Economic Globalization - Essay Example

Is economic globalization significantly eroding the power of s Globalization has many definitions , some conceptualizations emphasize co-existance with national or state governance and others stress on the negative implications of globalization on state power. Globalization is a term used for a seamless one world phenomenon characterized by cross border flows of goods , services , capital and technology . This may according to many lead to the dissolution of national identities and macro influences on the state and the economy tending towards a worldwide convergence towards a single system. (Weiss, 1997 , see Reich, 1990; Cable, 1995). The concept of the 'global' corporation has been captured in the following phrase 'It has been preceded in the last 30 years by a string of synonyms such as: international, inter-territorial, multinational, transnational, and world-wide' (Weiss, 1997 see Hu, 1992: 120). These terms, however, are not at all synonymous. A world economy with high levels of international trade and investment, would not necessarily make a globalized economy. It may remain a highly internationalized economy in which most companies trade from their countries in distinct national economies (Weiss, 1997 , see Hirst and Thompson, 1996: 185). The term 'global' could be meant to represent a new or different level of interaction. For example , Michael Mann's (1997) fruitful distinction of five different socio-spatial networks of social interaction in the contemporary world order: local, national, international, transnational, and global. Local and national networks refer to relationships formed within the nation-state , for example, regional support groups. Inter-national networks involve relations between nations and state networks. A multinational corportion would be a good example including more formal institutions for regulating economic and military affairs, such as the EU, the WTO, NATO, and the UN. (Weiss, 1997) Transnational networks carry within them the ability to operate without regard to national boundaries and without being affected by them. Thus, although typically understood as worldwide, transnational networks are not necessarily the same as 'global' ones , since they could also comprise of neighbouring economies . Global networks operate on a worldwide basis, these networks could range from political netowrks to economic networks.. The Red Cross, although Swiss in origin, appears to fit the bill. Most of the global organizations been prey to the 'national' differences. (Weiss, 1997 see Hu, 1992: 120) Globalization means the overlapping and diffusion of national economies to the point where the significance of national and international networks is reduced in relation to transnational and global networks. The notion of globalization thus conveys a 'widening' and 'deepening' of international ties to a degree that creates a qualitatively new (i.e. global) network of social interaction. There is therefore thetwin issue of globalization that needs to be addressed. Firstly, whether transnational and global networks are growing in importance relative to national and inter-national ones. Secondly, even if global networks have advanced very far - as in financial markets -the extent to which national and inter-national networks contribute to their continued operation and existence. (Mann,1997). "The real issue, then, is whether the kind of world economy in the making is a transnational one in which displacement of national and inter- n a t i o n a l networks of interaction is occurring, or one in which such networks (and thus the state) retain a pivotal, if changing, role. In sum, the power of the global idea (and, indeed, the purported weakness of state power) turns on whether or not 'national' and 'inter-national' networks of interaction are being both outweighed and displaced by 'transnational' networks." (Weiss, 1997) The use of the word 'globalization' could meant to claim that the nation-state is no longer an important entity. It is possible for a globalization tendency to exist, and yet to do so by virtue - not at the expense - of the structuring and coordinating capabilities of national and state-constituted institutions. (Weiss, 1997) 'The 'power' of the modern state principally concerns not 'state elites'exercising power over society but a tightening state-society relation, caging social relations over the national rather than the local-regional or transnational terrain, thus politicizing and geopoliticizing far more of social life than had earlier states' (Mann, 1993). "More and more studies, however, are beginning to draw a very different conclusion. A gain in power for non-state actors is not necessarily at the expense of state power. This new group of transgovernmentalists contends that today's new international problems - from terrorism and money laundering to bank failure and environmental degradation - have generated a new, transgovernmental order in which the state, rather than dissolving, is d i s a g g regating into functionally distinct parts. These distinct entities - which range from regulatory agencies to courts and legislatures - are networking with counterparts abroad, thus creating transgovernmental networks." (Weiss, 1997) Many significant changes have taken place inside nation-states in recent times. On the social policy front, there has been a decisive move towards fiscal conservatism, with reforms to taxation systems and the trimming of social programmes (see Rhodes, 1996; Swank, 1997). In the economic sphere, governments have moved towards greater openness in matters of trade, investment and finance. These changes may be regarded as evidence of the emergence of a new global order of capitalism. Under this order, states may be forced to adopt similar fiscal, economic and social policy regimes moulded as per the dominating economy . Globalists therefore predict economic convergence as more and more states adopt the low-taxing, market-based ideals of the American model. (Weiss, 1997) A different approach focuses on globalization elucidates what most globalization arguments ignore: the adaptability of states, their differential capacity, and the enhanced importance of state power in the new international environment (Weiss, 1997). The predicted emancipation of state powers would not necessarily occur due to the fact that the impact of economic openness is always mediated by domestic institutions. The character of public purpose and national ot state arrangements render the neccesary diversity. This is also due to the fact that multi national entry strategies are in most economies through acquisitions, mergers and strategic alliances -globalization is being advanced by and through the nation-state, hence depending on the latter for its support and maintenance. Thus, rather than counter posing nation-state and global market as antinomies, in certain important respects 'globalization' is often the by-product of states promoting the internationalization strategies of their corporations. Weiss (1999). A state could exert control over the external environment by entering into alliances and agreements with other states. Such agreemements involve a search for new ways of meeting new burdens, ceding some sovereignty in return for enhanced capacity to deliver on growth and employment. In that sense they are 'a gambit for building state capacity' (Ikenberry, 1995). For example therationale behind the member states of the EU, APEC and NAFTA. Thus, while the EU member states are no integral states, the alliance of European states has enabled each member state to have more rather than less control over the international economy - in particular, by 'Europeanizing' the market, and thus strengthening and creating barriers to intercontinental rivals. David Held (1991) . Globalization and state power are not locked in a negative-sum relationship whereby the advance of the former can only occur at the expense of the latter. A globalizing tendency may w ell coexist with - or, indeed, operate effectively only by virtue of being supported by - multiple networks of social interaction, especially national and inter-national ones. (Weiss, 1997) Though economics seems to have the most pronounced implication in this process, it needs to be tackled in the broader context of the development of the civil society at large. This highlights the need need to promote broad social awareness about globalization. The need for the state to work in congregation with the society. Globalization must mean globalization of human rights and of the struggle against deprivation and poverty. The states that emerge as a result of globalization would be those who foster cooperation, trust and improve their economic policies.(Held and McGrew, 1999). The nation-state, and its main framework for the existence of sovereignty and democracy has been challenged by the phenomenon of globalization. Unparalleled changes in communications, transportation, and computer technology have given new impetus to economy. Globalized capital is reorganizing business firms and undermining national politics. Local, national and continental, political, social, and economic space is reformed and is no longer necessarily coterminous with established legal and territorial boundaries. Although the nation-state continues to remain as the principal unit of analysis in the changing context of globalization, it now needs to be examined. As the world economy continues to integrate and cross- border flows become more important, global governance must be improved. Global governance will come not at the expense of the state but rather as an expression of the interests that the state embodies. As the source of order and basis of governance, the state in future will remain as effective, and will be as essential, as it has ever been. The process of globalization has also an 'ethical' dimension that requires the process of globalization to be governed by globally adopted and respected values, global principles of ethics and democracy, with greater awareness of the value of and greater tolerance for diversity. Whereas 'political' globalization is aimed at promoting individual freedom and human rights and the right to security of the citizen, the "ethical dimension" should be based on the understanding that it is necessary to follow a course that leads to worldwide progress seen as human development. The challenge for globalization is to create a future for all humankind that is based on ethical principles and in which responsibility and reciprocity are the necessary pillars in all social spheres. In this context, global agreements should be reached in various areas such as facilitation of labor mobility, curtailment of international trafficking in people, reducing global poverty and bridging inequality. (Held and McGrew, 1999). This in turn highlights a greater and more effective role of the United Nations in support of all the countries of the world, in creating a new world order based upon the principles of human rights, tolerance, democracy and values, including the value of human solidarity. Globalization thus supported will be that of human rights; of ideas and values; of the defense of life; safeguarding of families and society; of solidarity; and of the fight against poverty. New systems of global governance would also contribute towards ensuring a more equitable distribution of the benefits of globalization. It is imperative that globalization policies are built on democratic practices and inclusion of civil society into local politics. This argument turns much of the globalisation debate on its head. It challenges a series of firmly held and fashionable beliefs: markets need small government to thrive, economic globalisation is associated with weakened states. The issue is therefore no longer one of "the" state confronting global powers and either not being affected or being severely weakened , but of a profound redistribution of power inside the state. "Thus, far from relinquishing their distinctive goals and identity, states are inceasingly using collaborative power arrangements to create more real control over their economies (and indeed over security). As such, it is fruitful to view these new coalitions as gambits for building rather than shedding state capacity." (Weiss, 1997) Refrences: 1. Held, D. and McGrew, A., Goldblatt, D. and Perraton, J. (1999), Global Transformations: Politics,Economics and Culture, Polity Press, Cambridge. 2. Linda Weiss, "State Power and the Asian Crisis," New Political Economy. 3. Linda Weiss, "Globalization and State Power" Development and Society , Volume 29 Number 1, June 2000, pp. 115 4. Report on 56th session of the United Nations General Assembly Committee Panel on High-Level Panel on Globalization and the State November 2001 5. Michale Mann, The Sources of Social Power: Volume 2, The Rise of Classes and Nation States, Cambridge University Press 1993 6. Ikenberry, G. John. 1995. "'Funk de Siecle': Impasses of Western Industrial Society at Century's End." Millenium 24 (1): 113-26. Read More