ABSTRACT
The purpose of this volume is to explore how globalization affects governance. This chapter examines how economic globalization is establishing a political basis for new kinds of state interventions in the economy, what we call the “rearticulation” of the state. We argue that these new types of state interventions are posing new challenges to existing institutions of international economic governance. In the introductory chapter to this volume, economic globalization is defined as the increasing integration of factor, input, and final product markets coupled with the increasing salience of multinational enterprises (MNEs) in economic activity. This is not to say that economic integration is uniform in all markets and countries. However, existing empirical evidence suggests that factor, input, and product markets are indeed becoming more integrated, particularly among the countries in the so-called Triad (North America, Western Europe, and East Asia). The share of MNEs in global economic activity has increased over the last two decades and they are more willing than previously to manage businesses where the value chain for a given product or service is distributed across great geographic distances (for evidence, see Prakash and Hart, 1998).
