Monday, March 26, 2012

Dani Rodrik on the relevance of the Nation State

One of the several questions that recur in the debate on globalisation is the relevance of the nation state vis a vis globalisation. Has the nation state lost its relevance in the context of multilateral trading rules? Has the domestic policy space shrunk in the context of globalised trade? Are policy choice options increasingly be taken by nations compelled by international rules rather than domestic interests? The critics of globalisation argue that the nation state is under tremendous pressure and the forces of globalisation would have a devastating impact on the existence and relevance of the nation state.

Project Syndicate has a piece on the relevance of the nation state vis a vis globalisation by Dani Rodrik titled "The Nation-State Reborn" which questions the underlying myths and assumptions in this regard.
"One of our era’s foundational myths is that globalization has condemned the nation-state to irrelevance. The revolution in transport and communications, we hear, has vaporized borders and shrunk the world. New modes of governance, ranging from transnational networks of regulators to international civil-society organizations to multilateral institutions, are transcending and supplanting national lawmakers. Domestic policymakers, it is said, are largely powerless in the face of global markets."
Arguing that the nation state has not lost its relevance in the context of the financial crisis as well as the realities of international trade, a strong case for relying on the nation state has been made.
"Geographical distance is as strong a determinant of economic exchange as it was a half-century ago. Even the Internet, it turns out, is not as borderless as it seems: one study found that Americans are much more likely to visit Web sites from countries that are physically close than from countries that are far away, even after controlling for language, income, and many other factors.
The trouble is that we are still in the grasp of the myth of the nation-state’s decline. Political leaders plead impotence, intellectuals dream up implausible global-governance schemes, and the losers increasingly blame immigrants or imports. Talk about re-empowering the nation-state and respectable people run for cover, as if one has proposed reviving the plague.
To be sure, the geography of attachments and identities is not fixed; indeed, it has changed over the course of history. That means that we should not entirely dismiss the likelihood that a true global consciousness will develop in the future, along with transnational political communities.
But today’s challenges cannot be met by institutions that do not (yet) exist. For now, people still must turn for solutions to their national governments, which remain the best hope for collective action. The nation-state may be a relic bequeathed to us by the French Revolution, but it is all that we have."
Globalised trade and the existence of multilateral trade rules are often viewed as antithetical to nation states'interests. Call for protectionism are often raised in the context of measures that affect domestic interest. The WTO is seen as an omnipotent multilateral organisation interfering with domestic policy space. However, there are a few lessons one has to consider. inspite of the strengthening of multilateral trade rules, the nation state is the "fulcrum" around which they operate. The nation state is the only actor that represents various "domestic interests" at the WTO be they business, public, workers, local industry, environmental or multinational. Thus, while global trade rules may be viewed as effecting the nation state's sovereignty (though the nation state has agreed to them), it is undisputed that the nation state is the most prominent actor in the international trading system to influence it's course. The nation state, though, has to reinvent itself. While domestic legitimacy issues plague it in various forms, it has to ensure that a balance between domestic interests (with the characteristic of being equitable) and international trade is maintained. This is a complex task in a complex world, but who said governance was easy anyway?

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