Foreign relations at the state level. (U.S. states) (States in the International Arena)

The globalization of state governments is receiving a tremendous amount of publicity at the international, national, state and local levels. State and local governments are being propelled into the novel role of developing policies for dealing with foreign entities. This globalization phenomenon is affecting all states and localities - whether they are densely or lightly populated, and whether they are highly industrialized or agriculturally oriented.

Governors - and more recently, state legislators - have wrestled with this globalization puzzle to determine exactly what its various components are, how they interact with one another, and how the chief executive and legislative leaders should promote the best interests of the public in the global market. A few of the more persistent questions regarding globalization are: How did the states become involved in the globalization process? What are the specific roles of the states in this nebulous globalization phenomenon? When state governments interact with foreign entities will they be constitutionally and programmatically in compliance with federal legislation, regulations and policies?

Most states have been ushered into the international arena because of their strategic role in 1) promoting international trade, 2) recruiting economic investment, and 3) participating in international cultural exchange activities, such as Sister Cities Programs, educational exchanges, and United Nations Day events. As states become more immersed in a variety of international activities, they have seen their roles dramatically broadened to include those of international negotiators, recruiters and ambassadors (without national portfolio). These are roles which - until not too long ago - traditionally were filled by the federal government.

There are three major trends that have occurred over the past 14 years which have contributed to creating a greater independence between the federal and state governments, have inadvertently urged the states to launch into their international roles, and have encouraged the states to expand their foreign relations.

First, due to a rising federal budged deficit, an abrogation of federal responsibilities to the states and localities, and to a philosophical shift, the so-called New Federalism of the Reagan and Bush administrations, fewer funds have been returned to state and local governments. In essence, the federal government has devolved additional responsibilities and mandates to the states and local governments without accompanying funds. Federal grants-in-aid to state and local governments were 2.2 percent of the gross national product in 1980, which amounted to $68 billion; however, they have fallen to 1.3 percent of the GNP in 1988, which amounted to $43 billion in constant dollars.

There also has been an explosion of federal mandates - especially during the latter half of the 1980s. This has placed an additional burden on states and localities, requiring them to undertake expensive programmatic initiatives. For example, in 1990, the federal government passed 20 additional state mandates which carried a whopping price tag of $15 billion.

With the downturn in the economy, the burgeoning federal budget and trade deficits (projected to be $340 billion and $80 billion respectively in 1992), the fact that 29 states and Puerto Rico are running actual or potential deficits, and the expanded programmatic responsibilities of state governments, states have turned to other revenue sources. Two logical revenue generators were to encourage economic investment by foreign businesses and industries and to work with local businesses to expand into international markets. Obviously, the primary motives were not only to increase the tax and revenue base, but also to create new employment opportunities, upgrade the quality of life, and remain agriculturally and industrially competitive, both in foreign and domestic markets.