Are States in Conflicts with the Process of Economic Globalization?

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nIntroduction

nIn the past few decades, economic globalization has experienced rise in multinational companies, foreign direct investments and global business. The process of economic globalization has been stimulated due to emergences of advanced technologies, and changes in production. On the other hand, states have the power to influence the performance of economic globalization because they enact policies that affect growth of business (Vos and Koparanova 2011). The paper will discuss how states change, impose and determine economic globalization.

nThe state power and role in international trade is at constant change. Nonetheless, the need of territoriality and location is an essential factor in production. The choices of multinational companies are affected by various factor including infrastructure, skilled labour and cost of production. More importantly, decisions made by such companies are influenced by their relationships with states depending on a multifaceted benefits distribution (Rodrik 2011). The states perform a governing role because national circumstances and geopolitical issues influence the process of globalization. Moreover, states can alter the performance of economy through both monetary and economic policies. Consequently, these policies affect global competitiveness, which lead to inequality in terms of fair business environment. For instance, most industrialized economies still hold more trade as compared to developing countries (Otsubo 2015). On the other hand, global financial companies operate in almost every country across the world.

nStates have the power to apply a wide range of mechanisms aiming to take advantage of opportunities presented by global markets. However, a state employ a certain mechanism based on the competitive advantages, which affect the participation of global economy. The countrys economic strength determines its decisions on the kind of policies to enact in order to enhance global competitiveness (Murshed, Goulart and Serino 2011). It also influences the capacity and susceptibility to safeguard itself against harmful effects of economic globalization. Consequently, the world has witness irregular level of economic globalization because more transnational corporations and foreign direct investments occur in developed nations at the expense of less developed states.

nThe states adaptability and power is a product of strength of its economy, geo-strategic benefits, resources and size. Therefore, powerful states have the ability to control institutions and rules of the global economy based on their interests. In this regard, they apply, tariffs, quotas of imports and subsidies in order to develop a barrier, which safeguard their rights of intellectual properties and strategic benefits (Herrmann and Terhechte 2011). In addition, these states have the financial muscle to enter markets of weaker states because they have competitive advantage. On the contrary, states with weaker economic strength have minimal control regarding enforcement and formulation of global rules. Similarly, they have restricted power over their degree they can achieve integration into the global economy. Therefore, liberalization of market does not benefit weaker economies (Goldin and Reinert 2012). Moreover, powerful countries have the ability to change policies, impose sanctions and leave global structures that do not add value to their economic interests.

nConclusion

nStates play a role in economic globalization because they are involved in formulation of policies and governance. They create a conflict in the process of economic globalization because they can institute policies that favour their interests (Otsubo 2015). Stronger states are able to abandon or change a certain global structure if it does not serve their interests while weaker states are unable. Therefore, more trade tend to concentrate in developed nations.

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nReferences

nGoldin, I. and Reinert, K., 2012. Globalization for development. Oxford: Oxford University Press.

nHerrmann, C. and Terhechte, J., 2011. European yearbook of international economic law 2011. Berlin: Springer.

nMurshed, S., Goulart, P. and Serino, L., 2011. South-south globalization. Abingdon, Oxon: Routledge.

nOtsubo, S., 2015. Globalization and Development Volume I. Hoboken, United States: Routledge.

nRodrik, D., 2011. The globalization paradox. New York: W.W. Norton & Co.

nVos, R. and Koparanova, M., 2011. Globalization and economic diversification. London: Bloomsbury Academic.