Globalization and loss of autonomy by the fiscal, banking and monetary authorities

The idea that globalization impairs the sovereignty of the modern nation-State is increasingly accepted in some academic, government and international circles. Currently, there is generalized concern over the progressive erosion of national authorities' leeway for making decisions on matters of internal interest independently of outside influences. This perception has reached its extreme among those who feel that globalization has transformed the nation-State into a dysfunctional entity in a world without frontiers. It is understandable that a consensus should have grown up around this thesis, in view of its general nature and in particular because of the conceptual flexibility with which the notions of globalization and sovereignty are usually treated in some professional circles. The term globalization is frequently used in the fields of communications, culture, politics and economics, while the notion of sovereignty is current in the political and military areas, whence it has been extended to apply to economic matters too. This paper examines the thesis in question, restricting it to the economic sphere. Even in this limited form, there is a certain lack of clarity in the idea that globalization of the economy curtails the autonomy of the authorities responsible for economic policy, since there is no single, or at least generally prevalent, interpretation of the concept of globalization within the field of economics. Similarly, the fact that the concept of autonomy did not originate in the economic sphere means that it is used with some latitude. In order to analyse the content, scope and limitations of the thesis, various examples are drawn from the areas of banking, monetary, exchange-rate and fiscal policy.