Economic Sovereignty and Globalization 

In the chaotic system of international relations, states are the primary actors. The basic motive of states is simply one of survival. They must ensure their survival via self-help. This can be achieved by persisting on hard power such as military hardware and economic motives.

In the era of globalization, the world is becoming smaller due to technological developments, the affordability of travel and the impact of market forces. Globalization influences the rectitude of national borders and their economic development. For better or worse, we are now all linked together in a multi-layered system of mutual interdependence. It is therefore undoubtedly that globalization has had a deep and lasting influence upon the nation-state and national sovereignty.

Some scholars argue that globalization has weakened the nation-state. The tools of the state no longer abundantly protect a nation from the forces of globalization. They identify four risks to the nation-state: identity politics, post-nuclear geopolitics, global warming and global capitalism. Whilst the bulk of each threat differs, they all offer a direct challenge to the sovereignty of the nation-state. Globalization spells the death knell of the nation-state.

In the overpowering impact of globalization, territorial borders no longer offer a valid delimitation by which to comprehend the complex interactions of the modern era. The Westphalian conception of national sovereignty faces a slow but reliable slide into permanent irrelevancy.



Globalization can be said to have had a profound impact upon the nation-state in three basic areas: political, economic and cultural. If we dive into the economic realm, the interconnected character of the international system, it is simply impossible for states to contain entire sovereignty in the economic realm.

Taking policies of the IMF, WB and WTO many also consider this to be a pure neocolonialism. Some scholars believe that these policies are consciously wrong, they are deliberately a determined target state in order to force certain political and legal measures by an external force. A typical case was the recent debate between the Pakistani government and the IMF on the “CPEC documentation”. The IMF is not satisfied with collecting interest on the borrowed money but it also tends to model the internal political relation in a state. This case typically demonstrates how one of the state’s basic functions becomes meaningless.

International financial institutions set strict conditions for aid, requiring a reduction of the public sector and privatization of many sectors. This often leads toward directly non-democratic practice and a direct violation of the sovereignty of people.

The transnational companies (TNCs)  also exploit the resources of the state which links to sovereignty. The large TNCs have the economic power to dictate the political framework within states. They enhance the deregulation policies and are able to force governments to assume smaller roles within the states. This action is a self-reinforcing loop. 

The classical concept of sovereignty centres on the idea that economic sovereignty became the dominant aspect of sovereignty over time. The common terminology of rich and poor states were replaced by strong and weak states. The meaning of power is crucial.

Power is not legally unlimited authority. Power is measured by the results. States really do have the legal authority, but their power is measured by what they can or cannot obtain. This is undeniably confirmed by the term “deregulation”. Deregulation means reduction of legislative scope of the state in the economic zone and represents another term for decline of sovereignty. In international politics power means to decline the sovereignty of states and this sovereignty is mainly economic sovereignty.

In a nut shell, in this anarchic international system, economic sovereignty of states must be ensured. But the powerful states have a disproportionate edge over others for their survival via globalization, like WB, TNCs, IMF.