Chapter 6

The State Really Does Matter

Review• Concepts to Review

– Globalization– Geographical embeddedness– GPNs and TNCs– Impact of 2008 financial crisis – Convergence and divergence

• Key Words– Nation-state in globalization, varieties of

capitalism, GATT/WTO, development, national culture, borders and ‘borderlessness

Definition of the State• State, nation, nation-state, and nation without state• Hofstede

– Four dimensions: individualism, power distance, uncertainty avoidance, ‘masculinity’

• Schwartz– Seven-dimension scale: conservatism, intellectual autonomy,

affective autonomy, hierarchy, egalitarian commitment, mastery, harmony

• Both studies have in common the (debatable) idea that there are identifiable traits which vary across cultures

• Role of the state– Support markets– Provide physical and human infrastructure– Use globalization as means of increasing their power– Two types of macroeconomic policies:

• fiscal and monetary

Varieties of Capitalism• Liberal market economy

• Coordinated market economy• Neo-liberal market capitalism• Social market capitalism • Developmental capitalism• Authoritarian capitalism• Neo-authoritarian capitalism

• Are institutions and history inherent obstacles to convergence or will there be convergence to best practice in economic governance?

The State in the Global System• Most states are mixed economies: certain sectors

nationalized, others private• 1980s−2000s: deregulation/reregulation and privatization• Post-2008 government intervention begins again to

stimulate growth

• Trade regulation– GATT/WTO

• Strategies of newly industrialized states– ISI– EOI– EPZ

Strategies of States• States as competitors

– Locational tournaments, competitive bidding– Porter’s argument:

• Rivalries between domestic firms create pressures on firms to innovate

• Role of chance and of government

• States as collaborators– To achieve specific economic and welfare goals– Regional trade agreements:

• Have a number of motivations, e.g. defensive, influencing investment

• Types include free trade area, customs union, common market, economic union (give examples of each)

– Global activity is concentrated in mega-regions: North America, Europe and East Asia