Globalisation and state power: The question of context

Abstract

The phenomenon of economic globalisation, broadly defined as the increase in the magnitude and extent to which economic relations transcend national boundaries, has underpinned many important developments in the global economy in recent decades. This carries significant implications to the management of economic affairs, not least with regards to the ability of states to maintain control of economic relations within their borders. While some scholars advance the thesis that there has been an erosion of state power – a ‘retreat of the state’ – in the face of globalising forces, others contend that the state remains the central force in the global economy. This essay critically engages existing literature on globalisation and state power. It finds that the relationship between these two forces is one of mutual constraints and reinforcements, and thus an objective answer to the question of ‘retreat’ is more difficult than commonly thought. More importantly, this question is unable to provide a comprehensive picture of the position of the state in the globalised world as it fails to take into account certain key developments in the global economy as well as the existing variations in the nature of the state. As such, the essay proposes a new paradigm for the study of the influence of globalising forces on the state that frames globalisation as providing a distinct context for the exercise of state power.