To what extent can national governments influence the outcomes of economic globalization? Discuss with examples?
In a world where trade barriers are blurring, people cross borders relatively easier in comparison with previous times, countries cooperate with one another and even unite and multinational enterprises (MNEs) gather momentum the national governments still exist. National states refer to geographical space preoccupied by a group of people, who share the same cultural values and political governance, language and religion, history and ethics (Dicken, 2003). Recently, their relevance has been questioned because the world experiences fundamental economic transformation (YouTube, 2008). In other words due to globalization a significant number of changes has occurred in terms of competition, integrated trade, capital movements, MNEs and the role of national governments. This essay is going to argue that as a result of globalization, the role of national states nowadays have changed and they assume a number of different positions and perform various functions. The first paragraph is going to show that states contain different cultural dimensions. Then, the second one asserts the view that national governments might be or might not be seen as key regulators in terms of trade, industry and foreign direct investment (FDI) policies. The next section is concerned with the relationship state- MNEs. The penultimate part delineates that states might or might not be seen as competitors while the last one represents them as collaborators. I. States as containers of different cultures
This paragraph is going to examine one of the main sources of differences- culture. Although, globalization has spread in a fast pace, countries still have their specific cultures and institutions. Basically, the international business systems seem to be based on different countries’ values which are diverse in terms of local culture and practices. Hofstede and Hofstede et al.,(1883; 2010), argues that there are four main cultural dimensions:
Figure 1.1 (Hofstede, 1983; 2010)
So, each country has different traditions and culture which represent its uniqueness of national system and politics. States dealing with international business should be aware of such difference in order to prosper and facilitate their merchandising. To illustrate, this appears to be highlighted by Jake’s character in the movie Wall Street: Money Never Sleeps, when Chinese business representatives seem to be fascinated not only by the bargain proposed but also by the fact that Jake speaks their own language and pleased them with a present “American bijou” (Stone, 2010). II. States as regulators of trade, foreign investment and industry Hudson (2001, pp 48-9) asserts that “state activity is necessarily involved in constituting economy and society and the ways in which they are structured and territorially organized.” First of all, states form their mix of policies on the basis of a few key dimensions including their level of development in the globalized economy, the standards of their main institutions, their capital of resources and the proportions of their domestic market (Dicken, 2003).States could influence the economy in two major ways – by using fiscal or monetary policies. The former refers to the use of taxes and government spending, the later to the level of money (high powered money) supplied by the Central Bank (Blanchard et al., 2010). Finally, the policies adopted by states might be applied towards neoliberal market capitalism, which refers to narrow state intervention and more liberal market orientation, or developmental market capitalism, in which the state plays a key role in the economy and might imply restrictions to markets in order to support domestic trade (Whitley, 1999). In the former case, countries are more liberal and their macroeconomic position is likely to be more competitive. A good example seems to be the United States (Dicken, 2003).In the later, government still plays crucial role in the formation of country’s macroeconomics, trying to encourage further economic development, for instance, Japan, Korea and Taiwan (Woo-Cumings, 1999). So, according to the type of capi...