The idea of the impacts of globalization on the erosion of national boundaries and state sovereignty has been controversial. Globalization refers to the process of integration of national economies, technologies, cultures, and trade, which produces complex relations characterized by mutual interdependence (Nye and Donahue 2000). This process has led to the reduction of constraints of geography, expansion of communication networks, free mobility, and hence the flow of ideas, finance, and investment among other socioeconomic aspects. However, there are arguments that the process erodes the boundaries of the modern state while rendering governments less able to manage their economies (Veltmeyer 2004). This discussion presents a critical analysis of the argument that globalization has surmounted national boundaries and undermined governments' ability for independent economic governance.
The current discourse on economic globalization recognizes that the forces associated with the process have undermined the sovereignty of countries (Nye and Donahue 2000). The allegation backing this point of view is that countries seem to have lost the ability to control and regulate the movement of people, flow of goods, ideas, and services, and the associated negative impacts such as pollution (Sebastian 2017). When it comes to territorial borders, countries find that the speed of transmission is relatively high that it is difficult to not only regulate but also to resist external influences. The advances in technology are partly to blame as they have revolutionized aspects such as commerce and finance to the extent that numerous elements are no longer under the regulatory scope of the state (Lynch 2003). The outcome is that countries are seemingly reduced to an ordinary component of the global community as an organization that does not hold economic supremacy anymore. This perspective seems to be having a right judgment because according to Collis (2014), increased globalization implies that countries are always subject to the dynamics of the global markets including the volatility that may come with them. Any decision making, policy changes, and social adjustments are, therefore, in response to the demands of globalization. Caselli (2012) holds a similar opinion that 'supra-territorial' characteristics and processes have resulted from globalization. The primary argument in this proposition is that a country may be a territorial institution with sovereignty within its borders, but globalization gives rise to processes that unfold irrespective of whether there are constraints that come with physical space or not (Caselli 2012).
Some analysts have even blamed international institutions such as the International Monetary Fund (IMF) and World Bank for the promotion of macroeconomic policies whose costs allegedly outweigh the benefits as they apply to individual countries. These institutions have been accused of imposing standard economic policies to which nations must adhere and those that reject the policies are blackmailed by being threatened to be denied loans (Collis 2014). Collis (2014) further notes that some countries in Europe have had to give in to the requirements of their counterparts in the region to remain in the Eurozone. For example, neoliberal reforms and austerity measures to minimize government spending to solve public debt are some of the crucial requirements the region has made imperative in the recent past (Nye and Donahue 2000). This implies that as globalization opens borders for increased integration, the fiscal unions, treaties, and most importantly free trade agreements in economic blocs seem to be curtailing the capacity and sovereignty of governments of individual countries to conduct independent economic policymaking (Sebastian 2017). The overarching premise is that as nations realize that their 'fate' is intertwined, they end up surrendering the powers to pursue independent economic destinies.
The assumption behind the position that governments are losing control is that the current globalization is synonymous with global capitalism which is based on the neoliberal ideology (Sebastian 2017). This process is then seen to have resulted in social, economic, and political structures that transcend national boundaries (Sandbrook and Güven 2014). Neoliberal policies advocate financial openness, private property rights, free international trade and investment, free financial and currency markets devoid of government intervention, deregulation, and removal of protectionist policy barriers (Lynch 2003). Neoliberalism has resulted in the internationalization of production while promoting global competition and the engendered globalization seems to have increased the power of multinational corporations (Nye and Donahue 2000). Countries that have pursued these policies have a global perspective in the way their business is organized and believe in the existence of mutual interests when they cooperate and reciprocate with their international counterparts (Collis 2014). Critics of neoliberalism argue that such countries are vulnerable to adverse impacts of globalization such as financial shocks because of the free flow of capital, information, goods, and services. Also, to safeguard own interests in the global interrelations, states have had to give up some powers to world institutions and multinational corporations, even in the domestic spheres (Sebastian 2017).
Financial globalization is of particular interest when considering how the abilities of the state have been affected by neoliberalism. Primarily, the advancement in communications and information technology have accelerated financial globalization leading to a significant transformation of the financial market operations (Nye and Donahue 2000). One notable occurrence is that national economies have been penetrated by corporates and associated alliances in addition to the multinational corporations, which have vital influence in governmental decision making (Caselli 2012). It appears a challenge for governments to control these developments. As seen, government regulation, currency stabilization, standardization, and state-run or state-supported production and distribution activities seem to have reduced because of neoliberal policies (Sebastian 2017). It is perhaps also a growing trend that the capacity of governments to play a role in economic policies such as redistributive arrangements including welfare services, employment protection policies, and environmental protection has declined (Sandbrook and Güven 2014). Most importantly, the provision of public goods, which are meant to benefit the population in a domestic economy seems to be slowly being overshadowed by the market while politics have also been transcended by the economics of which countries have less control when part of an international system (Sebastian 2017).
However, in all these arguments, it is also crucial to analyze the role of the state in this whole process. While it is no doubt that the pressures of globalization are strong, countries can decide how to respond. It seems that there is no compelling requirement to respond uniformly to the demands of globalization. According to George and Wilding (2002), the impacts of globalization are mediated by history, economic dynamics, and politics, which means that countries have the responsibility to decide how to respond to the pressures emanating from the same. Caselli (2012) points out that the modern state has not been adequately equipped to deal with the current challenges because the contemporary problems are global in scope, which means that they demand solutions which are universal and those that surmount the capacity for decisions of a single nation. This argument suggests that the state is somewhat powerless, a case that may not be necessarily accurate. Some countries can retain their functions and relevance while trying to adapt to the new global context in which they exist. However, since globalization engenders socioeconomic processes that manifest regardless of geographical borders, it can be argued that some states gradually lose their relevance as the process of globalization pervades.
According to Veltmeyer (2004), the idea that globalization is inseparable from capitalist expansion cannot be downplayed. Global capitalism has gone a notch higher in terms of development and complexity especially because of the technological innovations that have taken place thereby revolutionalizing transport and communication (Sandbrook and Güven 2014). Domestic economic policies, which countries pursue to ensure development are no longer easy to formulate because development is expected to occur in a global context and consistent with the demands of globalization (Veltmeyer 2004). It appears that globalization is the solution that neoliberalism prescribes to development activities. Therefore, as aforementioned, the resulting free market dynamics and unregulated decisions making by private players when it comes to finding solutions for socio-economic problems imply that government's role in domestic economic affairs and social welfare is limited (Caselli 2012). At the same time, it is a challenge to manage financial flows and international trade even with domestic policies. Critics of globalization who do not necessarily reject the process raise concerns about its form; the neoliberal character, which has been over the past promoted by elite international institutions such as the IMF and World Bank.
It is no doubt that globalization has positive and negative impacts on the world. In regards to the response to the process, the most appropriate resolution would be for countries to embrace the trends and mitigate the adverse effects while protecting their citizens. National governments may be required to do more to manage domestic policy reforms while ensuring welfare for their people (Scott 2003). However, it might be a challenge for some countries such as those still indebted and under pressure from international institutions, to regain control over development (Veltmeyer 2004). According to Collis (2014), the aforementioned elite institutions had compelled some nations to abandon their independent and context-specific development initiatives and policies to pursue the prescribed neoliberal policies, which often did not take local conditions into account. As a result, such governments are among those that have been less able to pursue independent economic policies in addition to having problems with deciding which policies would best respond to the current needs of the citizens (Tonkiss 2006). For example, most countries in Latin America embraced the prescriptions of neoliberal policies in development initiatives.
From a different perspective, globalization and the state are intertwined realities. It can be said that globalization is supported by countries because they are the ones that lay out the infrastructure on which the process thrives. For example, with the advancement of technology, many countries have installed communication networks and modern transportation channels, which support the transnational flow of information, finance, capital, and people. The idea of developing these infrastructures still lies in governments' independent decisions. Also, while the capitalist labor market may seem influential, governments are still the principal decision makers when it comes to the regulation of international migration and employment policies (Tonkiss 2006). Other economic policies such as taxation, import and export regulations, among other guidelines governing local sectors are still under the control of the state. Therefore, it can be argued that the state is still relevant and continues to make independent economic contributions, but its role has significantly changed with globalization (Cohen 2001).
In essence, the suggestion that governments no longer have the power to control and regulate what takes place within its borders and to make independent economic decisions is founded on the notion that the pervasive and dominant neoliberal ideology, which is associated with globalization, derails governments in terms of domestic policy (George and Wilding 2002). However, there is no logic in believing that globalization is an inevitable process which is intrinsically neoliberal. There may be other possibilities because as a process, globalization is long-term and historical, which means that it may be accompanied by various underlying ideologies (Scott 2003). On a positive note, the process offers a reference framework for policymakers in independent states so that they can consider international economic trends even when they are thinking and acting locally in terms of policies. It becomes essential to look at the position of other national governments as they deal with issues that transcend national boundaries (George and Wilding 2002). Most importantly, if multinationals and global capital are the ones influential in domestic social and economic policy, then democracy is under a significant threat.
In conclusion, the impact of globalization on the operations of the nation-state has been argued from various perspectives. While it seems undeniable that the phenomenon of globalization has transcended national boundaries, the state is still relevant in multiple domestic economic affairs including pursuing independent economic policies. However, its role has changed significantly, and it appears to have surrendered some power to private firms and international institutions. Governments can still choose how to respond to the pressures of globalization, capitalizing on its benefits while prioritizing the welfare of the citizens with sound context-specific policies.