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Globalization and the Nation-State

Globalization and the Nation-State. Points covered: What is “globalization”? End of the nation-state? Race to the bottom. ‘Globalization’. What is it and is there reason for scepticism?

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Globalization and the Nation-State

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  1. Globalization and the Nation-State Points covered: What is “globalization”? End of the nation-state? Race to the bottom

  2. ‘Globalization’ What is it and is there reason for scepticism? Hirst, P., Thompson, G. and Bromley, S. (2009). Globalization in Question, 3rd edition (Cambridge: Polity Press).

  3. International trade 1948-2005: Value of exported goods increased from US$58bn. to $10159bn. Value of imported goods increased from $66bn. to $10511bn.

  4. Composition Between 1948 and 2005 some regions’ share of world trade declined: Africa’s (excl. S. Africa) share decreased from 7.3% to 2.9% (exports) and 7.6% to 2.4% (imports).

  5. Trade : GDP Ratio Large industrial countries (US, UK, Germany, France, Japan) are only just catching up with their ratio from 1913. There is nothing unprecedented about the current trade : GDP ratio (cf. Mosley, p. 109).

  6. Mobility One indication of globalization is increased mobility across boarders: • Foreign direct investment (FDI) • Finance • Goods (trade)

  7. Mobility What is not mobile? People, especially those with “low skills”: there is far less mobility of people today than in the late 19th and early 20th centuries.

  8. Foreign Direct investment Developed countries accounted for 84% of world FDI outflow (2006). Where is it going (inflows)?

  9. Fdi(cont.) Multinational companies (MNCs) are the main source of FDI to developing countries. What is the impact on host countries in the developing world?

  10. Fdi(cont.) MNCs can have a positive effect on host developing countries: • Technology transfer • Skill enhancement • Increased exports • Employment

  11. Fdi(cont.) Employment effects of MNCs: • Job creation • Higher wages • Better working conditions • More benefits Are MNCs obliged to help developing countries more than they currently do?

  12. North-south financial flows Does globalization mean that economic conditions in poorer countries are improving?

  13. The nation-state Is the nation-state powerless against the power of international capital? Does globalization intensify competition amongst nation-states?

  14. competition Three ingredients to competition: • Who (or what) is competing with each other (or: who are the competitors)? • What are the competitors competing for? • How are they competing with each other?

  15. ‘race to the bottom’ (rtb) Ingredients of the RTB (Mosley, pp. 110-12): • Who are the competitors? ‘Jurisdictions’, e.g. nation-states, regions of a country, supranational organizations like the EU.

  16. RTB (cont.) 2) What are they competing for? Mobile resources, particularly foreign investment (‘capital’). 3) How are they competing? By creating policies favourable to international capital in order to attract capital.

  17. Rtb(cont.) Effects of the RTB: • Policy convergence across jurisdictions. • Policy reaches lowest common denominator (the ‘bottom’). • Undermining democracy.

  18. Empirical evidence of rtb Mosley (pp. 112-14): Little evidence of a systematic RTB; some evidence that certain countries and sectors are affected. Hence no imminent “end” of the nation-state. Why?

  19. Gérard Depardieu and The french “rich tax” François Hollande announced a new “rich tax” (highest tax bracket of 75%) in France (2012). Actor Gérard Depardieu, along with other French high earners declared that he would leave the country.

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