With an intense global change engulfing the world over the past forty years marked by the third wave of democracy that started in the 1970s and peaked by 1990s; along with globalization of goods, information, people and money across borders, the interrelatedness of democracy and economic globalization has become an area of a great interest for foreign policy makers and those dealing with international political economy (Eichengreen and Leblang). Over the course of time, many conflicting views have emerged in this regard. While one school of thought considers globalization as a tool to enhance democratic governance, another believes the opposite, while there are those too who argue that economic globalization has no impact on democracy (Li and Reuveny). This paper aims to investigate these contrasting views and establish a relationship between economic globalization and democracy.
While exploring the relationship between the two concepts, a prevalent notion focusing upon the positive relationship between globalization and democracy argues that businesses gain power when authoritarianism recedes. This is because trade openness across borders and free financial markets results in an economy that is not strictly sanctioned by the state laws and public authorities. This reduced preference to the private sector, encourages business groups all over the world to explore the international markets and gain profits by investing in new financial opportunities offered by countries. Businesses, ultimately prefer an environment that is politically liberal and minimally regulated by government interference. The increased economic exchange and bilateral relationship with foreign businessmen results in augmented influx and access to information about self-governing systems. An acquaintance to this new information sets into motion the process of political development and democratization triggered by the demands of the citizens (Kim and Heo; Boix; Eichengreen and Leblang).
Conversely, another school of thought debates the negative relationship between the two concepts purporting that the autonomy of states is undermined by the trade liberation caused by globalization; handicapping the capacity of government to sanction their economies and societal structures. This not only leads to an environment where governments are rendered to be immobilized in making better decisions for its people and control the economical aspect of national and international trade but also results in undermining democracy. Another aspect of this is that the “losers” in a global economy; the ones unable to make profits within such a system, strive towards particularistic cultures. Such cultures that are driven by identity segregation as defined through religion, race, ethnicity or language. Since democracy thrives in nations tolerant of differing ideas and views and are most successful in pluralistic societies, the particularistic context results in weakening it, providing an edge to leaders seeking gains from political sovereignty (Bloom; Kim and Heo; Peck).
Lastly, there are studies that identify the neutral relationship between the two concepts arguing that an influx of foreign capital proves to be a strengthening factor for political systems, irrespective of the type of government. Therefore, it establishes democracy in democratic systems and hinders it in authoritarian systems and reveals no clear link between the two. The proponents of this school of thought argue that there is no significant or constant effect of economic globalization on the democratic political regime of a country (Armijo).
Conclusively, it can be stated that with so many contending schools of thoughts, global economies and political structures, a uniform relationship is not applicable across globe. The relationship between economic globalization and democracy might vary across countries in light of the national context, economic policies and market structure.
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