Globalisation and the state: Still room to move?

In recent years, scholars and policy makers have questioned the extent to which the nation-state - specifically, the modern welfare state, marked by intervention and publicly-provided social protection - is compatible with economic globalisation. While transnational actors, including multinational corporations, institutional investors, banks and non-governmental organisations, undoubtedly influence contemporary national policy making, they have not brought about the demise of the nation-state. Nor have the pressures generated by such actors eliminated cross-national diversity in policy outcomes and political institutions. In the face of economic globalisation, governments retain 'room to move', particularly in the developed world but also in developing nations. This essay reviews the empirical and theoretical evidence in support of this claim, beginning with the general issue of economic globalisation and government policy making. I then turn to the relationship between global capital markets and government autonomy. In conclusion, I ask why the 'race to the bottom' (RTB) logic remains a feature of contemporary public debates and explore variation across countries and investors in the pressures emanating from global capital markets.