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 defined borders within which a population lives.
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An institution is an organization governed by rules and laws that plays a specific role in society. Its role may be political, social, economic, religious, etc.
To better understand what an institution is, you can watch the video What is… an institution?.
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.
To better understand what sovereignty is, you can watch the video Sovereignty and Interference.
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 promote their own interests, it tries to convince the government to adopt certain laws and regulations.
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A multinational corporation 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 made up of citizens who defend a cause and act independently from the government.
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 occurs 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 (supply) who have a good or a service to sell and buyers (demand) who want to pay money for a product. There are regional (Quebec), national (Canada), continental (North America) and international (global) markets.
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Globalization is a phenomenon that pushes states to open their national economy to the world market in order to increase trade between countries, making them interdependent. Trade can include services, goods, capital (money) 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 assets 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 seeks to eliminate all trade barriers between states that have signed an agreement.
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The term multilateral is used when something involves three or more states. For example, a multilateral agreement is an agreement made between at least three states.