The declining significance of national borders constitutes a challenge to the capacity of the nation-state to reach unilaterally its governance targets. Effective governance depends upon the spatial congruence of political regulations with socially integrated areas and the absence of significant externalities. As societal interconnectedness across borders increases with globalization, national governments are increasingly confronted with four specific challenges: efficiency pressures, externality and competitiveness problems, and representational deficits. The political responses to these challenges vary significantly. Although globalization is thus neither identical with, nor does it necessarily lead to, the rise of international institutions and governance beyond the nation-state, this article will show to what extent societal denationalization is accompanied by the rise of international institutions and how the myriad of international institutions existing today interact to produce global governance. Globalization also questions a cornerstone of any modern understanding of politics, which considers nation-states as the basis of all politics. As governance beyond the nation-state increases in significance, the separation of political issues into nationally defined territorial units must be conceptualized as a variable rather than a conceptual premise.