State Policies in the Globalization Era

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Globalization along with liberalization of economy has brought several changes across the world. And the changes can be noticed in varied aspects, starting from the economy of the nation to its people, their lifestyles, and many more. State policies of government have also changed accordingly. In fact, state policies in the globalization era depend upon a lot of components, which change from time to time and are also subject to continuity. Though even in the age of globalization, one can still find the state relations in the governing body, however, the most distinguishing features of this is again the fact that, it has been able to bring changes in the policies of the state.


Let's have a look at globalization. Is it good for the economy or a harmful one? The principles of globalization were questioned in terms of the Westphalia system – a theory of governance. According to some agnostic, globalization is a threat to the state governing body. Being the framework of it, there is every possibility that globalization would affect Westphalia. In this juncture, the statehood principles and self-government come into limelight. According to the statehood, world is divided into territorial shares, and for the governance of each shares, it would require a separate government. Sovereignty is also classified into two categories, viz. Internal Sovereignty and External Sovereignty. Internal sovereignty is the case when the government exercises complete authority on a particular region. On the other hand, in case of External Sovereignty, there is no practice of absolute authority. While formulating policies, the state should consider these features of sovereignty.

Globalization and the State Policies

Globalization has had a huge impact on the state at every level of activity and functioning. As a result, state policies in the globalization era are also formulated accordingly, considering the above said impacts of globalization. If we look more into the term ‘Globalization', the term is popularly defined as “the integration of economic, social and cultural relations across the borders”. There are three dimensions of globalization that showcase the relationship between the sovereign state and the globalized world.

Economic Globalization

Economic globalization is associated with finance, trade, production, distribution and management. MNCs have played a major role in accelerating the integration of the global economy. During the 1960s and 70s, augmentation of foreign direct investment (FDI) by the U.S. MNCs were observed. It's the Japanese as well as the west European FDI that saw an increasing graph during 1980s. Besides these, financial flows including portfolio-type transactions have also started increasing. National capital got integrated with the international financial capital, corporate alliances also started coming about.

Political Globalization

Political globalization is defined by “the shifting reach of political power, authority and forms of rule”. Political relations become closely knitted, posing a challenge to the distinctions between domestic and international politics. In this present era, one can see the emergence of regional and global law in global politics. It challenges the state sovereignty.

Military / Security Globalization

Globalization extends the scope of security. The military/security globalization leads to re-definition of national security as international security or also sometimes as new cooperative security community. Here states can no longer be in charge of their non-physical security requirements like protection of technology assets or information.

State Policies

State policies play a major role in the governing powers – national or international, state or non-state and public or private. State policies in the globalization era involve transformation of powers to the international agencies and unions such as the EU and the regional and sub-national agencies. The changes that happened during to the financial globalizations largely depended upon the state support and approval.

The last 10 years saw huge changes in the globalization era state policies. Globalization has been the reason behind the flow of money transfers, capital flow, computer data flow, satellite communications, electronics upsurge and merchandise trade. The state policies have also changed accordingly.

Corporate Globalization

Last Updated on 5/18/2011