whether globalization has reduced the power of governments to regulate the business or not.

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Word count: 1552 
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Abstract
This essay intends to argue whether globalization has reduced the power of governments to
regulate the business or not. Based on the critical discussion of the essay, it has been found
that globalization has adversely impacted the governing power of the government and it has
also created a significant level of inequality in the society. 
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Introduction
Globalization has greatly influenced information and communication technology,
commercial and transportation sector for the past few decades (Weiss, 2000). It has
generated new challenges for government worldwide. Without any deceleration, the global
forces have brought changes in the economic and social landscapes of the societies
worldwide. It has challenged the traditional assumptions, which are developed for
explaining social and economic equality. It has affected the rules and regulations that are
created by government to bring peace and stability in a particular economy. Hence, it can
be stated that globalization have weakened governance and dominance of government and
has also restricted its role for the betterment of the society. The essay highlights on the
supporting ideas for the argument “globalization has reduced the ability of the government
to govern” (Weiss, 2000).
Globalization
International Monetary Fund (IMF) have stressed on the growing interdependence of
economy worldwide on the increasing volume of cross border transactions of goods or
services and widespread transmission of technology. Dr Ismail Shariff has defined
globalization as a global process for homogenizing products, prices, wages, profits and
interest rates. It depends on three main global forces of development such as role of human
migration, rapid movement of capital and international trade and lastly integration of
financial markets (Poggi, 1978).
Globalization and power of government
Globalization has been confounded by political and technical instruments such as policies
of trade, information technology and financial liberalization. Thus, these instruments are
defined as the main drivers of globalization. However, there is a distinguishing feature of
globalization, which has been identified by IMF and the World Bank. The feature refers to
the wide scope of revenue for the economy that is engaged in cross border transaction.
These two institutions have given its decision in the economic affairs and have limited 
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governmental intervention into globalization. Free trade and growing mobility of capital to
promote the supranational decision making of the companies have reduced the power of the
governments globally. These factors have undoubtedly developed greater economic and
social inequalities as globalization brought new realities to the market through its laissezfaire approach (Held, 1991).
Laissez-faire is defined as the economic environment, where transactions take place
privately between two parties freely. These transactions are free from any government
restrictions, subsidies and tariffs. However, there are adequate regulations for protecting the
proprietary rights (Modelski, 1972). Hence, from the term itself (laissez-faire) it can be
deduced that there is limited governmental intervention in the process of globalization,
which have encouraged the global companies to undertake cross border transactions. The
companies have concentrated in shifting the role of government as the supreme authority to
the global financial organizations. Hence, the governmental authorities have been restricted
by these institutions to make any rule or regulation for the betterment of the economy.
These institutions have the ability to influence fiscal and monetary policy on the macro and
microeconomic level. These companies or institutions should follow the rules and
regulations that are devised by the international trading authorities. This authorities force
the government to make macro-decision based guidelines and rules for the companies and
institutions. It can be portrayed that the government has to modify its conviction to satisfy
the trade laws that are devised by the international trade associations or authorities. Hence,
it can be stated that globalization has reduced the ability of the government to govern or
rule in the contemporary world of international trade (Archer, 2004).
From the above discussion, it can be stated that globalization has given rise to an economy,
where the power of the government is diminishing. The actions undertaken by the
government to regulate trade with the help of fiscal or monetary policy is not satisfactory as
the global forces such as exchange rate fluctuation should also be controlled. These can be
regulated by the international trade policies and thus, there is no significant role of the
government in governing trade. Globalization can also be characterized by the growing
movement  


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