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“Globalization” is a term that has gained popularity in the past history of world development which has been used to describe the many changes that have taken place. Ideally, it describes the interconnectedness and spread of communication, technologies and production. Through such interconnectivity, there has been interlacing of cultural and economic activities in the world. On a different perspective, globalization refers to the influence that the international organization such as, International Monetary Fund (IMF) in establishing a free trade and market operations in the world. The implications have been increased complexity in social and economic networks. Apparently, there exist both positive and negative implications of globalization, which necessitates close interactions between governance and globalization.
Governance, on the other hand, may not be defined in a simple definition, but, may refer to a body that makes decision relating to different matters that affect a particular society. The governance authority extends to decisions and policies that relate to social, political and economic aspects of the society. While globalization has been taking place, need to match the new perception of political and social trends have become prudent. Additionally, economic activities are the biggest measure of globalization and therefore changes on governance has been the way rather than a choice. The policy makers have had to put a lot of consideration on the current and possible future as a result of globalization (Mancini 2012). The reason is, they are supposed to act as people representative and maximize welfare under any circumstance. Governance is therefore contextual on the fact that it has to be dynamic to accommodate the environment, both micro and macro, that have resulted from globalization. This paper sheds some light on how globalization has affected governance.
Majority of the implication on governance owed from globalization have been associated with the economic implication. The explanation has been efficiency-based or functionalist. From a functionalist perspective, the explanations of the effects are based on the anticipated effects. Those that relate to the efficiency focus on how globalization have affected market exchanges and hence wealth. From Friedman (1999) perspective, globalization is perceived as having the ability to force states to embrace neoliberal policies.
The functionalist arguments are of the idea that, globalization causes upward shifts relating to both the supranational and at regional levels of governance. The implication has been that, as governance forges forward to address spillover effects across borders, they end up embracing supranational authority expansion. By addressing a single transnational issue, the authority may be forced to introduce some changes in the incentives available through the inter-linkages of issues or as propelled by self interest issues. This kind of pressure that necessitates the expansion of in the international authorities eventually leads to the development of new natures of governance.
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From this perspective, the central functions of the local, regional and international institutions may be integrated into alliances due to strategic or domestic interest. Economic integrations are good example of these.
For instance, governance has been seen to change and form Economic Unions as a result of globalization. In this case, the authorities come together to ensure that there is mobility of factors of productions as well as commodities among the member countries. The authority, as in the European Union, goes ahead and come up with economic policies such as monetary and fiscal policies that are highly harmonized. The authorities adjust their governance in such a manner that, the economic activities are collectively operated and coordinated. A good example where this has occurred is in Benelux and European Common Market by 1970.
The authority may also adjust its governance in such a way that, it allows free operation of trade within the member countries in the economic integration, but retain a common tariff to other countries. This is a pressure that countries are finding prudent to embrace when the authority intends to embrace collective growth for the member countries through mutual benefits that would arise from such relationships. This is what was contained in the Rome Treaty (1958) in the case of ECM.
Among other changes in governance witnessed is the establishment of free trade zones where the authority considers establishing free trade operation within the block while maintain a countries specific tariff towards the non-member nations. This is aimed at encouraging economic exchanges among neighboring nations while letting each country decide independently how to relate to the non-member nations to address both the local and external challenges.
Ideally, any form of the economic international relationships discussed above, the interest is to have the member nations get some economic benefits as a result of globalization. In these changes, the governments are compelled by globalization to consider favorable decisions relating to industry, commerce, navigation, commodities or even just the custom duties so as to try and balance the negative and positive implications that have resulted from globalization.
From an efficiency-based perspective, changes in governance structure are almost similar to those of the functionalism perspective. Here the major focus of governance is to track the shifts that are associated to benefits and costs from changes that globalization has brought in the economic environment. From this perspective, economist use model to explain that the size of a nation will depend on the cost of transferring goods into the different constituents. In this case, if an economic bloc is able to maintain high barriers to international operations, then, when such economies come together, they end up having mutual benefit. This especially explained by the protectionist behavior of governance that started after emphasis of free trade. Some economies that realize that they may not benefit much, they end up introducing barriers, either in tariff or non-tariff barriers. When such policies are embraced by nations which would otherwise benefit from trade, then, authorities are forced to reconsider their position given the advancement of international trade and possible benefits and low costs. This explanation can be used to advance an argument for the increased demand of regional autonomy especially by the industrialized nations. For instance, for the virtue of Scots and Catalans being in the European harmonized market, the do not as such need the current national markets.
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The economic approach of the effect of globalization on governance depicts situations where, the authority may be forced to delegate some of its power to the supranational or the private participants in the economy. These actors may be democratic or otherwise against the welfare goal of governance. This kind of delegation may mean reduced power by the governance in determining the fates of their nation. For instance, a country may find itself in a situation such that, it needs to conform with the requirement of the international markets dictators as opposed to the needs of the nation’s citizens. From these cases, it’s clear that, globalization and its implication on economic matter make government converge or even their policies.