THE EFFECTS OF GLOBALIZATION ON STATES AND GOVERNMENTS

 

State is commonly defined as a nation or territory considered as an organized political community under one government.

 

Government is the governing body of a state, nation, or community. A government is thus the political administration of a state or country. A state is the geographic unit that has a distinct constitution, fiscal system, and is sovereign (that is, self-governing and independent from other states as recognized by them). It is in a state where a government can exercise its powers.

 

One of the debatable issues relevant to the outcomes of globalization is the effect that it has had on governments or state entities. What are the ways in which the government leaders, and the state as a whole, have been fashioned by globalization economically and politically?

 

As of late, the question has been how globalization affects governments, as regards their overall behavior, and more definitely, whether globalization limits state sovereignty. For instance, with the upswing of globalization, some say that governments are far less able to govern their own politics without considering the outside world.

 

In the present day, it becomes difficult to be economically isolated. As a result, some believe that today, “government matters less and less in a "globalization economy" or global economy. (Related: The Global Economy (And the Economic Globalization))

 

Nation-states are simply other actors on the global stage rather than its directors” (Osland, 2003: 142), and that “aggressive global production systems and capital markets now occupy the ‘commanding heights’ of global development, forcing governments on the defensive and pressuring them to deregulate, downsize, and privatize many of the social management functions they assumed during the past century” (Yergin & Stanislaw, 2000).

 

Joyce S. Osland (PhD) of San Jose State University College of Global Leadership and Innovation enumerates some of the pros and cons of globalization related to governments. The positives include the following (2003):

 

1. Increased economic development benefits some governments.

2. Increased jobs and expanded infrastructure benefit some countries.

3. Transfer of modern management techniques into business sector

4. Greater interdependence among trading and investment partners may deter war.

5. Proliferation of nongovernmental organizations (NGOs) to counter- balance decreased governmental power

 

On the other hand, the negative effects of globalization on governments include these (2003):

 

1. Power of multinational enterprises (MNEs) increased at the expense of government power, sovereignty, and ability to regulate business.

2. MNEs externalize some of their costs to countries.

3. Competition for factories and foreign direct investment (FDI) result in too many concessions to MNEs by some governments.

4. Some MNEs influence local government policy and threaten to leave if their demands are not met.

5. MNEs pay fewer taxes to governments and incorporate where the tax rate is lowest, depriving their own country of revenue.

6. Governments are pressured to reduce tax rates and decrease social benefits that may affect stability. (© 2014 by Jensen DG. Mañebog)

 

QUESTION FOR DISCUSSION:

Generally speaking, is globalization advantageous or disadvantageous to states and governments? Why?

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