SMALL STATES, GLOBALIZATION AND INTERNATIONAL POLITICAL ECONOMY DR OWEN WORTH, UNIVERSITY OF LIMERICK

GLOBALISATION Generally speaking a buzzword that refers to the compression of space in global politics Political – Sovereignty Economic – associated with the ‘internationalisation of the state’ Cultural homogeneity

End of Cold War and of bipolarity Effective ‘globalisation’ of market system Move towards regional forms of governance HISTORICAL DEVELOPMENT

AND SMALL STATES… The era of bipolarity often provided states with East/West axis of influence Globalisation has seen small states maintain cultural/political autonomy through partnerships and links with others Regionalism, groupings within international organisations taken on greater significance

REGIONALISM States merge into groups so to maximise collective agreements Utilised in trade and security agreements Often seen as a criss-cross rather than coherent blocs

THE GLOBAL POLITICAL ECONOMY Emerged into a single entity after the cold war Deregulation and greater capital flows have incensified the significance of the global market Looked to cement alliances within groups and look to certain comparative advantages

Ideology on free market principles that dates back to the Mont Perelin society and Hayek Encourages privatisation, free trade and reduced state spending Emphasis on the conviction that economic growth is best generate through the private sector via the market NEOLIBERALISM

REALITIES OF NEOLIBERALISM: THE COMPETITION STATE Termed by Phil Cerny States transformed in bodies that look to utilise the global market in a manner that works for them Look to find a comparative advantage in order to attract investment Maintain social cohesion

Open Economy Tax breaks for Foreign investment Maintain welfare structures and services High income/service tax EXAMPLES: NORDIC MODELS

Took traits of the Nordic model Neoliberalism such privatisation of banking system Financial hub through high interest rates Crash ICELAND

First that responded to the Nordic model Lowered Corporation & Domestic tax and increased ‘knowledge’ economy Looked to the global economy for FDI and inward investment Growth Crash IRELAND

Small states that rely on providing tax havens for outside investors Certain Islands forged a niche market through globalisation Nothing new - Switzerland OFF SHORE FINANCIAL CENTRES

CRISIS Nordic model hit (Oil-rich Norway the exception) Iceland and Ireland hit and responded in contrasting ways. Partly due to the latter’s membership of the Euro Pressure placed on restricting offshore investment locations

SMALL STATES: PROBLEMS Convenient label in terms of defining states Often used as an excuse for failure of strategy or of specific policy Term contested (defined by some as under 1.5 million) Developed versus Developing?

Advanced Small States can play-off in larger ‘rule-making bodies’ EU/NATO for example ‘Failed’ (big or small) states experience greater load DEVELOPING/DEVELOPED WORLD

Even the most powerful ‘South’ countries seek specific strategies in the global economy China provide cheap labour for multinational investors Strategic realities of the completion state in the global political economy CORE OF THE PERIPHERY VS PERIPHERY OF THE CORE

BRINGING CLASS BACK IN ? Brings us back to look at who has the power in the international political economy Theories of ‘Transnational Class’ formations give us an alternative understanding of Global capitalism Small States assume specific role within it Perhaps reflected even more in light of the financial crisis?

CONCLUSION The expansion of the global economy has transformed the economic role of the state since the Cold War Small States have adopted certain strategies to enhance productivity Successes and failures have varied Gives us indications of power relations within global politics as a whole