Global political economy: theories and applications

Global Political Economy

There are several arguments that tend to point out towards the fact that regionalism in fact helps the globalization process. Among these, an important one is the fact that, sometimes, global negotiations will simply involve the regional groups rather than each country in part. The best example in this sense is the European Union. In some global agreements, the European Union negotiates on behalf of its 27 members without separate negotiations for each member state in part, which significantly reduces the amount of time spent on these negotiations.

On the other hand, regionalism has also promoted the idea of integration at a local level and there is a potential perspective that this is likely to occur at a global level as well, if regionalism and globalization interact. In other words, continuing on the example of the European Union, this institution has experienced the integration process for the past 50 years and it is likely to pass on its good practices at a global level, in its relations with the other organizations in the world.

On the other hand, regionalism can also help the states and other economic entities by preparing them for the global competition. Before the accession to the European Union, the countries in Central and Eastern Europe were part of a regional organization called the CEFTA. Their presence in this organization helped the member states and the economies of each of these countries to be better prepared for the competition at a European level. At the same time, it also prepared them to act as global economic actors. In the same manner, being active on a regional level will allow an economic entity or the nation state itself to better prepare itself for its presence on a global level.

On the other hand, regionalism is the first step towards globalization, based on the premises of free trade and liberalization. Some nation states have the opportunity of experimenting with free trade, with everything that this notion encompasses, before actually entering a globally competitive arena. For example, Mexico had a chance to enter NAFTA during the 1990s and prepare its economy for a competition on a global scale before actually entering it. With the countries of the ASEAN, a similar train of thought is valid.

With the European Union, the highest level of integration ever reached on a local and regional level, it is a somewhat different story. The countries in the union do not receive only the chance to prepare for the global economic environment, but also get economic and financial help to equalize their level with those of the more developed members of the union. This obviously increases the competitiveness of economic entities from the member states on the global market.

On the other hand, there are strong arguments according to which regionalism is, in fact, a barrier to globalization and free trade. With regionalism, nation states enter into local agreements and are less inclined to extend their framework of agreements to a global level and include other states. This means that in such situations, additional economic and commercial barriers are likely to appear and to hinder the relationships between the states in the regional framework and their global partners.

2. The concept of hyper globalization is, first of all, related to the idea that once globalization fully takes off, the demise of the nation state will occur as well. This concept goes back even further than the time that the globalization phenomenon actually occurred, but the idea was that the nation state will no longer exist as an economic actor and, even more than that, as an entity altogether.

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 of local, less competitive (in terms of wages and working conditions) companies. 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.