Saturday, October 2, 2021

The impact of globalization on the internal functioning of a state

 

The impact of globalization on the internal functioning of a state

Globalisation has been producing a subtle change in the functions of the State. Its role in the ownership and production of goods has been getting reduced. However, this does not in any way mean a return of the Laisses faire state. In the era of globalisation, the functions of the State began undergoing a change. With the increasing disinvestment of public sector, privatisation was encouraged. Public sector was made to compete with the private sector, and as a whole open competition, free trade, market economy and globalisation were practiced. State ownership of industries came to be rejected. The role of state began emerging as that of a facilitator and coordinator. The exercise still continues.

Globalisation has been producing a subtle change in the role of the State. Its role in the ownership and production of goods has been getting reduced. However, this does not in any way mean a return of the Laisses faire state. Activities which are essentially needed for the operation of economy. It now acts as a facilitator and coordinator and refrains from acting as an owner and regulator. It acts to ensure a smooth and orderly functioning of the market. It tries to secure stability in the market through macroeconomic policies.

Activities aimed at providing essential social services such as education, healthcare, and social security to the people. The state continues to be a welfare state performing all the protection functions as well as several socio-economic development functions. It continues to act as a regulator and coordinator of economy. It continues to regulate the economy in the interest of social justice and welfare of the people. . It has been, however, coming out of the field of production of goods. Private sector has now started acting as the major owner of business and industry in each state.

1. Decreased Economic activities of State:

The process of liberalisation- privatisation has acted as a source of limitation on the role of the state in the economic sphere. Public sector is getting privatized.

2. Decrease in the role of the State in International Economy:

The emergence of free trade, market competition, multinational corporations and international economic organisations and trading blocs like European Union, NAFTA, APEC, ASEAN and others, have limited the scope of the role of state in the sphere of international economy.

The impact of globalization on the internal functioning of a state


3. Limitations on External Sovereignty of State:

Increasing international inter-dependence has been compelling each state to accept limitations on its external sovereignty. Each state now finds it essential to accept the rules of international economic system, the WTO, the World Bank and the IMF.

4. Growing People’s Opposition to their Respective States:

Globalisation has encouraged and expanded people-to-people socio-economic-cultural relations and cooperation in the world… IT revolution and development of fast means of transport and communication have been together making the world a real Global Community.

The people of each state now deal with people of other states as members of the World Community. The loyalty towards their respective states continues, but now the people do not hesitate to oppose those state policies which are held to be not in tune with the demands of globalization.

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