Another main trend of the new economy is the demise of the sovereign nation-state
(Castells, 2000c, p. 694). Since both global networks and communication technologies have
increased the strength and frequency of transforming information, capitals, and labour among other nodes in the networks, all nations and states have become more interdependent. The increased
relations stimulate the necessity of transnational institutions such as the EU, NATO, ASEAN, and UN. Castells (2001) argues that the degree of freedom of nation states has shrunk to an
extraordinary degree in the last ten years, because of the European Union. Member nations in the European Union have decentralized markets in order to strengthen their bargaining power and
socio-economic control. Consequently, each member state in the Union has experienced diminishing social power over their national issues and more complex relations with each other. Nodes in
information economies or network economies do not necessarily exist in the form of an organization, but occasionally exist as a individuals, such as Alan Greenspan, the Chairman of Federal
Reserve Board (Castells, 2001).
However, the demise of sovereignty for Castells does not mean that the current nations or states will disappear through global networks, but that their social power should be shared or restricted by other institutions, nations, or states.
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