Territorial Sovereignty to Globalization

Introduction

In 1648, the Treaty of Westphalia was signed by a number of states and the result is that the principle of territorial integrity was strengthened. As a result it became difficult to conquer other states in Europe because of territorial sovereignty that made states all powerful and autonomous. After the Second World War, the principle of self-determination emerged and became very prominent. It strengthened existing states and facilitated the fight for national independence of colonies in different parts of the world. Since then, the nation state has continued to grow and became stronger until globalization came along. For a long time, states dictated how an individual lived because it provided essential social amenities to its citizens and in return demanded for tax (Martell 2010: 18). The state controlled the destiny of individuals through its monopoly of taxation, defence and law.

Globalisation and economic integration

Globalisation refers to the transformations the world economy has undergone for the last thirty years in terms of trade, production and financial markets (Ku and Yoo, 2013). The world has become one small village because of globalization and advancement in technology and the state is no longer capable of controlling a number of things it used to. Scholars have thus argued that globalisation has weakened the state and will probably kill it in the long run. Moreover, there are commentators who have suggested that the state is no longer an actor in international trade. Accordingly, the economic liberalism theory of Global Political Economy supports the idea of globalisation regardless of its effect on the state (Ku and Yoo, 2013). In particular, liberals believe that it is the province of the market place to make economic decisions and not the government.

In short liberals are proponents of a free global market with minimal governmental interference. In contrast, economic nationalism theorists contend that because states compete economically it can only be as strong as its industries hence free trade is unnecessary and a threat to domestic entrepreneurs. In the nationalist, view Multinational Corporations (MNCs) are agents of national power and allowing foreign MNCs to operate freely in key area in the state is a threat to the state’s own power (Sparke, 2013). Today, countries like Japan, Germany and South Korea still operate based on a diluted theory of economic nationalism. It follows that liberals would most likely be comfortable with the apparent decline of the state while nationalists would want implement conservative measures to bring back the overarching state power. Economic structuralism is based on the theories advanced by Karl Max and Engels which advocates for Communism system of government where the state controlled everything (Jotia 2011:13). In light of globalisation, economic structuralism and nationalism do no support free trade and open borders and are pro-powerful states.

Hyperglobalists maintain that the state is constantly declining as a result of the encompassing nature of global integration. This school of thoughts believe that national entities, economies, societies and systems of regulation are slowly eluding the state (Jotia 2011:14). One of the tools emasculating the state is mobility of capital which entails that capital can move in and out of the state with minimal costs in anticipation of tax and malleable labour regulatory regimes. In addition to this states are in constant competition to bring into their borders more Foreign Direct Investment (FDI) thus the allure of MNCs to move operations to attractive destinations in terms of tax and labour laws. For instance, Apple has 94 percent of its cash reserves held in offshore accounts and this amount is greater than the foreign reserves of the Bank of England (Robertson 2018). In this regard the state is slowly losing its autonomy over markets. However, it is not entirely true that such unrestricted mobility of capital would eventually kill the state but the reality is that it diminishes the power of the state. In fact countries like Japan and Singapore despite the state autonomy of the marketplace has been able to facilitate economic integration.

Apple Inc. is an example of an MNC that taken advantage of the mobility of capital concept to search for competitiveness. The MNC has been for a long time manufacturing its products in China with a view of reducing the cost of production. Other companies that have adopted the same approach are Dell, Google, Hewlett-Packard, and Nintendo among others (Economist, 2019). In essence, China has implemented policies including a cut on foreign exchange restrictions with the aim of attracting foreign companies seeking to manufacture elsewhere apart from their countries of origin. In light of the hyperglobalist view, states find themselves in positions that require them to adapt to new trends as dictated by the market place to remain attractive to MNCs. However, to contend that states are at the mercy of the global economy is not exactly true because there are still state-led development policies that shape the global economy. For instance, the US has in recently implemented tariffs that have led to MNCs moving their operations from China. Although MNCs have the freedom and the ability to move operations between states, the state is still important to them especially in terms of infrastructure and institutions.

International organisations.

After the Second World War, the United Nations and other international organizations emerged stronger and were more effective. The UN is an international body controlled by representatives from different states that appears to be a world government taking over as the global ruler. Pursuant to its Charter the UN has intervened in the internal affairs of different countries including Central Africa Republic, Congo, Kosovo, Cyprus, Somalia, India and Pakistan. Further, there has been a sharp increase in the number of affiliate Non-Governmental Organizations attached to the UN. The fact that the UN has been able to expand and make major decisions affecting sovereign states could be viewed as a threat to the state. Having said that, it must be remembered that the UN Charter provides for the principle of sovereignty and it will only intervene without consent of the nation where there are continuing human rights violations (Fulcher 2000:523). Further, the decision to intervene in another sovereign state is not made by isolated persons at the helm of the UN but by representatives of sovereign states. Therefore, the argument that the UN weakens the state is a first glance plausible but upon scrutiny it doesn’t hold water.

A similar argument has been associated with the International Monetary Fund (IMF) and World Bank. IMF is part of the UN system and is responsible for fostering global growth and economic stability through policy advice and financing. In pursuit of the above, the IMF has been criticised for imposing harsh conditions for developing countries in order to obtain FDI. It is thus argued that conditions regarding public spending and others places such countries in a situation where they are basically controlled by the IMF thus weakening the state. Despite these criticism, IMF was designed to help countries prosper economically and aid them in distress just like Argentina and Greece. Once again, the claim that IMF is a threat to the state is largely unsubstantiated although the organization’s efficacy is a debate for another forum.

According to Oberoi (2010), state economies have been fragmented by globalisation such that the autonomy and capacity to regulate its internal affairs has waned considerably. The author suggests that national policies are no longer tenable since economic outcomes are today determined by world market forces and actions of MNCs. In support of the above assertions, Martell 2010 adds that the state is incapable of controlling its national interest, trade policies exchange rates, social and labour policies. Interestingly, other authors have disagreed with the above contentions and they has maintained that globalisation is a creation of the state and the state has the capability to adapt to changes (Solakoglu 2016:19). In short, this school of thought believes that globalisation does not weaken the state.

Regionalisation

In Europe, the European Union has been influencing the economic policy of its member states for years. Notably, the British exit from the EU which has dragged on since 2016 is attributed to some of the economic policies imposed by the EU. It may be argued that Brexit was fuelled by the need for the UK to regain its power which had been taken away by regionalisation. The North American Free Trade Area (NAFTA), the Association for South East Asian Nations (ASEAN) and the Organization for Economic Cooperation and Development (OECD) are examples of trade blocks that have exacerbated the move towards open borders and zero tariffs. Hirst and Thompson (1996) however argue that globalisation has been around for decades and these trade blocks are merely vessels through which states dictate globalisation. In their view, globalisation is not novel and the state is not at any risk of diminishing.

Conclusion

The upshot of the above arguments is that the states are faced with the challenge of globalisation that has hindered their ability to make economic policies and regulate trade and financial markets. Be that as it may, the state has been instrumental in the creation of free market and the same state is capable of aligning itself to take advantage of scenarios like the US had done. In the end the sate remains the common denominator in international trade and relations although its role could change but it is here to stay.

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Bibliography

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