The Role of Local Governments in the Global Economy

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NOYO OSAGHAE
1/30/2012
I HAVE NEITHER GIVEN NOR RECEIVED, NOR HAVE I TOLERATED OTHERS’ OF UNAUTHORIZED AID

THE ROLE OF LOCAL GOVERNMENTS IN A GLOBALIZED ECONOMY
Recent developments in the global economy would seem to suggest that it is in the interest of states to be integrated into the global economy, although it is also obvious that most would like to do so in the most beneficial and equitable ways. The increase in the number of states seeking membership in the World Trade Organization is perhaps evidence enough that states, whether developed or underdeveloped, democratic or non-democratic, want to play a role in the World Liberal Order. The circumstances under which states are influenced to be integrated into the global economy however vary from one state to another and can be internal or external. Amongst the internal factors are national interests, pressures from regional governments, local governments, pressure groups, and private enterprises etc. The significance of the internal factors lies in the fact that even though in most cases it is private enterprises that dominate the flow of international trade, the interests and welfare of citizens constitute the critical basis of a state’s actions in the global economy. Further, domestic institutions affect which groups or interests have a voice in national trade policy. Also, just as domestic institutions influence political (and economic) outcomes, the international trade regime can also be a vehicle through which leaders manage domestic political pressures. It is on this basis that I propose to analyze at the micro level, the domestic institution which is closest to the people, namely, local governments, and the ways they affect and are affected by the global economy. As a result of the recent financial crisis, it is evident that there is an increased role of the state in the global economy in democracies and authoritarian systems alike. As Burrows and Harris (2009) predict, there would be a shift towards a greater state role in the economy through State Owned Enterprises and Sovereign Wealth Funds. This possibility of increased state involvement in the nearest future heightens the significance of understanding the role domestic or internal institutions play and how they are in turn affected by the outcomes of the global economic process. There is a need to identify if the national economic policies formulated by world liberal order are acceptable to not just the national governments who pass them into law but also the government at the grassroots. Most notably in Africa there are numerous scenarios where although the presence of global economic programs and principles may not be in the interest of the local communities, leaders acting on personal intuition and for selfish reasons, welcome the opportunity to promote globalization. However, policy makers in the region agree that globalization cannot be stopped but understood and adjusted to (Suruma, 2002). This also sparks another question; how do local governments seek to adapt to the fast changing times dictated by a global economy? We shall analyze the sluggish growth of enterprises owned and run by local government and the chances they stand in competing with their counterparts in the private sector in having a global impact. We shall consider the push and pull effects of a globalizing economy that lead to emigration from localities, the dispersal of tenets of democracy, good and democratic governance, including encouragement of demands for transparency, responsiveness, accountability, participation and collective governance through globalization. Local governments have also fought to have more autonomous spaces, and have been encouraged by neoliberal reforms that emphasize decentralization and lean central governments. LITERATURE REVIEW

This section of this paper reviews scholars relevant to our subject matter stated above. Globalization and Glocalization: Experiences in the Local Philippine Context...
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