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How Globalization Affects Governance

Abstract

Globalization is a phenomenon that has dominated the social, political and economic interaction in the world for many years. It’s used to describe the interconnectedness that spread of communication, technologies and production. On the other hand, governance is a measure of authority that makes the policies and provides directions on the direction to be taken on different matters relating to a nation.

Globalization has had different effect on governance based on its effect on economic, political, social and cultural implications. On economics its, it has led to economic integration which have affected governance on delegation of powers and sometimes compromising the national interests for the sake of international market dictators. With regard to politics, globalization has led to formations of political groups that focus on how benefits and cost of globalization are distributed both internally and to the external world.

With regard to undue influence, the paper focuses on the international influence on nations that fall short of such powers. To avoid self inflicted economic bottlenecks, such nations are forced to comply with international requirements, whether favorable or otherwise. The other changes in governance relates to cultural changes that have seen governance change to remain relevant and suit the national needs.

“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 (Schmitz 2004). 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.

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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.

Economic Effect

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 (Mancini 2012).

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 (Schmitz 2004).

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 (Podobnik & Reifer 2005).

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.

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 (Wild et. al. 2008).

Globalization and Politics

Governance is a subset of politics and therefore we can try to understand how globalization has affected politics of a nation. As a matter of fact, whenever there are some economic integration, there are some distributive outcomes. The issue is always to understand how and who benefits at the expense of whom. Sometimes, the distribution of such benefits may be uncertain or prospective. When such changes occur as a result of globalization, political actors form their preferences over the best policies such as less or more openness of an economy. This is done in such a way that, the politicians target maximization of benefits from globalization. In any democratic nation, politicians’ actions are based on the interest of the institutions, which are the most affected by globalization (Raynolds et. al. 2007). This tries to give an explanation to the struggles that are observed in debates relating to decentralization, role of private and public sectors, supranationalism, and accountability. This leads to contest relating to governance, which is closely related to policy that relates to globalization.

The political preference is a major thing that has been affected by globalization and hence resulting to changes in governance. A major thing observed from globalization id the need by nations to develop national loyalties as well as developing bargaining powers among nations. By expansion of markets, globalization is able to improve the market efficiency. This is achieved through improved specialization, extensive labor division as well as reducing the existence of monopolies due to increased competition. This results to increased wealth of nation as explained by Adam Smith, in his Wealth of Nations. Though there are losers and gainers as production processes shifts from high cost nations to less cost nations, the truth remains that, globalizations affects governance through considerations of what to embrace for both national and international benefits. For this reason, as globalization start to take new phases; as has always done, there are always conflicts by political groups on cost and benefits.

The realized from globalization are redistributed in a predictable manner to different groups in a nation, hence creating clear cleavages within the societies. As observed by Rogowski (1989), the owners of the abundant factor of production will always have their political power and welfare improved whenever free trade, a distinctive measure of globalization, is embraced. The opposite happens for those who own the scarce factor of production. For this reason, the preference of particular policy will differ across people based of their factor ownership. Therefore, of production factors across nations has differed systematically over time, hence leading to unique political eras based on internationally generated cleavages.

Another unique effect of globalization on governance is the increase of actors who have different preferences over policies being instituted. For instance, the governance structures have highly been affected by mobilization of groups into politics. These may include, transnational spillovers, consumers and environmentalist among other activist whose interest goes beyond quality of good produced but also on how they are produced.

Undue Influence

Globalization has led to over-reliance of some nations over the others especially for the case of less developed versus the developed ones. The less developed economies are characterized by less diversification of their products and to the national endowment or lack of technologies to exploit the country’s endowments. Such nations are characterized with single destination of their product in the international markets which ideally, is competitive. Such nations find their governance being affected by the interest and dictatorship of their market. If they don’t comply, the threat is always that they will stop importing from them. This leaves the governance of such a nation with no choice unless they are willing to compromise on their balance of payment.

Globalization and Cultural Changes

As globalization takes different phase, one thing that has become clear is the evolution of cultures over time. The contemporary cultures have been developed alongside the technological advancements that have been realized with globalization. As the society drops the old ways of doing things, the governments have had to adjust on their ways of governance so as to fit the needs of the society. This has been observed through nationalization of some policies that fits the changes such as national languages. Also, the governments have adopted similar technologies being adopted by its citizen so as to remain relevant to their citizens.

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