same period the world’s flow of foreign direct investment more than tripled,
from US$192 billion to 610 billion. Capital flows to developing countries
also increased sharply in the 1990s, though concentrated on a small number
of countries designated as ‘emerging markets’. Such trends have been fos-
tered by technological developments in transportation and communications,
especially electronic forms.
Globalization has social and cultural dimensions, too. Cultural unifor-
mity is encouraged by increased travel and migration, and the media net-
works of rich Western countries. Global communications networks have
far-reaching consequences for businesses, governments, educational institu-
tions, voluntary bodies and community groups. Social globalization is
reflected in the illicit trade in drugs, laundered money, weapons and
women. Civil conflicts threatening political stability are fuelled by the
global traffic in weapons and mercenaries. Global markets put huge pres-
sure on the environment.
The nation-state is said to be undermined by these forces. National poli-
cies for economic development, employment, social protection and fiscal
objectives are made redundant by mobile capital, global markets and trans-
national industrial production. Nation-states are rapidly being reduced to a
‘municipal’ role in the global system, providing the required infrastructure,
physical and legal, for international capital (Hirst and Thompson, 1999,
pp. 261–3). Trans-national networks of production, trade and finance rele-
gate national governments to ‘transmission belts’ for global capital. World
market forces are more powerful than state actions both domestically and in
the international arena, so that while state interventionmay have increased,
the state’s effectivenessin providing what markets do not – security, finan-
cial stability, law and order and public goods such as infrastructure – has
declined (Strange, 1996).
Global capital imposes a discipline on states, leaving governments only
with policy choices that are consistent with a free market. The welfare state
is ruled out. National sovereignty has been displaced by global and regional
institutions (e.g. free markets and free trade) and organizations such as the
IMF, the World Trade Organization, the Association of South East Asian
Nations, Asia-Pacific Economic Co-operation, and the Southern Cone
Common Market (Held et al., 1999, pp. 3–5). Forms of international co-
operation between states have proliferated (to deal with crime, terrorism,
migration and capital flows) and the number of international agreements
(treaties, charters and covenants) has grown enormously. Global governance
and politics is not only conducted through international organizations, but
also through international NGOs, social movements and pressure groups
128 Understanding Third World Politics