One can understand how this occurs from an economic perspective. With globalization, the individual economic entity, be it company, small firm or individual member of society, will no longer interact with the state in the economic field, but rather with one another, and this will occur not in a limited, stately environment, but on a large, unlimited, global scale. At the same time, globalization goes hand in hand with liberalization, which means that in the global economic environment, the nation state loses its role as a centralized and regulatory authority in the economic events, as the economic entities will be able regulate the market freely, through their own interaction.

The hyper globalization thesis also argues that the globalization phenomenon is likely to significantly impact the nation state's regulatory ability in all areas ranging from labor to environmental regulations and to taxation. The logical reasoning for this is simple: globalization proposes an infrastructure and a framework based on the principle of competition. In other words, because of the competition between economic actors in a global environment, the state will lose its ability to impose regulations in a wide array of areas.

Some of the actual practical examples from the past two decades tend to point out in this direction. Transnational corporations have moved in a flexible manner across state boundaries in search both of cheap labor and of the markets in which to sell their products. In many of these occasions, the state was no consulted on the ability of a transnational to simply recruit, for example, a whole year from a local university, to the detriment...

The state had no mean to act in such a situation.
Much worse were the cases when the state could not act or even became responsible in situations when transnational companies broke the law when it came to the environmental protection and disasters occurred, such as the one in India during the 1990s. For the nation state, its demise in this case was obvious because its main role is that of protecting its citizens and it was clearly not able to do so.

Nevertheless, it is probably too soon to talk about the complete demise of the state. Some of its prerogatives remain unaffected by globalization and it's hard to see this occurring in the future. Something like taxation is going to remain a prerogative of the state and there is no sign that this will change any time soon. At the same time, the nation state retains an important role by which it can decide on what companies can actually enter the local market by the legislation framework that is put in place.

Finally, the nation state continues to remain an important economic actor. First of all, it is the nation state that enters into a political and negotiating relationship with other nation states and not a transnational company. A free trade agreement, which will encourage the activity of the transnational company in a global environment, is signed between two or more nation states, without the implication of private companies. From this perspective and many more, it is likely that the role of the nation state is going to remain important in the future as well, despite the advent of globalization.