The state-augmenting effects of globalisation

The argument I have put forward suggests that deepening integration has a state-augmenting effect, emphasising the state's centrality to social life. If there is a significant constraint from globalisation, it is not in the direction expected. Generally speaking, states have increased direct tax yields, maintained or expanded social spending, and devised more complex systems of trade and industrial governance in order to cope with deepening integration. Moreover, the significant relationship between strong trade integration and high social expenditure discovered more than two decades ago appears no less valid today. There is good evidence that economic integration is strongly linked with the centralisation of public expenditure and taxation, as fiscal resources have generally shifted into the hands of national governments (even while subnational officials may find their political autonomy enhanced). Territorially-based institutions continue to structure responses to the adjustment pressures of integration, which in turn reinforces distinctive varieties of political economy, welfare capitalism and even transnational firm behaviour. Even the smooth operation and evolution of the most seemingly transnational networks of governance - the EU and WTO - are inextricably tied to the organisational and normative resources of constituent states. Much has changed in the international economic environment, but the enabling effects of economic integration and the entwinement of global and national structures ensure that states command a central place in the unfolding drama. The conclusion is thus not simply that globalisation's effects are complex and contingent or that the state has both lost and gained, trading some powers for others. It is that, in the larger scheme of things, globalisation reinforces and augments the state's centrality to social life. Given that nation-states are the pivots of the global political economy, it would be not only misleading but also unwise to give credence to the ideas that national authorities now have less capacity, scope and responsibility, or that states are becoming superannuated, residual powers in a world of multilayered governance. © 2005 Taylor & Francis.