In 21st century globalization has touched all aspect of business, economy, trade, and government system. Globalization altered the way businesses were operating and governments were handling international relations. Experts have different opinion on globalization, few consider that globalization has reduced the power of nation state because of global capital. Some experts said that nation-state is still powerful, and adopt changes developed by globalization. This paper intends to discuss the impact of globalization on nation states, and how globalization reduced the power of the state.
Fundamentally all countries across the world have become the part of global transformations. Capital, products, knowledge, human resources, communication, crimes, weapons, fashion, and even pollutants move between territorial boundaries. Centralization of power to the government authorities and military, and their dominance on foreign relations started declining after the Cold War. Boundaries of any nation cannot prohibit the flow of information across the borders. Globalization brought transformation on social as well as on economic front (David Held).
In modern world, globalization has accepted and praised by all part of societies of the states. Over a period of time the society has shifted from industrial society to information or postindustrial society. Global telecom systems impacted political system, economy and social life of the states. It impacted locations of industrial activities, level of competition in different markets, and business processes. Globalization impacts can be described by analyzing three dimensions i.e. economy, political, and security.
Globalization brought a shift in political power, formation of rules & regulations, and authority. Due to globalization, political relations are now linked closely to depict the challenge to local or international peculiarities of politics. There are various factors that influence state authority such as nongovernment organizations, Multinational Corporations, ethnic groups, and international government organizations. All types of institutional bodies and organizations work in complex interdependence. Therefore, it was essential for global politics to integrate socio-economic, geographical and environmental concerns.
Emergence of global politics and international political relations played a major role in declining the power of states. Emergence of global politics also influenced the development of regional and international law such as cosmopolitan and humanitarian related laws. State government is required to form policies that are in favor of the people, and globalization positively impacted people across the world. Ohmae (1995) mentioned that economic activities across the world are changing very rapidly. The power of these activities impacted traditional politics in significant manner. Politics are not focused on increasing state’s participation in global economy (Ohmae).
Strange also mentioned that due to globalization, the authority of states is declining. According to the author, globalization integrated all markets and made an integrated world market. The influence of world market on economy and society is so high that the state is also required to accept globalization and formed state policies accordingly. The focus is not shifted on delivering benefit to the society. Companies now operate from the locations which offer them competitive advantages in terms of cost, skills, availability of resources. Governments of different countries extend their support to the MNCs by eliminating red-tapism, and removing all hurdles associated with foreign investment. The authority of government is shifted to the large organizations and other institutions (Strange).
Supporters of state power mentioned that all economies across the world are not truly globalized. It is not possible for the globalization to substitute internationalization of global economy. Present patterns of world trade, foreign direct investment, and financial markets, and economic growth of developing countries inform about two types of economy. The economies across the world can be classified in two categories i.e. truly global economy and internationalized economy. In truly global economy, government authority or power of state is placed after the economy and society. In internationalized economy, the power of state is superior and policies are viable.
Internationalized economy adopt changes for welfare of society, people and economy, but ultimate power remains in the hands of state. In internationalized economy, regulations and laws are created and sustained by the government of the state. The role of government in such economy is to provide governance to the economy. Country such as China have internationalized economy, where government also control the flow of information. Despite of globalization, China does not have liberal policies towards other economies. It can be said that Chinese economy is not truly global but truly international economy. Companies are welcomed to come and do business in China but with lot of regulations and paper work.
After analyzing impact of globalization on the power of state, it is good to conclude that the globalization has declined the power of state in significant manner. Economic activities and forces of the world market compelled government to reduce its power and form policies that are suitable for global market. Multinational companies and other institutions also reducing the power of government by demanding more favorable and liberal policies. All different forces of globalization overall reduced the power of state.
Works Cited
David Held, A. McGrew. "The End of the Old Order?" Review of International Studies, 24 (1998): 230.
Ohmae, K. End of the Nation State: The Rise of Regional Economies . USA: Free Press , 1995.
Strange, S. The Declining Authority of States. Cambridge: Cambridge University Press , 1996.
