Role of the State in Globalization: India and Israel
Globalization has fundamentally reshaped the relationship between the state, economy, and society. Far from rendering the state obsolete, globalization has reconfigured state power, altering its priorities, functions, and modes of intervention. States today operate within dense global networks of trade, finance, technology, security, and governance. The experiences of India and Israel illustrate two distinct yet comparable ways in which states respond to globalization, shaped by their historical trajectories, political economies, and strategic locations.
This unit analyses the role of the state in globalization in India and Israel, focusing on economic reforms, state capacity, global integration, and the tensions between sovereignty and interdependence.
Globalization and the Changing Role of the State
Globalization is often associated with the free flow of capital, goods, technology, and information across borders. Early accounts suggested that globalization weakens the state by limiting its control over the economy. However, comparative political analysis demonstrates that globalization does not eliminate the state; instead, it transforms the state’s role.
States remain central actors in shaping globalization by regulating markets, negotiating international agreements, managing economic reforms, and responding to global crises. The key issue is not whether the state retreats, but how it adapts.
India and Israel exemplify this adaptive role of the state under globalization.
India: From State-Led Development to Global Integration
For much of the post-independence period, India pursued a model of state-led and inward-looking development. The state played a dominant role in industrialization, planning, and economic regulation. Global integration was limited, and economic sovereignty was emphasized.
A decisive shift occurred in the early 1990s, when India adopted economic liberalization in response to fiscal crisis and global pressures. The state reduced direct controls over industry, opened markets to foreign investment, and integrated the economy into global trade and finance.
Importantly, globalization in India did not mean the withdrawal of the state. Instead, the state reoriented itself from a producer to a regulator and facilitator of market activity.
The Indian State and Uneven Globalization
The Indian state has actively managed globalization through selective integration. Sectors such as information technology, services, and pharmaceuticals were promoted as globally competitive industries, while other sectors remained protected.
This selective globalization produced rapid economic growth but also uneven outcomes. Regional disparities, informalization of labor, and social inequality increased. The state faced new challenges in balancing global competitiveness with social welfare and inclusion.
Thus, the Indian state remains deeply involved in mediating the social consequences of globalization.
Israel: Globalization, Security, and the Innovation State
Israel’s engagement with globalization followed a different trajectory. From its early years, Israel was integrated into global networks through migration, foreign aid, and strategic alliances. Over time, globalization became closely linked to technology, security, and innovation.
The Israeli state played a central role in fostering a high-tech, export-oriented economy. Through investment in education, research, and military–civilian technological linkages, the state positioned Israel as a key player in global innovation networks.
Rather than retreating, the Israeli state emerged as a developmental and innovation-oriented state, actively shaping its integration into global markets.
Globalization and State Capacity in Israel
Globalization in Israel strengthened certain dimensions of state capacity while constraining others. Economic openness increased dependence on global markets, but strong state institutions ensured continued intervention in strategic sectors.
Security concerns remained central to Israel’s global engagement. Defense industries, surveillance technologies, and cybersecurity became key export sectors, linking globalization to national security priorities.
Thus, globalization in Israel is deeply intertwined with state power and strategic considerations.
Sovereignty, Global Governance, and Policy Autonomy
Both India and Israel face tensions between national sovereignty and global governance. International trade rules, financial markets, and transnational institutions constrain policy choices.
India has sought to preserve policy autonomy by engaging selectively with global institutions and emphasizing South–South cooperation. Israel, in contrast, has aligned closely with Western economies and security networks, leveraging globalization to enhance strategic influence.
In both cases, the state remains a critical mediator between global pressures and domestic priorities.
Social and Political Implications of Globalization
Globalization has reshaped domestic politics in both countries. In India, debates over liberalization, privatization, and welfare reflect tensions between growth and equity. The state is expected to manage economic openness while addressing popular demands for protection and redistribution.
In Israel, globalization has intensified social stratification and debates over inequality, while reinforcing the role of the state in security governance. Political conflicts over identity and citizenship continue to intersect with global economic integration.
Thus, globalization does not depoliticize the state; it often intensifies political contestation.
Comparative Insights
A comparative perspective highlights key contrasts:
- India’s globalization is marked by gradual liberalization and selective integration; Israel’s by early and deep integration into global technology and security networks
- India emphasizes balancing growth with social inclusion; Israel emphasizes innovation and strategic advantage
- In both cases, the state remains central, though its functions have been redefined
These differences demonstrate that globalization produces varied state responses, rather than a single global model.
Conclusion: The State in a Globalized World
The experiences of India and Israel challenge the notion that globalization diminishes state power. Instead, they show that globalization reconfigures the state, altering its priorities and strategies while preserving its central role.
In India, the state has transformed from a planning authority into a regulator and manager of global integration. In Israel, the state has leveraged globalization to build an innovation-driven, security-oriented economy.
Together, these cases illustrate that globalization is not a uniform process imposed on passive states. It is actively shaped by states themselves, reflecting historical legacies, institutional capacities, and political choices.
References
- Kohli, Atul. State-Directed Development
- Rodrik, Dani. The Globalization Paradox
- Evans, Peter. Embedded Autonomy
- Khilnani, Sunil. The Idea of India
- Sen, Amartya. Development as Freedom
