What are the impacts of Globalization on the Functions of State?


Neoliberalism developed in the writings of free market economists sue as Friedrich Hayek and Milton Friedman. The cores of neoliberalism are the market and the individual. Its goal is to ‘roll back the frontiers of the state. The development of welfare state had led to a huge expansion of state activity. The attempt now during neoliberalism is to reverse the process and keep the market free from the control of the state. It is believed that unregulated mark capitalism will deliver efficiency, growth and prosperity.

State regulation kills initiative and discourages enterprise. It argues that economic institutions civil societies are more effective in creating order and distributing resource than the state. For neoliberals human potential is best realised, not through the power of the state, but by the promotion of a free economy.

Hence, the process of globalisation has been accompanied by liberalisation or deregulation of economy as well as a process of privatisation. Private enterprise is preferred to the public sector and there is a continuous attempt to privatise the public sector.


State is gradually withdrawing from economy and social activities. The welfare state, according to the neoliberal argument had created a culture of dependency and undermined freedom of the market, now there is a shift to self help, individual responsibility and enterprise Individuals can no more expect the state to provide social security and basic services. The state is supposed to perform bare minimum functions and ensure that the market mechanism freely operates. There is a great pressure the state to reduce its activities and programmes which was meant to support weaker sections of the society.


The foregoing description contains arguments in favour of reduction in the functions of state under globalisation. The market mechanism, freed from the control of state, is supposed to ensure more efficient utilisation of resources, increased production and overall social prosperity. Besides, such changes in domestic economic policies (through liberalisation and privatisation) makes it easy for a state to get integrated with the international economy and such close integration is claimed to be helpful for the underdeveloped countries of the world.

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