Economic development in all nations is a priority of the government. This has made the ability of nations to play a major role in the global economy very important. Efforts by nations to increase economic growth have given rise to entrepreneurial and transnational states. Entrepreneurial states are established when governments are able to put into place interventionist and strong economic policies to increase economic progress. The transnational states on the other hand are committed to the coordination of resources, technology and information across the national borders for cultural, political and economic purposes.
Globalization has made it necessary for states to cooperate with others to achieve economic progress and to address critical political matters that affect people beyond the national borders. As states continue to be preoccupied with economic development, the transformation of nations into entrepreneurial states is anticipated. This paper will discuss the transnational and entrepreneurial states and what they both entail. An Entrepreneurial state The term entrepreneurial state refers to nations that have strong interventionist and state economic policies .
National governments in entrepreneurial states are able to address issues such as the promotion of state exports and attraction of foreign investment. Like the term implies, entrepreneurial states play an important role in supporting entrepreneurship According to Eisinger (Eisinger, 1988), the transformation of governments into entrepreneurial states has resulted to changes in public governance whereby a nation of citizenship is reconstructed as a result of globalization. The emergence of an entrepreneurial state has been encouraged by intense preoccupation of states with economic development.
In addition, economic matters in such a state have been swept into the rope of political agenda. Many citizens in entrepreneurial states are convinced that through public initiatives, they can shape the economic destiny of the state in the contemporary society. Citizens understand their role in economic development hence through public initiatives they recognize the positive impact their support for sound economic policies and entrepreneurship can have on the country’s economy.
According to Goldin (Goldin 1993), growth in trade has opened up new avenues of increasing economic growth. Nations have been active in supporting bilateral and multilateral trade relations that have proven to have great positive impact on the economy. As nations compete to play an important role in the global economy, it has become necessary for nations to develop sound economic policies to effectively compete with other nations. In addition, the global political economy is influenced greatly by economic growth in various countries.
Entrepreneurial states have adopted economic development policy which defines the efforts that a government makes to encourage new business investment. The governments do this with the hope that retaining and creating good opportunities of entrepreneurship will support the secondary employment multiplier as well as the diversification and enhancement of the tax base. Entrepreneurial states acknowledge the importance of economic development in fostering sub national economies. These states have confirmed how important market reforms are in economic development.
For example, in the advanced industrial countries which can be considered to be entrepreneurial states, market reforms since the 1990 have moved from financial liberalization and overall trade to more regulating changes that are designed to ensure corporate restructuring. This includes measures that relate to corporate law, accounting and adjustments in banking regulation and labor policy. The regulatory changes that have been experienced in entrepreneurial states lead to changes in the corporate choices and the government policy that has been developed and implemented has shaped the distinctive approaches to restructuring.
Good examples are Japan, France and South Korea where the government policy has contributed to the growth of auto sectors. The policy changes that are experienced in the countries can be attributed to the rising foreign portfolio investment. In the past, some countries have initiated economic transformations that made positive impact on the economy. For example, the emergence of an entrepreneurial state between 1700 and 1914 was witnessed in Britain due to the economic transformations that were witnessed.
Between 1700 and 1800, major transformations in the country’s economic band social structure was witnessed. There were a large number of workers involving into urban areas to work in the various industries. This gave Britain a leading role in industrialization. Although the barrier to free competition and rational utilization of resources undermined the liberalization of industries, the adoption of 1821 Reform Act in Britain promoted the entrenchment of free – market and liberal assumptions in the public place.
This had Britain through economic growth due to increased production in the manufacturing companies dominate the world trade. According to Diamond( Diamond, 1999),changes in the political systems and the need to improve governance that ensures sound economic policies that support entrepreneurship are put into place has resulted to the establishment of democratic institutions in many entrepreneurial states. In entrepreneurial states, the government plays a key role in economic development.
For example, in the Asia Newly Industrializing Economies (NIEs), the intervention of the governments in economic affairs has turned nations such as South Korea, Singapore Taiwan and China into entrepreneurial states. This has made the nations to create what is now referred to as the “Asian Miracle” due to the rapid economic growth that has been witnessed in the region over a short period of time. According to neo-classical free market economists, the governments’ intervention policies in the Asian NIEs were able to be market sustaining and market conforming.
Economic and political cooperation often aim at increasing economic growth and providing an avenue for addressing political matters. Gould (Gould, 1990) supports this argument. The setting up of different kinds of business is a major characteristic of an entrepreneurial state. New dimension of state activity in nations such as China has emerged under market reforms and the state activity referred to as “state entrepreneurialism”. Market reforms create opportunities and constraints that make them to view business as a viable way of having staffing and financial problems solved.
In the past, China’s state businesses have promoted state entrepreneurialism due to the market reforms have been adopted. State entrepreneurialism in the country has been witnessed in the structural and institutional context of market reform. Since in entrepreneurial states, the state has an important entrepreneurial role to play in the development of societies, the evolution of the state entrepreneurship towards industrialization has been witnessed in the contemporary entrepreneurial states.
Due to the good investment opportunities that are found in entrepreneurial states, foreign investors are often ready to invest in the country as long as the government continues to support and enact reforms that not only facilitate corporate restructuring but also improve corporate governance. Held( Held, 1999) agrees that global transformations have made it necessary for nations to adopt sound economic policies that try to address all the issues of concern in relation to the economy. Some economists have proposed that an entrepreneurial state is a model of state adaptation to marketization.
In the economies that are experiencing market reforms, the state bureaucracy is becoming adapted by being entrepreneurs or playing an active role in entrepreneurship. For example, the emergence of entrepreneurial state defies the expectations that states will or should play a minimal role in the economy as encroachment in markets continue to be experienced. Furthermore, the increasing role of states in the economy has confirmed the commitment of countries in avoiding the obstruction of market – oriented changes through rent-seeking and bureaucratic conservation.
For example, in China during the early 1990s, state entrepreneurialism was witnessed in the in the Chinese city of Tianjin. The emergence of this form of entrepreneurialism was as a result of changing demands and incentives as well as market induced structural transformation. The direct involvement of the state officials in entrepreneurship is important in an entrepreneurial state. Japan, South Korea and France are examples of entrepreneurial states that have managed to put into place strong interventionist and state economic policies.
These three countries shifted towards market-friendly policies since the mid 1990s. South Korea has managed to adopt market friendly policies that are considered to be “market bending” measures of an active state promotion and support for corporate restructuring. The market friendly policies have been very instrumental in supporting economic development in South Korea which now is a major player in East Asian regional economy. Japan on the other hand adopted “market-tolerant” measures of reforms that do not require restructuring but facilitates restructuring.
Just like its counterparts in Asia, Japan has managed to become an important trade partner of its neighbors and members of the ASEAN+3. France’s interventionist policies can be considered to fall in between those of South Korea and Japan. France has adopted economic policies that are considered to have a “market-enhancing” approach . This approach provides various corporations with strong incentives to restructure through state-sponsored mergers and acquisitions, privatization and bank-led reorganizations.
The above case studies show that role of a state in socio-economic development is important in an entrepreneurial state system. For example, an entrepreneurial state in Botswana is supported by rapid economic growth through strategic leadership and management of the diamond mining sector by the state. Botswana is one of the world’s largest producers of diamond. As a result, diamond is one of the country’s largest revenue earners. The government in efforts to ensure good management in the mining, production and marketing of diamonds has adopted “state-led development” .
The strategy of “state-led development” is an element of an entrepreneurial state which has worked well in some nations. However, the issue of the collapse of centrally placed economies in the dominance of neo-liberalism dogma have made it necessary for states to minimize their role in the economy in order to create space market –based socio-economic development. Because the impact of state actions on the economy and business has some implications for policy markets, the need to increase economic development has encouragement states to create programs and adopt policies that have positive impact on entrepreneurship.
According to Boggs (Boggs, 2000), the growth of business corporations and support given to the corporations by states now play a major role in economic growth. Political entrepreneurs are able to exert leadership influence well when they enjoy high strategic bureaucratic delegation and high strategic political autonomy. In addition, the entrepreneurs are more effective if they can delegate to the bureaucrats. In entrepreneurial states, many businesses involve risk-taking, productivity and generation of profits.
One distinctive element for state entrepreneurialism is that there are direct business activities of the state in the emergent markets. In this case, the direct involvement of the state in business makes the bureaucracy to be involved in business. This is done in two ways. One of the ways is that the leading officials may set up enterprises like private entrepreneurs and then get into business on the behalf of the bureaucrats by estimating the success of a business in new emergent market and judging whether the business activity is profitable.
Another way through which entrepreneurial bureaucrats can get involved in business is by investing funds in business. Borosage (Borosage, 1998) states that nations compete stiffly to acquire a high world order through growth in trade. Some of the features that are important in the entrepreneurial activities of the state officials include the involvement of state officials in the emergent markets, and setting up of businesses to generate profits. State entrepreneurialism is characterized by risks that are associated with management in entrepreneurial enterprises.
Furthermore, state entrepreneurialism is directed towards productive economic activities. State officials are required to adjust their behaviour to suit the new market environment and as a result the state behaviour facilitates state restructuring. Van Dormael (Van Dormael, 1978) acknowledges the importance of the World monetary system in facilitating global financial issues A Transnational State Transnational states are involved in the coordination of resources, technology and information across the national borders for cultural, political and economic purposes.
Efforts to define what a transnational state has attracted discussions from scholars and theorists in the business field. The meaning of the term transnational state has led to the development of various theories to explain the rise of a transnational state and what it entails. Since the time of Karl Marx, scholars have tried to explain this term by exploring the manner in which economics transcend national borders. For some, the expansion of the capitalist world economy is influenced by transnational social relations that result from globalizing capitalism.
The theorist Robinson (Robinson, 2004) in his theory of global capitalism states that the rise of a transnational state has led to the formation of a transnational class. The theory also supports the notion that there exists a transnational capitalist class that supports low-intensity democracy that legitimizes neoliberal globalization. Although the theory has been criticized, it explains the rise of a transnational state and its contribution to the formation of a transnational class and globalization.
The rise of transitional states is marked by a decline in nation-states such that all states are recognized as a single global authority. This is associated with the term “citizen of the world”. The definition and working of a transnational state as reflected by President Bill Clinton’s declaration in 1992 consider countries to be social arrangements and accommodations that are subject to change under certain circumstances. The emergence of a transnational state marks the end of a nation-state.
Business corporations in relation to transnational state consider themselves to be globally competitive companies that are headquartered in certain cities. Hegemonic fractions of capital on a global scale have been transnationalized and this has made the fractions to be detached form particular territories. Although this does not mean that nations are stateless, the detachment of the fractions can be from the social and political projects of nation states. Boron (Boron, 1995) confirms that capitalism has been adopted in many countries across the globe including Latin America.
The rise of transnational states has influenced the capital class. For example, the transnational capital class (TCC) has economic dominance because it controls the commanding heights of the world economy despite the fact that the economically dominant class does not have to be a political ruling class. According to Robinson, the rise of a transnational state apparatus is an integral dimension of world capitalism. Robinson (Robinson, 1999b) asserts that the transnationalisation of states has been influenced by globalization.
The transnational capital class is related to the emergence and consolidation of global economy hence its economic interests and political objectives aims at pursuing the global project of an integrated society and economy. This is referred to as “transnational elite agenda”. The transnational elite agenda aims at creating conditions most favorable for global capitalism to function in an economy. This class has advanced this agenda through the transnational apparatus institutions.
Political scientists and sociologists have noted that a dominant class in the economy has its rule exercised through political institutions where the high personnel represent the class in the unification of its actions and reinforcement control over social reproduction. In this case, the reproduction of global capitalist relations of production and creation as well as the reproduction of cultural and political institutions are favorable to the rule of this dominant class in the state.
Gilpin (Gilpin, 1987) states that great changes in the global and political economy have been witnessed. These changes and the interactions between states has influenced the global political economy . In a global capitalist system, the transnational corporations control the global economy and make key declarations that affect people and business across the globe. For instance, the leading strata in transnational corporations from 1970s into 1990s became politicized.
This indicates that in a state, the idea of a politically active wing of a ruling class is captured by key levels that controlled at the apex of a global ruling class. The emergence of a transnational state has resulted to the development of communication and mobility that has increased transborder relations. This has resulted to political and social mobilization beyond the national borders. In addition, there is a global system where the capitalists are comfortable investing in various nations across the globe.
A transnational state has made development on interconnected global businesses and industries to act as the drivers of the world capitalism. As a result, global capital mobility that has been witnessed has allowed the organization of production to be done according to considerations that promote the maximization of profit making opportunities. Due to this, the production systems that were earlier located in one country have been integrated externally and fragmented into new globalized circuits of accumulation.
The production process is therefore divided into smaller parts which then move to different countries based on where the investment is highest. The worldwide fragmentation and decentralization of the production process has been witnessed alongside the centralization of control and command of the global economy in transnational capital. As Gill (Gill, 1990) points out, globalization has played an important role in creating hegemonies which have increased transnationalism.
Hegemony is anticipated to be exercised by a new global ruling class rather than a particular nation state. This global ruling class can be able to achieve this through transnational state machinery whereby the networks of a transnational state enable the global elites to share similar lifestyles and to interact freely regardless of their national identity. This makes globalization to unify the world into one mode of production and a single global system, bringing about the integration of various nations and regions into a new global society and economy.
Barnet and Cavanagh (Barnet and Cavanagh, 1994) however points out that the new global capitalism has increased the lift between the poor and the rich. In the transnational states, social institutions and human activities go beyond the national boundaries. Globalization has made capitalist states to acquire elements of a transnational state. For example, transnational institutions form a transnational apparatus that is incipient. This apparatus is an emerging network that comprises externally integrated and transformed national states.
The efforts to forge a new global capitalist block in transnational states has had global institutions such as the World Bank, International Monetary Fund and regional banks which are global economic forums to be formed. Chossudovsky (Chossudovsky, 1998) asserts that these organizations. These organizations can be considered to be transnational because their work goes beyond border. They provide financial aid that aim at eradicating poverty across the globe. Political forums that have been formed included the G-7, the United Nations and the European Union.
These forums have become institutions that tend to form a global capitalist bloc which is related to transnationalism. The emergence of transnational states has institutionalized the new relation between the global labor and global capital hence nation-states are now absorbed into the larger transnational state structure instead of disappearing or retaining their primacy. Transnational states support the interactions and multiple ties that link institutions and people across the nation-states’ borders.
This has transformed the political, social and economic structures which make nations to be considered as discrete units that are found within the international or world system which is characterized by external changes that influence the units. In the late twentieth century, the process of transnational financial, market and productive integration proceeded to make world capitalism headquarters untenable. Many countries have become part of the world capitalism and from a global-nationalism dualism perspective, the international extensions of the nation-state system is associated with a transnational state.
Transnational states are expected to cooperate in confronting the new era problems as well as the expansion of the international activity. The institutionalization of capitalist class led to the emergence of a transnational state apparatus beginning 1970s into the 1990s. A transnational capitalist class has emerged from the rise of the global financial system where the preservation of mergers and acquisitions across national border and the increased interlocking of positions in the global corporate structure are witnessed.
The transnational states promote transnationalism when their governments act as active mediators and agents of transnational movements states that are able to generate and sustain transnational flows. An increase in interdependence between non-state and state actors has increased in relation to transnationalism and this makes both domestic and external sources to influence internal issues within a state. Governance in transnational states involves the establishment of social instructions that involve both non-state and state actors to promote co-operation.
The global reorganization of the production process results to the flow of commodities, people and ideas across borders. A transnational state can be defined by its offshore involvement in local, national and regional business due to the impact of the global process. For example, the US-Mexico mango and Lime export industries have confirmed that there is impact of the US food certification on the rural Mexican society as well as the structure of production.
The transnational activities of the US have influenced the behavior and adaptations of the distributors and the producers who are engaged in marketing and global trade. For instance, the US trade with Mexico makes the Mexican mango entrepreneurs to organize annual schedule to fit the export market by ensuring that the harvesting and processing of export fruit goes hand in hand with “free trade” of market demand and US regulations. In other cases, the emergence of transnational states can lead to the growth of transnational higher education.
This form of education refers to exported education as an approach to cooperation in international university education. Since the transnational provision of education has been increasing, there have been a new phase of global development in higher education within emerging international trade agreements. Asia has been active in transnational higher education where nations such as China and India send hundreds of thousands of students to study abroad. Conclusion Economic developments in nations across the globe rely on the ability of the public and the private sector to increase economic growth.
As nations compete for a more influential position in the global order through economic and political power, efforts to support business through sound economic policies has been witnessed. The need to support entrepreneurship in the countries has led to the formation of entrepreneurial states. On the other hand, transnational states have been formed due to globalization and the importance of nations in the world global economy. The support of governments towards economic activities and businesses that increase development is important in the new global order. References Barnet, R and Cavanagh, J. 1994.
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