Globalization can be defined by five main criteria: internationalization, liberalization, universalization, Westernization, and deterritorialization. Internationalization is where nation states are now considered less important as their power is diminishing. Liberalization is the concept where numerous trade barriers have been removed, creating freedom of movement. Globalization has created a world where everyone wants to be the same, which is known as universalization. Westernization has led to the creation of a global world model from a Western perspective while deterritorialization has led to territories and boundaries being "lost."
Perspectives on Globalization
There are six main perspectives that have arisen over the concept of globalization; these are "hyper-globalists" who believe globalization is everywhere and "skeptics" who believe globalization is an exaggeration which is no different from the past. Also, some believe that "globalization is a process of gradual change" and "cosmopolitan writers" think the world is becoming global as people are becoming global. There are also people who believe in "globalization as imperialism," meaning it is an enrichment process deriving from the Western world and there is a new perspective called "de-globalization" where some people conclude globalization is beginning to break up.
It is believed by many that globalization led to inequalities around the world and has reduced the power of nation states to manage their own economies. Mackinnon and Cumbers state "Globalization is one of the key forces reshaping the geography of economic activity, driven by multinational corporations, financial institutions, and international economic organizations."
Globalization is seen to cause inequalities due to the polarisation of income, as many laborers are being exploited and working under the minimum wage whilst others are working in high paying jobs. This failure of globalization to stop world poverty is becoming increasingly important. Many argue that transnational corporations have made international poverty worse.
There are those who argue that globalisation creates "winners" and "losers," as some countries prosper, mainly European countries and America, whilst other countries fail to do well. For example, the USA and Europe fund their own agricultural industries heavily so less economically developed countries get priced out'of certain markets; even though they should theoretically have an economic advantage as their wages are lower.
Some believe globalization has no significant consequences for less-developed countries' income. Neo-liberalists believe that since the end of Bretton Woods in 1971, globalization has generated more "mutual benefits" than "conflicting interests." However, globalization has also caused many so-called "prosperous" countries to have huge inequality gaps, for example, the United States and the United Kingdom, because being globally successful comes at a price.
Nation State's Role Diminishing
Globalization led to a significant rise of multinational corporations which many believe undermined the ability of states to manage their own economies. Multinational corporations integrate national economies into global networks; therefore nation states no longer have total control over their economies. Multinational corporations have expanded drastically, the top 500 corporations now control almost one-third of global GNP and 76% of world trade. These multinational corporations, such as Standard & Poors, are admired but also feared by nation states for their immense power. Multinational corporations, such as Coca-Cola, wield great global power and authority as they effectively 'place a claim' on the host nation state.
Since 1960 new technologies have developed at a rapid rate, compared to the previous fundamental shifts which lasted for two hundred years. These current shifts mean that states can no longer successfully manage the changes caused by globalization. Trade blocs, such as NAFTA, reduce nation state's management over their economy. The World Trade Organisation (WTO) and the International Monetary Fund (IMF) have a huge impact on a nations' economy, therefore weakening its security and independence.
Overall, globalization has diminished the nation state's ability to manage its economy. Globalization within the neoliberal agenda has provided nation states with a new, minimalist role. It appears that nation states have little choice but to give away their independence to the demands of globalisation, as a cutthroat, competitive environment has now been formed.
Whilst many argue that the nation state's role in managing its economy is diminishing, some reject this and believe the state still remains the most dominant force in shaping its economy. Nation states implement policies to expose their economies more or less so to the international financial markets, meaning they can control their responses to globalization
Therefore, it can be said that strong, efficient nation states help "shape" globalization. Some believe nation states are 'pivotal' institutions' and argue that globalization has not led to a reduction in nation state power but has altered the situation under which the nation state power is executed.
Overall, the nation state's power can be said to be diminishing in order to manage its economy due to the effects of globalisation. However, some could question if the nation state has ever been fully economically independent. The answer to this is hard to determine however this would not appear to be the case, therefore, it could be said that globalization has not lessened the power of nation states but changed the conditions under which their power is executed. "The process of globalization, in the form of both the internationalization of capital and the growth of global and regionalized forms of spatial governance, challenge the ability of the nation-state effectively to practise its claim to a sovereign monopoly." This increased the powers of multinational corporations, which challenge the nation state's power. Ultimately, most believe nation state's power has diminished but it is wrong to state that it no longer has an influence over the impacts of globalisation.
- Dean, Gary. "Globalisation and the Nation-State."
- Held, David and Anthony McGrew. "Globalization." polity.co.uk.
- Mackinnon, Danny and Andrew Cumbers. An introduction to Economic Geography. Prentice Hall, London: 2007.