Read the passage and answer the questions:
One of the debates that has been generated as a consequence of contemporary processes of globalization relates to its ongoing political impact. How does globalization affect traditional conceptions of state sovereignty? There are at least three aspects that we need to consider when answering this question. At the most simple level, globalization results in an erosion of state capacity, that is, the ability of governments to do what they do. All over the world, the old ‘welfare state’ is now giving way to a more minimalist state that performs certain core functions, such as the maintenance of law and order and the security of its citizens. However, it withdraws from many of its earlier welfare functions directed at economic and social well-being. In place of the welfare state, it is the market that becomes the prime determinant of economic and social priorities. The entry and the increased role of multinational companies all over the world leads to a reduction in the capacity of governments to take decisions on their own. At the same time, globalization does not always reduce state capacity. The primacy of the state continues to be the unchallenged basis of political community. The old jealousies and rivalries between countries have not ceased to matter in world politics. The state continues to discharge its essential functions (law and order, national security) and consciously withdraws from certain domains from which it wishes to. States continue to be important. Indeed, in some respects state capacity has received a boost as a consequence of globalisation, with enhanced technologies available at the disposal of the state to collect information about its citizens. With this information, the state is better able to rule, not less able. Thus, states become more powerful than they were earlier as an outcome of the new technology.
What is the political consequence of the entry and increased role of multinational companies?
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → Reducing the capacity of the governments to take decisions on their own.
Option (1) Increasing the capacity of the governments to take decisions on their own. — Incorrect. When multinational companies enter and grow, many economic decisions are shaped by them and by the market, so a government can no longer decide on its own as freely as before. Their entry therefore reduces that capacity; the passage counts it as part of the erosion of state capacity.
Option (2) Reducing the capacity of the governments to take decisions on their own. — Correct. The entry and the increased role of multinational companies all over the world leads to a reduction in the capacity of governments to take decisions on their own; this is part of the erosion of state capacity.
Option (3) Increasing the ‘welfare state’ functions of the state. — Incorrect. The welfare state is giving way to a minimalist state; its welfare functions shrink, not grow.
Option (4) Reducing the ‘minimalist state’ functions of the state. — Incorrect. The minimalist state keeps its core functions, law and order and the security of citizens; these are not reduced.
NCERT (2025-26): “Political Consequences … One of the debates that has been generated as a consequence of contemporary processes of globalisation relates to its ongoing political impact. How does globalisation affect traditional conceptions of state sovereignty? There are at least three aspects that we need to consider when answering this question. At the most simple level, globalisation results in an erosion of state capacity, that is, the ability of government to do what they do. All over the world, the old ‘welfare state’ is now giving way to a more minimalist state that performs certain core functions such as the maintenance of law and order and the security of its citizens. However, it withdraws from many of its earlier welfare functions directed at economic and social well-being. In place of the welfare state, it is the market that becomes the prime determinant of economic and social priorities. The entry and the increased role of multinational companies all over the world leads to a reduction in the capacity of governments to take decisions on their own.…” |