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The Role of the State in Globalization: Dynamics, Policies, and Economic Strategies

This chapter examines the significance of the state in the context of globalization and explores various economic governance models, including liberal and coordinated market economies. It discusses the impact of the 2008 financial crisis, emphasizing how states operate as mixed economies and their strategies, like import-substitution industrialization (ISI) and export-oriented industrialization (EOI). Additionally, the review delves into cultural dimensions influencing economic practices and the complex interplay of regulation and market forces in shaping national and global economies.

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The Role of the State in Globalization: Dynamics, Policies, and Economic Strategies

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  1. Chapter 6 The State Really Does Matter

  2. Review • Concepts to Review • Globalization • Geographical embeddedness • GPNs and TNCs • Impact of 2008 financial crisis • Convergence and divergence • Key Words • Nation-state in globalization, varieties of capitalism, GATT/WTO, development, national culture, borders and ‘borderlessness

  3. Definition of the State • State, nation, nation-state, and nation without state • Hofstede • Four dimensions: individualism, power distance, uncertainty avoidance, ‘masculinity’ • Schwartz • Seven-dimension scale: conservatism, intellectual autonomy, affective autonomy, hierarchy, egalitarian commitment, mastery, harmony • Both studies have in common the (debatable) idea that there are identifiable traits which vary across cultures • Role of the state • Support markets • Provide physical and human infrastructure • Use globalization as means of increasing their power • Two types of macroeconomic policies: • fiscal and monetary

  4. Varieties of Capitalism • Liberal market economy • Coordinated market economy • Neo-liberal market capitalism • Social market capitalism • Developmental capitalism • Authoritarian capitalism • Neo-authoritarian capitalism • Are institutions and history inherent obstacles to convergence or will there be convergence to best practice in economic governance?

  5. The State in the Global System • Most states are mixed economies: certain sectors nationalized, others private • 1980s−2000s: deregulation/reregulation and privatization • Post-2008 government intervention begins again to stimulate growth • Trade regulation • GATT/WTO • Strategies of newly industrialized states • ISI • EOI • EPZ

  6. Strategies of States • States as competitors • Locational tournaments, competitive bidding • Porter’s argument: • Rivalries between domestic firms create pressures on firms to innovate • Role of chance and of government • States as collaborators • To achieve specific economic and welfare goals • Regional trade agreements: • Have a number of motivations, e.g. defensive, influencing investment • Types include free trade area, customs union, common market, economic union (give examples of each) • Global activity is concentrated in mega-regions: North America, Europe and East Asia

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