Marxism conceived of globalization to a great extent as simply the worldwide expansion of the capitalist mode of production (Amin and Luckin 1996:225).
The global expansion of production methods and networks has resulted in a proverbial shrinking of the globe, leading analysts to argue that globalisation is constricting the capacities of states and governments to control economic policies and processes within their borders. Baylis and Smith (1998) define globalisation as the 'intensification of worldwide social relations which link distant localities in such a way that local happenings are shaped by events occurring many miles away and vice versa.' In this essay, Globalisation is understood as a phenomenon, and a process that eases the movements of labour, services, capital and goods and information across the globe. It has evolved partly due to the trend of increasing international trade across national boundaries and the conduct of business activities in more than one country. Put simply, it is a process that involves the growth of inter-dependency between national markets and industries on a worldwide scale (Brooks, Weatherston and Wilkinson, 2011).
As globalisation progresses the status of national boundaries as obstacles to trade continues to diminish consequently changing the international business environment. As a result, corporations and businesses do not need to rely on single national/domestic markets. In order to critically assess the proposition that national boundaries have been affected by globalisation and that the phenomenon limits the extent to which states can pursue independent economic policies; this essay will be guided by the key questions that arise from this proposition. Namely, to what extent has globalisation transcended national borders? In what ways can globalisation restrict states economic autonomy? Can states overcome the reaching effects of globalisation? Can globalisation completely undermine state power? The core argument is that even though national governments still have a say in promoting independent economic policies, the influence of globalisation has put this to the test. This will be illustrated by looking at examples of how some states continue to maintain economic policy independence even in the midst of multilateral bodies and trade agreements.
The first major phase of globalisation occurred in the late 19th century and was marked with the rapid increase in industrialisation of the main western nations (the USA, Canada and Western Europe). This was followed by the inter-war period in which nations abandoned the more open world economy and reinforced barriers to fortify their political and national security concerns; representing a 'retreat' from globalisation. Post-war globalisation (1945 – onwards) saw the re-emergence of the world economy, followed by growing improvements and dramatic developments in communications and information technologies that allowed for the quick transfer of beliefs and ideas around the world. Add to this the development of transportation technologies such as the jet engine which have made the world a “smaller place”. These developments have taken place across national boundaries, meaning that the capacity of countries to separate themselves from the rest of the world has effectively been eliminated, for example China, who in the past isolated itself from the rest of the world with no outside influences. However, more recently China has relaxed its legislation so as to accommodate foreign trade and investment. As a result its economy has developed and the world is so interconnected that an economic shock in China can have consequences across the globe in Brazil. Accordingly, poverty reduction in Brazil during the early...