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.
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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