Today, there are some 200 sovereign states in the world, meaning they have the absolute power to govern themselves by making and ensuring that they are respected by the population within their borders. A sovereign state is an independent state. It cannot choose laws for another state and cannot have laws imposed on it.
States tend to come together in organizations. Within these international institutions, they join forces in collaboration and cooperation to achieve common goals such as international security, increased trade or peacekeeping.
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A state is a territorial and political entity administered by a government. It has delimited borders within which a population lives.
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An institution is an organization governed by rules and laws which plays a specific role in society. This role may be political, social, economic or religious.
When states join organizations, whether the United Nations (UN), the World Trade Organization (WTO) or the World Bank (WB), or political unions such as the European Union (EU), they lose some of their sovereignty. Decisions are often made by majority. A state may not agree with a decision, but as a member of the organization, it is committed to respecting the decisions.
Sovereignty is the absolute power of a state to govern itself by making its own laws and enforcing them within its territory. A sovereign state is independent, meaning that it cannot be controlled by any other state or institution.
Joining a political grouping limits a state’s sovereignty, since it has to enforce laws that it did not necessarily choose. This redefines a state's powers. This redefinition of powers is also due to the pressure put on governments by various groups such as non-governmental organizations, multinationals, lobbies and unions. These groups try to influence government decisions in their favour according to their own interests. Sometimes these groups even succeed in getting the government to reconsider its positions.
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A lobby group is a pressure group whose members share common interests. To further their own interests, lobbies try to influence the government to adopt certain laws and regulations.
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A multinational is a company that carries out activities in countries other than its country of origin (exploitation of resources, production of goods or services, research and development, etc.).
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A non-governmental organization (NGO) is a non-profit organization of citizens defending a cause and acting independently of governments.
Globalization opens up the markets, which increases trade between states. Multinational corporations play an important role in this globalization. Some countries adopt advantageous laws, such as reduced tax on profits, to attract multinational corporations. This encourages many companies to outsource their activities.
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Outsourcing refers to the relocation of part or all of a company’s activities to another country in order to reduce production costs. Relocation generally takes place from developed countries towards developing or emerging countries.
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The market is a place of exchange where commercial activities take place. This is a meeting place for sellers (the supply) who have a good or a service to sell and buyers (the demand) who pay money for a product.
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Globalization is a process that pushes states to open their national economy to the world market to increase trade between countries, making them interdependent. Trade may include services, goods, capital or the movement of workers.
States also sign economic agreements with each other to further promote trade. These agreements are often multilateral, meaning they involve several states. These agreements remove barriers to free trade and increase the trade of goods, services, capital and, in some cases, labour.
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Capital is the property or money owned by a person, company or state. Capital can be used to make investments.
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Free trade is an economic policy that aims to eliminate all trade barriers between countries that have signed an agreement.
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The term multilateral refers to or involves three or more states. For example, a multilateral agreement is an agreement that involves at least three states.