First year · International Relations

The Coming of Globalisation essay: How important are states in a globalised world?

Understanding globalization requires us to distinguish between three aspects: what is globalization, media globalization and the effects it produces. The first aspect, which can be described as “globalization itself” is defined by the IMF as “the growing economic interdependence of all countries of the world”. This interdependence is a process and therefore requires a dynamic analysis: globalization becomes palpable with the growth of foreign trade, financial flows, information flows and increased mobility of the workforce. The second component consists of at least two elements, which can be called “media globalization”: first an economic and financial market deregulation and secondly, technological innovations. These two elements are related to the process of globalization, but they exist independently of globalization itself. The third aspect shows that the effects of externalities of globalization can have worrying adverse effects on the environment, employment, inequality, and culture. It also affects prices which tend to decrease, rising wealth, technology transfer, the variety of goods and services traded. We will take the term “state” in the sense of Heywood: “a political association that establishes sovereign jurisdiction within defined territorial borders” (Global Politics, 2011, p.114). We are going to analyze the role of states in the complex process of globalization and, to do so, we are first going to explain how states are dealing with globalization, and then the role of the actors of the global world.

 

 

Among the many actors of globalization, we could think that states are losing their power. Indeed, states have not mastered all the flows that have taken place in their territories. For example, European states do not seem to be able to control such phenomena as the financial flows in the recent debt crisis or the sporadic human stream, with the arrival of many illegal migrants into southern Europe from the southern shore of the Mediterranean. According to Robert Cooper, three types of states are beginning to emerge: besides the “postmodern” or developed states exist modern states, such as India, Brazil and China which have a new policy of national power, whereas other states, such as Somalia and Afghanistan, still belong to “pre-modern” age, with archaic values (The Breaking Of Nations, 2004). The role of governments is increasingly conditioned by external constraints from other actors of globalization and, in the framework of international organizations, States must deal with their partners. This is the case in the European Union, where Britain wants a tariff revision of the Common Agricultural Policy (CAP) because it is a financial burden for the country, and mainly benefits the French agriculture. Another example can be found in the way the Organization of Petroleum Exporting Countries (OPEC), sometimes imposes penalties on some member states when negotiating prices. Actors in global economic governance such as the International Monetary Fund (IMF) also have an important role and can control the economic activities of states. The Trade Negotiating Committees (TNCs) weigh heavily in the decisions taken by states, particularly in developing countries.

 

Despite this, the role of states is still important in the context of globalization because they remain key players. States are still sovereign monetary and customs entities. They can control the flow of goods and monetary exchanges, like China who maintains a weak currency to promote exports. Some states have accumulated significant sovereign funds that allow them to have a power of investment. This is the case of oil monarchies such as Qatar, which has been investing quite massively in France, but especially the United Arab Emirates, with $ 750 billion invested in the banking sector (BNP Paribas) or the energy sector (Total). States also have political and military power. For instance the United States has imposed an embargo on Cuba since 1962. Another example which has been recently evoked in the media is Iran, which in 1997 was the target of a strict embargo initiated by the US because it refused international checking in its nuclear programme. They can use the “food weapon” to limit the agricultural resources of a country, or a military strike like Iraq in 2003 during the second Gulf War. Finally a State may decide to close its frontiers to globalization, as North Korea is doing. All the pro-market discourse (a media globalization) should not overshadow important protectionist practices (down from globalization itself). Many countries have erected tariff barriers. It is not the most common practice, unless one considers the public grants to businesses as tariff barriers. Non-tariff barriers are also very frequent and numerous: quotas, standards, anti-subsidy, managed trade, land for businesses, etc… not to mention the protection of some currency based on the exchange rate to help companies and other types of financial protection within which institutions encourage support for export credits. In 2011, Pascal Lamy, French politician and Director General of the WTO from 2005 to 2013, regretted that “the trade monitoring over the past six months has been the confirmation of an increasing trend in the use of export restrictions.” (World Trade Organizations, 2011). All of these pricing practices and non-tariff remain largely finalized by the state. Regulation exists and has always existed, but the manner of intervention of the state has changed.

 

Sign of the country’s sovereignty, borders are issues in the context of globalization and their role can be debated. Are they more open, which would tend to prove that globalization intensifies, or more closed, which would show instead that States may maintain barriers and that globalization is not inevitable? In fact, the number of open borders is increasing with regional consequences for both sides. As part of the Schengen area, some states of the European Union have not had any control at internal borders since 1995. However, this case is exceptional. The opening of borders has encouraged some development of certain areas, allowing the creation of new flows. This has been the case of the border between Russia and China, along the Amur River, since 1991. Flows of raw materials have increased from Siberia to China, migration and investment from China to Siberia. The boundaries are emerging as active interfaces in the global space. Cross-border dynamics between the United States and Mexico, are organized like Euroregions SarLorLux between regions of Saarland (Germany), Lorraine (France) and Luxembourg. However, some borders remain closed for political or economic reasons. This is the case of the border between Israel and the Palestinian territory of Gaza, and since the end of the Korean War in 1953 between North and South Korea. There are cases where even walls have been built, as in some areas between Israel and the Palestinian territories of the West Bank. The United States did the same to counter illegal immigration flows from Mexico. A number of borders are therefore organized as points of selective switching between different streams. A good illustration is the border between the United States and Mexico. From the perspective of human movements, the border is closed to illegal immigrants from Mexico to the United States, but open to economic flows. The spatial consequences are asymmetrical along the borders, which challenges the idea of ​​globalization that would unify the different areas. Thus, along the border between the United States and Mexico, the “twin cities” such as San Jose and Tijuana are populated on the Mexican side. The “twin enterprises” locate their offices in the United States and factories (“maquiladoras”) in Mexico. The boundary study therefore shows that the globalization process is more complex than a simple increase in the flow and other non-economic logic also hold the global space.

 

 

While globalization tends to define flows and processes worldwide, states remain key players, but several other actors are beginning to be crucial. States define economic policies and have significant monetary and fiscal tools or material for the construction of infrastructure. Among the institutional actors, international organizations are of several kinds and weigh on globalization. For example the United Nations (UN) has various agencies, such as does the IMF (International Monetary Fund). Some of these structures are themed and include only a few states, as is the case of the WTO (World Trade Organization) and the OECD (Organisation for Economic Cooperation and Development). Some of them include countries at the regional level , such as the EU (European Union), NAFTA (North American Free Trade Agreement), Mercosur (Southern Common Market), ASEAN (Association of South East Asian Nations), APEC (Asia Pacific Economic Cooperation) … Others are collections of states by interest groups such as OPEC (Organization of petroleum Exporting Countries). Non-governmental organizations, like the Red Cross, provide charitable help, resources or development across the planet. The scope of the nation-state has become more complex since the Second World War. We are moving toward a “police-state” ensuring standby function to the state in charge of welfare (Baskerville, 2008). For twenty years, the welfare state has been going through a crisis. It is well-aware of the diminishing power it has in controlling certain aspects of globalization, such as the encroachment of multinationals, and therefore must continually justify its actions. However this very process also contributes to weakening its status. Moreover state interventions have changed: The State employer –producer has drastically reduced its contributions while the redistributive function has increased. The “end of the nation- state” is so often announced, as was the “end of history” or the “end of ideology.” But no market economy, even global, works without rules, conventions, institutions and even today, even in a market interaction process without a dose of state.

 

Among the most prominent actors of globalization, there are more and more private actors, especially transnational corporations (TNC). These large companies, employing about 100,000 people, carry out their activities in several countries and have significant funds, and direct flows. They account for more than half of world trade. The TNC generally come from the North American continent, such as General Electric. They contribute to a new international division of labor, marked by the relocation of some production activities in countries where labor is cheaper. Let us focus now on one actor: multinational corporations (or MNC). MNCs are important players in the globalization process and maybe the state has been surpassed by the multinationals. Robert Reich (The Work of Nations: Preparing Ourselves for 21st Century Capitalism, 1992) supports this thesis, but there is no consensus among several authors. Some nuance the number of multinational firms and keep reminding that actually they are still submitted to the laws of the country they have settled in.

 

Other networks that are neither institutional nor from companies are also involved in globalization. Diasporas are people from the same country and living abroad. Trade both in goods and money plays an important part in the intensification of the globalization process. The Chinese diaspora accounts for nearly 30 million people worldwide. Less formal or straightforwardly illegal networks, also thrive in the globalization process. Often mafia, they contribute to human trafficking and the illegal purchase of weapons and drugs.

 

 

To conclude, if they sometimes limit their power, the associations between States may also allow them to carry more weight on the international scene. This is the case from the economic point of view: the creation of the euro, despite the current crisis has strengthened the presence of the European Union in the framework of financial exchanges. Globally, the UN and its various specialized agencies such as the World Bank or FAO (Food and Agriculture Organization), may also increase the weight and the power of states by combining them, allowing them to constitute intervention peacekeeping troops or organize political cooperation forces. Globalization itself has undoubtedly complicated the work of the State. In this context, we can describe the state “acting like all the others”. The state seems too “small” when dealing with globalization issues that it should regulate and administratively too “big” for individual expectations. But the role of globalization itself in this state crisis must be qualified. Globalization redefines foremost the contours of the state. But it is often a “justifying myth” (Bourdieu, 1999). Minimizing the role of the State in addressing externalities of globalization is also a way to justify disengagement. This important actor can however be criticized. The state is an “ambiguous reality” (Bourdieu, 1999): It aims to act on behalf of the public interest while at the same time it is constrained by private interests and influence. This is again the capitalist ideology that is largely responsible for unequal globalization, not the process of globalization itself. Changing the ideology may seem inadequate and improbable nowadays, so to live with globalization involves formidable challenges. We see at least two: first, it requires to enhance the public interest beyond self-interest and secondly, to count otherwise. Finally, this leads us to wonder about the impact of nationalism. Indeed, according to Huntington (1993), the nation-state is still the center of the world organization, but cultural and political groups are changing the nature of international relations.

 

 

Bibliography

  • Baskerville, S. The Independent Institute, The Independent Review 12 n°3 (2008) From Welfare State to Police State,
    Available at: http://www.independent.org/publications/tir/article.asp?a=668 (Accessed 30 November 2013)
  • Bourdieu, P. (1999) Acts of Resistance: Against the Tyranny of the Market. New Press.
  • Cooper, R. (2004) The Breaking of Nations, Atlantic: London
  • Heywood, A. (2011) Global Politics. 4th Palgrave Macmillan
  • Huntington, S.: ‘The Clash of Civilizations?’ in: Foreign Affairs, Vol. 72, No. 3, Summer 1993, pp. 22-49.
  • Lamy, P. World Trade Organization (2011) Trade restrictions on the rise, Available at: http://www.wto.org/english/news_e/sppl_e/sppl196_e.htm (Accessed: 28 November 2013)
  • Reich, R. (1992) The Work of Nations, Preparing Ourselves for 21st Century Capitalism
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