht: F4EI, Forum for Economists International. Smick, DM, 2008, The world is curved: Hidden dangers to the global economy, New York, N.Y: Portfolio. Vietor, RH, 2007, How countries compete: Strategy, structure, and government in the global economy, Boston, Mass: Harvard Business School Press. Zahariadis, N, 2008, State subsidies in the global economy, New York: Palgrave Macmillan. Read More