ESSAY : Has globalization reduced the powers of the states ?

            Globalization has indisputably become a buzz-word both among economists and journalists. It has also become a scapegoat as national problems are often said to spring from globalization. It is indeed easy for presidents to put the blame on the EEC, the UNO or the IMF in times of slumps. Yet, if states have become increasingly interdependent, foreign exchanges are nothing new. Archeological artifacts testify to age-old trading activities between far-away countries and to constant cultural influences. Industrialization, as well as the advent of the consumer society, encouraged by technological revolutions, have admittedly given globalization a new boost. So much so that globalization encapsulates many aspects of our life, ranging from what we produce and buy to what we listen to and watch. Do we live in a global world that leaves no margin whatsoever to national governments ? Has globalization provoked the demise of the nation states ? These are much-debated questions nowadays and the economic downturn has undoubtedly added much passion to this debate.

            Globalization may first be defined as an economic global integration that stems from the removal of trade barriers, the free flow of goods and services, direct investment and new flows of capital. As a matter of fact, many companies are international, national companies often resort to outsourcing, which inevitably generates greater dependence on foreign regulations and labour force. Many components of products formerly made by national companies are now produced in less-developed countries. Entrepreneurs take advantage of lower-wages rates in countries where workers, often uneducated, unemployed and poor, accept wages and working conditions that few Westerners would willingly accept. Now, some of these countries may introduce new regulations that may jeopardize the financial health of the Europe-based firms. Surely, the removal of trade barriers has created a worldwide, seamless market. This means new trading opportunities, and larger markets. Besides, in some cases, the lowering of production costs has led to a decrease in prices. As both large-scale corporations and smaller firms depend upon regulations abroad and the purchasing power of global consumers, national governments find it harder and harder to act upon firms. Subsidies and taxes are often forbidden and collide with sometimes necessary outsourcing. However, if French producers can gain consumers across the border, they are also faced with fiercer competition against their neighbours. National governments have very few means of protecting their companies.

            Globalization has been encouraged by international institutions or multi-sates organizations that prevail upon national governments and impose obligations. Most of these supranational organizations are devoted to developing free trade. Within a liberal framework, deregulation often goes with unhampered competition. The World Trade Organization set up during the Uruguay Round (1986-94)… The Organization for Economic Cooperation and Development (OECD) is committed to the development of world trade and cross-border exchanges. The International Monetary Fund (IMF) sees to it that national governments do not get into debts, devaluate their currency. Some of these institutions are not global but gather states sharing the same economic interests and trying to strengthen their competitive values. The North-American Free Trade Agreement (NAFTA) The EEC has banned large deficits and therefore reduces the capacity of national governments to increase public expenditures. Consequently, national governments have many constraints and must establish political agendas that are in keeping with international policies. The locus of decision-making has no doubt shifted. Yet, national representatives may exert pressure upon international bodies. Besides, if supranational organizations have gained much political clout, one must not overlook the weight of lobbies and think-tanks in the decision-making process at any level, whether it be national or international. The erosion of national sovereignty cannot be the sole result of globalization.

            The recent economic slump has led to new demands in terms of wages, unemployment benefits and purchasing power. Anti-globalists, who hold that globalization brings nothing but outsourcing and unemployment, financial instability and competition between the workers, seemingly foresaw a situation that has become actual. The economic break-down, due to the instability of the financial market, has indeed provoked a chain reaction. Governments now have to deal with the citizen’s grievances and are adamantly urged to go against the globalization tide. Now, public spending being controlled or at least overseen by supranational bodies, presidents are often powerless or irrelevant. Managing economic crises globally seems to be very difficult.

            However, globalization should not be considered as merely an economic, and financial phenomenon. It has impacted upon technology, medicine and culture. In these fields too, pro and anti globalists have diverging stances. We shall briefly evoke them as they are connected to the power of the nation states.  The internet has encouraged globalization in many ways even though many citizens of developing or underdeveloped countries have been left aside. The internet is regulated both internationally and nationally, thus a large part of communication escapes national control. Globalization has had a double-edged impact on medicine. On the one hand, medication is now available to more people but on the other hand pandemics, such as the bird-flu spread all the more quickly as tourism and migrations have rocketed up. National governments are still free to impose their own public health measures, to put an end to some imports and to regulate the flow of migrants. Both new media, tourism and migration have generated more cultural exchanges. Here again, anti-globalists put the limelight on the standardization and the Americanization of culture to the detriment of national or regional culture while pro-globalists put forward the richness and pacific exchanges stimulated by globalized communication. Governments are still free to implement whatever cultural policies they like, as long as it does not entail too much public spending. Nonetheless culture largely develops outside the scope of national governments. Private museums can be financed by foreign philanthropists, public museums may benefit from international corporate funding and television networks may be owned by international tycoons.

            The environment is the last but not least aspect of globalization I will tackle in this essay. It admittedly requires a global approach as every population shares a worrying vulnerability. If national states may implement law and decrees in favour of sustainable development, it undeniably requires international cooperation. Transports, the use of oil and gas, deforestation, water pollution are issues that have to be dealt with globally. Unfortunately, countries seems to be reluctant as very few people are satisfied that environmental-friendly decisions can encourage and not curb economic development.

            Dealing with the supposedly eroded power of national governments in a context of globalization has led me to think that the proponents of sovereignty may be barking up at the wrong tree. Globalization is not wrong in itself as it only serves and facilitates given policies. Geared towards noble causes, such as preserving the environment, encouraging diversity, democracy and well-being, it may replace the power of nation-states advantageously. Eventually, nations need some form of control and global organization, international courts of justice among others, are useful. The aim of globalization could be not to weaken nation states or to have them surrender their sovereignty but to balance their power, which could lead to an international form of democracy. In this respect, global governance has still a long way to go. A fair globalization would not pose a threat to nation states but would represent the interests of national communities in a global perspective.