Economic Integration and Statist Reach - towards a Holistic Assessment

Article excerpt

Abstract:

This paper assesses the relationship between public governance and economic competitiveness in a globalized world. The extent of statist reach is often seen as being reduced by the integrated world economy. The present article argues that this is not necessarily so: economic development is not mutually exclusive with good governance. Although international economic actors often tend to use the 'exit' strategy, by choosing those markets that are least regulated, as the globalization process homogenizes further on the world markets, inter-state synchronization of environmental, labour or fiscal regulation must be achieved. As this article argues, such accountability mechanisms will not thwart economic prosperity, but rather secure its further development in a predictable and secure environment for both citizens and firms.

Keywords: globalization, economic development, statist power, markets, accountability

JEL classification: H11, O10

INTRODUCTION

The process of globalization has changed many aspects of our societies, from the macro level of national policies, to the micro level of our private lives and the way an individual conducts his daily practices. Therefore, one can only expect to see substantial changes in the relationship between states and markets in the globalized world of today. Many discussions have circled around the relationship between the economic sphere and the political. This paper, however, focuses this centuries' old debate on the specific impact of globalization forces on the balance of power between statist reach and the world markets. Although it makes use of empirical evidence, this is nevertheless a theoretically oriented assessment, which tries to establish a holistic conceptualization of the relationship between states and markets.

The first part of this article will discuss the degree of economic integration worldwide. Borrowing data from the Global Economic Monitor, I will show how the economic flows have intensified substantially from year to year, thus constituting a tendency that must be reckoned with. The second part of this paper looks at what state power is constituted from and, based on Fukuyama's distinction between state's scope and state's strength, proposes a conceptualization of statist reach along the lines of intensive reach and extensive reach. Thirdly, this paper will tackle the impact of the global economic integration on the authority, autonomy and jurisdiction of the state, and the choices the latter is left with. Finally, the last two sections of this paper assess the level of accountability for transnational corporations - the actors of an economically integrated world, and the way governance is shaped by these new challenges.

"International Economic Integration"

Rodrik (2000) first used the expression 'International Economic Integration' to talk about economic globalization. Given that he saw globalization as a much more controversial, and too broad a term, he considered this phrasing much more suitable for the process of interconnectivity between world markets. Indeed, part of the process of globalization is this interconnectivity. As KaId or (2007) defines it, globalization is 'the intensification of global interconnectedness - political, economic, military and cultural - and the changing character of political authority'. Rodrik's denomination of 'international economic integration' leaves out this latter political dimension that is captured by Kaldor's definition. Indeed, there is a resilient tendency in the academia, as well as in the professional world, to see the political and economic dimensions of contemporary social life, as not on Iy distinct from each other, which is an accurate assessment, but also as autonomous, independently occurring dynamics, which is an extreme, reductionist assessment of the contemporary political and economic nexus. Indeed, despite significant changes in the world morphology of power relations between politics and economics, these are much more intertwined than many studies admit. …