After the emergence of the process of globalisation, the functions of the State began undergoing a change. With the increasing disinvestment of public sector, privatisation was encouraged.
Public sector was made to compete with the private sector, and as a whole open competition, free trade, market economy and globalisation were practised.
The role of state began emerging as that of a facilitator and coordinator, in place of an owner and controller. The Information revolution brought the people of all states closer and they rapidly got involved in the process of free flow of information, goods and services across all frontiers.
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In fact, the process of globalisation involves a change in the role of the state. However, this does not in any way mean re-adoption of Laisses faire or reversion to the principle of police state. It stands for liberalization of society .politics and economy from all unnecessary and unproductive restraint. It stands for neither the weakening of the state and nor in any way taking over its position.
Under Globalisation, the state continues to be a welfare state. However, its economic activity is getting confined to three main types of functions:
(i) The activities which are essentially needed for the operation of economy. It acts as a facilitator and coordinator and refrains from acting as an owner and hard regulator. It acts to ensure a smooth and orderly functioning of the market. It tries to secure stability in the market through macro-economic policies.
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(ii) Activities aimed at providing social services such as education, health, social security etc., to the people.
(iii) All activities aimed at providing security to the people against the forces of terrorism, violence and aggression.
Globalisation has necessitated some change in the role of state. The state continues to be a welfare state performing all the protection functions as well as several social functions. It continues to act as a facilitator and coordinator of economy.
It however, does not mean a reversion back to the police state. It continues to act as a welfare state, a natural and necessary institution performing protection and social welfare functions with some role in protecting and improving economic life of the people.