The role of the state is changing in the era of globalization; debates as to whether its power is diminishing or increasing relate to arguments around sovereignty.
Neo-liberals believe that globalization will restrict the role of the state to that of adjusting the domestic economy to the requirements of the global economy. Others argue that state sovereignty and globalization can coexist, but that the framework and actions of the state change: for example, there is less state ownership of health services but a stronger regulatory role on treatment standards.
States with low incomes and poor judiciary and law-making systems, and which suffer a lack of resources for monitoring and implementing laws, tax collection and social spending, are said to lack state capacity. They lack the capacity to take full advantage of globalization or to protect against its dangers. Middle-income and poor countries are sometimes targeted for the marketing of essentially dangerous products, such as tobacco, sugared drinks, alcohol and powdered baby milk, which can have serious health consequences. Regulating these products and ensuring correct labelling of drugs are part of the role of the state in maintaining the health of the public. However, this role requires finance, skilled labour and efficient systems, from policing to scientists (for example to monitor food imports for dangerous levels of toxicity). A lack of capacity in these areas leaves poorer countries open to the worst negative aspects of globalization.
A lack of state capacity can lead to government failure, which is when government action does not bring about an efficient allocation of resources or when government intervention harms the economy. This can be the case in poor countries where there is a lack of knowledge, finance and independence from dominant economic interests. Weak governments often lack absorptive capacity, which is the ability of to absorb foreign private or public financial assistance in a productive manner.
Others argue that globalization provides an international framework of rules and enforcement methods that can aid governments to decide, design and enforce rules and can, in fact, protect the individual citizen from the worst excesses of the state. Global institutions can also help maintain sovereignty and increase a state's capacity. Not least, it is argued that globalization increases wealth through economic growth, thus expanding the public purse and strengthening the state.
- International Law
- Civil Society
- Global Democracy Deficit
- Global Public Goods
- Human Capital
- InterGovernmental Organizations
- Washington Consensus