One of the roles of the state vis-a-vis today's global economy, as opposed to earlier phases of the world

economy, has been to negotiate the intersection of national law and foreign actors, such as firms,
markets and supranational organizations. (Sassen, 1999, pg. 1). [1]

We have, on the one hand, the existence of an enormously elaborate body of law that secures the
exclusive territoriality of states to an extent not seen in earlier centuries, and on the other, the
considerable institutionalizing of the "rights" of non-national firms, and the growing scope of crossborder transactions and supranational organizations. These new legal frameworks set up the
conditions for a necessary engagement by states in the process of globalization. (Sassen, 1999).

[2]
many transactions that are a key part of the global economy either do not cross borders, or do not
in ways that investment and trade do. Instead, they are located inside national economies (Sassen,
1999).[3]
PRO : Besides the new functions of the state there is a new set of intermediary strategic agents
that contribute to the management and coordination of the global economy. They are largely,
though not exclusively, private (Sassen, 1999) [4]
PROwhen the Chinese government in 1996 issued a hundred-year bond to be sold, not in Shanghai but in New York, it did
not have to deal with Washington but J.P. Morgan. This example can be repeated over and over for a broad range of
countries. (Sassen, 1999) [5]

Private firms in international finance, accounting and law, the new private standards for
international accounting and financial reporting, and supra-national organizations such as the WTO,
all play strategic non-government centered governance functions. (Sassen, 1999) [6]
thereby have experienced transformations of various aspects of their institutional structure. In this
process some components of states, such as ministries of finance and central banks, may well gain
power, even as others lose power. My working hypothesis is that while globalization leaves national
territory basically unaltered, it is having pronounced effects on the exclusive territoriality of the state
- that is, its effects are not on territory as such but on the institutional encasements of that
geographic condition. (Sassen, 1999) [7]

One overall effect is what I am calling an incipient de-nationalizing of several highly specialized
national institutional orders, or the partial replacement of national legal and regulatory frameworks
with "de-nationalized" ones. One concrete version of this change is the way states have shifted away
from what are ultimately Keynsian principles toward agendas that ensure the rights of global capital
inside their national territories. (Sassen, 1999) [8]
through legislative acts, court rulings, executive orders - of the mechanisms necessary to
accommodate the rights of global capital in what are still national territories. (Sassen, 1999)[9]
Keynesian economists often argue that private sector decisions sometimes lead to inefficient
macroeconomic outcomes which require active policy responses by the public sector, in particular,
monetary policy actions by the central bank and fiscal policy actions by the government, in order to
stabilize output over the business cycle(0Sullivan & Sheffrin, 2003)[9]

Its capacity as an administrative and technical apparatus can be used to govern the operations of national as
well as of non-national economic actors and institutions. (Sassen, 1999) [10]

In its most extreme form I would argue that we are seeing a partial de-nationalizing of state
sovereignty. Similarly, economic globalization does not eliminate the state's exclusive control over
its territory (Sassen, 1999) [11]
Three components in this new geography of power are of interest here. The first concerns the
actual physical territories where much of globalization materializes in specific institutions and
processes. (Sassen, 1999) [12]
There are a number of implications here for the question of territoriality and sovereignty in the
context of the global economy. First, when there is geographic dispersal of factories, offices and
service outlets in an integrated corporate system, particularly one with centralized, top level control,
there is also a growth in corporate central functions. The more firms become global, the more their
central functions grow in importance, complexity, and number of transactions. (Sassen, 1999) [13]
PRO: The other half is that these corporate central functions are disproportionately concentrated
in the national territories of the highly developed countries. (Sassen, 1999) [14]
deregulation is only another name for the declining significance of the state. (Sassen, 1999) [15]
The predominance of these and other transnational institutions raises questions about the
relationship between state sovereignty and the governance of global economic processes.
International commercial arbitration is basically a private justice system, while credit rating agencies
are private gate-keeping systems. Along with other such institutions they have emerged as
important governance mechanisms whose authority is not centered in the state. (Sassen, 1999) [15]

the role of central banks has emerged as critical. Although they have lost some of their
macroeconomic authority, they have now become intermediary institutions through which the
new international rules of the game are implemented in national economies. (Sassen, 1999) [16]

World English Dictionary

globalization or globalisation (lb lazen)
n
1the process enabling financial and investment markets to operate internatio
.nally, largely as a result ofderegulation and improved communications
2the emergence since the 1980s of a single world market dominated by multi
.national companies, leadingto a diminishing capacity for national governme
nts to control their economies
First, the emergent, often imposed consensus in the community of states to further globalization
has created a set of specific obligations for participating states. The state remains as the ultimate
guarantor of the "rights" of global capital, i.e. the protection of contracts and property rights. [18]
(Sassen, 1999)
The state continues to play a crucial, though no longer exclusive role in the production of laws

around these new forms of economic activity. . [19] (Sassen, 1999)

Secondly, while central, the role of the state in producing the legal encasements for economic

operations is no longer what it was in earlier periods. Economic globalization has been
accompanied by the creation of new legal regimes and legal practices and by the expansion and
renovation of some older forms that bypass national legal systems. This is evident in the rising
importance of international commercial arbitration and the variety of institutions which fulfill
rating and advisory functions that have become essential for the operation of the global
economy. [20] (Sassen, 1999)
Yi, and the federation of Korean Industries which he headed, actually pushed on its own for a shift in
policy toward promotion of exports, a shift that effectively occurred by the middle of the 1960s
Samsung wasnt merely disciplined.
Rather, its leaders themselves pushed to be involved in export production, gaining varied
forms of state support in exchange for doing so ((glassman)
Of the 100 largest economies in the world, 51 are corporations; only 49 are countries
(based on a comparison of corporate sales and country GDPs) $ To put this
in perspective, General Motors is now bigger than Denmark; DaimlerChrysler is
bigger than Poland; Royal Dutch/Shell is bigger than Pakistan.
The 1999 sales of each of the top five corporations (General Motors, Wal-Mart,
Exxon Mobil, Ford Motor, and DaimlerChrysler) are bigger than the GDPs of
182 countries. (dicken pg. 222)
Conversely, TNCs need states to provide the infrastructural basis for their continued
existence: both physical infrastructure in the form of the built environment
and also social infrastructures in the form of legal protection of private property,
institutional mechanisms to provide a continuing supply of educated workers, and
the like.
As we saw in Chapter 6, states are both containers of distinctive business practices
and cultures within which firms are embedded and also regulators of business
activity.
that states
really do matter. The change was most apparent in the financial sector (see
Chapter 12), where the Masters of the Universe2 had to go on bended knee
to the state to be rescued, but also in such industries as automobiles(170)
The notion that the power of the state
had been totally emasculated by globalizing forces was always a highly misleading
view
The state, therefore, has remained a most significant force in shaping the world
economy, despite the hyper-globalist rhetoric. It has always played a fundamental
role in the economic development of all countries and, indeed, in the process of
globalization itself.
An important enabling factor
underlying globalization, therefore, has been the progressive reduction in political
barriers to flows of commodities, goods, finance and other services.171

The institutions of the state are not simply involved in regulating economy
and society, for state activity is necessarily involved in constituting economy and
society and the ways in which they are structured and territorially organized.179

In other words, states do not merely intervene in markets; they underpin and help
to constitute their very existence. 171

REFERENCES

Sassen, S. (1999). The state and the global economy. The Journal of the International Institute,
6(3). Retrieved from: http://quod.lib.umich.edu/j/jii/4750978.0006.304?view=text;rgn=main
^ O'Sullivan, Arthur; Steven M. Sheffrin (2003). Economics: Principles in action. Upper Saddle
River, New Jersey 07458: Pearson Prentice Hall. pp. 471. ISBN 0-13-063085-3.
http://en.wikipedia.org/wiki/Keynesian_economics
http://quod.lib.umich.edu/j/jii/4750978.0006.304/--state-and-the-global-economy?rgn=main;view=fulltext
https://courses.ryerson.ca/bbcswebdav/pid-2583655-dt-content-rid4785121_2/courses/geo208_w14_01/T1%20Glassman%20%282011%29%20Geopolitical%20Economy
%20of%20GPN.pdf
http://taiwantoday.tw/ct.asp?xItem=107417&ctNode=1743
Article ^