The changes associated with the globalising international economy have had significant effects on the nature and functions of national states. Rather than being in a process of decline in both relevance and effectiveness, the state remains central to the study of IPE and to processes of transformation at the national, regional and global levels. The process of globalisation has created a situation which we can call the ‘paradox of state power’, in which the national state is simultaneously weakened and strengthened. In the Latin American case, the ‘internationalisation of the state’ was engineered very consciously by government elites as a means of using international constraints to overcome domestic constraints. As a result of the location of significant decision-making authority at the regional and global levels, and also as a result of the changing policy environment associated with financial globalisation, the policy-making options available to national governments were significantly diminished. On the other hand, the ‘internationalisation of the state’ provided precisely the conditions in which the state was able to recompose itself and recover its coherence vis-à-vis societal interests following the conditions of economic and political collapse which characterised the region at the end of the 1980s. In this way, state power was simultaneously weakened at the global level, as a result of the changing structures of rewards and punishments in the international economy, and strengthened at the domestic level as a result of the space created by the internationalisation of the state for the consolidation of economic and political reform
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