Are these valid concerns from local entities in countries world wide, or is this only the fear of change and the unknown future. It must be accepted that Global companies will influence states in some manner as there must be an interaction through contracts, agreement, trade or taxes. However, before it is possible to adequately evaluate if Multinationals pose a treat to states it may be of value to follow the events leading up to, and which are facilitating Globalization.
The break-up of the Soviet Union ended the Cold War and this resulted in liberalization of many communistic countries, increasing acceleration of globalization. States became part of the global village, which resulted in people and entities questioning the idea of a state being a totally sovereign entity. Sovereignty is the ability of a government to have absolute authority over its own territory. Economic interdependence between states has meant that increasingly what happens somewhere in the world ultimately affects all the countries in the world. Thus, the role of politics has been overtaken by the role of economics.
At the beginning of the 1990s, James Rosenau, one of the leading theorists of this trend, developed the idea that globalisation and 'Tran nationalisation' has led us into a period of global 'turbulence'. While the state is not about to disappear, it no longer has a free hand and has lost control of events. Rosenau claimed that the inter-states system, once the central pivot of international affairs now coexists with a 'multi-centred' system; the determination of foreign policy has largely passed to non-state entities.
As the world market today is realized ever more completely, it tends to deconstruct the boundaries of the nation-state. Robert Reich, former U.S secretary of labour celebrates the overcoming of national boundaries in the world market. He contends that 'as almost every factor of production-money, technology, factories and equipment-moves effortlessly across borders, the very idea of a national economy is becoming meaningless.' He adds that 'in the future there will be no national products or technologies, no national corporations, no national industries. ' Thus, with the decline of national boundaries, the world market is liberated from the kind of binary divisions that nation-states had opposed for many centuries before.
Globalisation has made trade of goods and communications between countries much easier. For instance, jet aeroplanes transport passengers and cargo across any distance on the planet within a day. Electronic mass media broadcast messages to world audiences. Countless goods and services (such as Nissan cars and Club Med holidays) are supplied to consumers in global markets. The global financial order is now virtually universal, as seen by the influence of the World Bank and the International Monetary Fund. On the downside, state economies have become so interdependent on each other that if the stock market were to crash now as it did in 1929, the consequences would be felt throughout the whole world at a much greater speed.