Government Is More Rather than Less Important in an Era of Globalization - Literature review Example

Government is more rather than Less Important in an Era of Globalisation Student’s Name Grade course: Tutor’s Name Date: Word Count: 1510 Introduction Globalisation is defined by Keohane and Nye (2000) as the “increase in networks of interdependence at multi-continental distances” (p. 2). In the economic circles, the same is defined by Kahler and Walter (2006) as the reduction in obstacles to economic exchange and element mobility that generates one economic space for many. In the globalisation era that is best epitomised by the 21st century, it is widely acceptable that most governments have taken a backseat and instead let transnational corporations, multinational corporations or multinational enterprises to conduct businesses in the global market. Yet, there is no denying that governments are at the centre of the globalisation era more so when it concerns formulating policies and political choices that govern the trade and other relations held by different entities in the global market. It is for this reason that this essay argues that governments are more rather than less-important in the globalisation era. But why is this so? One may ask. Well, according to Bitzenis (2005a), companies doing business in the global market targets to increased their profits as well as their market share. This means that companies look for better opportunities both in the local markets as well as in the global market. Better market opportunities are on the other hand a creation of governments, which enforce policies that liberalise or tighten measures governing their respective markets hence creating or restricting market prospects for the business enterprises. But this opinion is not shared by all scholars. Kahler and Walter (2006) for example observe that some analysts hold the opinion that globalization has done away with territorial geographical boundaries hence meaning that populations, goods and capital are less engaged with their governments. This is in turn interpreted to mean that the era of globalisation has made governments less important. This argument is however countered by Ohmae (1990, cited by Kahler& Walter, 2006), who state that “[humankind] does not live in a borderless world or one that has seen the end of geography”. In respect to the global economic integration aspect of globalisation, it is noteworthy that some scholars argued that the role of governments was slowly being eroded as private actors in regional and international institutions took up roles that were formerly executed by national governments. Disagreeing with this observation, Kahler and Walter (2006), argue that in order to adapt to the changing times, the national governments have had to change in order to retain the accountability and effectiveness often demanded by the citizens. To this end, Kahler and Walter argue that globalization has become a determinant of the territoriality and governments, rather than becoming a force that eradicates the geographical territories and the governments that oversee policy formulation and enactment therein. Polaski (2007) cites the United States as one of the cases where a close connection between government actions and globalization can be observed. In specific, this analyst observes that globalization has weaved the United States with other countries therefore creating a web of interdependency among countries. Notably, some critics argue that the US government’s acceptance of global engagements has led to stagnation of wages and rising inequalities as the globalisation forces seem to favour the wealthy people both within the US and in other countries. For this reason, it is proposed more strict government policy, which would specifically shield the domestic market from the harshness of the global competitiveness should be enacted in order to rectify the widening income inequality gap in the country (Polaski, 2007). A different section of thought however argues that too much government interference in the global market place, especially in a manner that seeks to shield the US market from the harsh realities of globalisation would only serve to worsen the situation in the country (p.7). Australia is in a similar position as other countries facing the rigours of globalisation. Isaac (2005) for instance notes, that the state and federal governments in the country have had to react to pressures mounted on the country by neo-liberal and globalisation forces. Most notably, the Australian government have had to give in to forces that required it to consider allowing arbitration and compulsory conciliation to be part of individual and collective business bargaining processes in the labour laws in order for them (labour laws) to enable Aussies to participate in the global market. As evident from the action to deregulate the labour laws, governments play a critical role in laying down the necessary infrastructure necessary for the smooth running of the globalisation agendas. By considering global entities such as the World Trade Organisation, one further realises that government are indeed of great significance in the globalisation era. As Paasi (1998) stipulates, WTO is made up of individual countries, who negotiate the different trade agreements based on the needs and aspirations of their respective citizenry. Expounding on why governments create global organisations such as the world trade organisation, Kahler and Walter (2006) explains that the institutions are created and accepted as a way for different countries to overcome high costs of transactions, uncertainty and other harmful externalities that arise from territorial conflicts. Beyond multilateral agreements attained under WTO, Bitzenis (2005b) notes that foreign direct investments also contribute significantly to bilateral cooperation, which also form the necessary ground work for globalisation. Foreign-direct investments however prosper where respective governments provide the necessary technological, information and transportation infrastructure to potential foreign investors. Most notably, governments liberalise their markets by abolishing obstacles (Bitzenis (b), 2005) that bar the flow of foreign investments hence once again playing an important role in globalisation. To most people however, government intervention has always posed more hindrance to conducting business than it has been helpful. Citing the case of Malaysia, Musa (2002) observes that governments are less efficient than private players. However, this does not negate the need for governments to exploit observations such as the fact that IT and other types of technological advancement are driving globalisation to help people within their countries to benefit from the same. Musa (2002) notes that the Malaysian government has a role to play in order to ensure that its populace are able to access affordable internet services easily, hence improving their chances of competing in the global marketplace. Though this essay has already established that government is more rather than less important in an era of globalisation, it also notes that it has not always been easy for respective governments to lay the ground work necessary to place their countries into the global arena. Conaghan, Fischl and Klare (2004) note that governments have to balance between factors that enhance productivity and competitiveness at home, and the social economic aspirations of its citizenry. Often as observed in balancing labour laws governments are usually at a loss on how well to balance employees’ right against labour policies that would bring to the country increased quality productivity. In such situations, governments usually embrace a political strategy where the economic and social aspirations of the majority are entrenched in the policies (Conaghan, Fischl & Klare, 2004). Finally, this essay’s agreement to the assertion that government is more rather than less important in an era of globalisation is further affirmed by Newman (2004) who observes that geographical territories remain part of human relations as people seek to control where they live and the political spaces they occupy. This in turn determines issues such as political control and sovereignty. Boyson (2007) view the role of governments in regard to the need for a revitalised command especially at a time when the supply chain is also being globalised. This makes it hard for government policies, regimes or regulatory frameworks to adapt to or extract value from multi-national corporations. According to Boyson, governments will need to revitalise command in the globalised market especially as cross-border supply chains makes it hard for governments to trace or tax corporate owners. Conclusion While governments may not have an easy time catching up with the globalisation trends in the conventional world market mainly due to the inflexibility and non-competitive nature of government departments, it is quite clear that all governments have a major role to play in ensuring that their respective countries participate and benefit from globalisation. Mainly, this is to be attained through policy formulation, which will in turn ensure that not only ensure that the countries they represent can easily participate in the globalised market environment, but also setting the ground work needed for external players such as foreign investors to participate in the domestic markets. Overall, globalization calls for a robust government role in building of partnerships that benefit the in each governed country. The governments’ role also extends to laying down the infrastructure needed for both government and private enterprises to engage in global activities just like players from other countries. As long as people continue to hold on to their personal spaces that defines their identities as a geographical region or country, the role of governments in globalisation will continue being of much importance. References Bitzenis, A. (2005a).‘Company Oriented Investment interest and cross-border transactions under globalization. Geographical proximity still matters.’ European Business Review, 17 (6): 547-565. Bitzenis, A. (2005 b). ‘Decisive barriers that affect multinationals’ business in a transition country.’ Global Business & economics Review Journal, Special Issue: The Political Economy of Transition, forthcoming. Boyson, S. (2007). Supply chain globalization: The era of revitalized command is upon us, WT100, Retrieved 06 September 2010, from http://www.worldtrademag.com/CDA/Articles/Feature_Article/BNP_GUID_9-5-2006_A_10000000000000178467 Conaghan, J., Fischl, R. M. & Klare, K. (2004). Labour Law in an Era of globalisation: transformative practices and possibilities. London: Oxford University Press. Isaac, J. E. (2005). Labour market deregulation: rewriting the rules- Essays in honour of Keith Hancock. Leichhardt NSW: Federation Press. Kahler, M. & Walter, B. F. (2006). Territoriality and Conflict in an era of globalisation, Cambridge: Cambridge University Press. Musa, M. B. (2002). Malaysia in the era of globalisation, San Jose: iUniverse. Newman, D. (2004). ‘The Resilience of Territorial conflict in an Era of Globalization,’ Political Geography. 21(5): 629-646. Paasi, A. (1998), ‘Boundaries as social processed: Territoriality in the world of flows,’ geopolitics, 3 (1): 69-88. Polaski, S. (2007). ‘U.S. living standards in an era of globalization,’ Carnegie Endowment for International Peace, policy brief 53, pp. 1-8. Read More