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Study Material - Globalisation and The Indian Economy

The document discusses how globalization and multinational corporations (MNCs) have changed production across countries. [1] MNCs now own or control production in multiple nations by setting up offices and factories where labor and resources are cheapest. [2] This interlinking of production across borders through foreign investment and trade has integrated markets globally. [3] Technological advances in transportation, communication, and removing trade barriers have enabled the rapid process of globalization.

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Manaal Khanam
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285 views5 pages

Study Material - Globalisation and The Indian Economy

The document discusses how globalization and multinational corporations (MNCs) have changed production across countries. [1] MNCs now own or control production in multiple nations by setting up offices and factories where labor and resources are cheapest. [2] This interlinking of production across borders through foreign investment and trade has integrated markets globally. [3] Technological advances in transportation, communication, and removing trade barriers have enabled the rapid process of globalization.

Uploaded by

Manaal Khanam
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Study Material

CLASS – X
Ch. 4 Globalization and the Indian Economy

Production across countries


Before Now

Untill middle of the 20th Multinational corporations


country, production was emerged.
organised within countries
What crossed the boundaries They own or control
were raw materials, food stuffs production in more than
and imported finished goods. one nation.
Trade was the main channel Set up offices and factories
connecting countries in region where they can get
cheap labour and resources.

MULTINATIONAL CORPORATIONS (MNCS):-


MNC is a company that owns or controls production in more than one nation.
MNCs set up offices and factories for production in regions where they can get cheap labour
and other resources.
This is done so that the cost of production is low and the MNCs can earn greater profits.
MNCs set up production where it is close to the markets; where there is skilled and unskilled labour
available at low costs; and where the availability of other factors of production is assured. In addition,
MNCs might look for government policies that look after their interests.

INTERLINKING PRODUCTION ACROSS COUNTRIES


The money that is spent to buy assets such as land, building, machines and other equipment
is called investment.
Investment made by MNCs is called foreign investment. Any investment is made with the
hope that these assets will earn profits.

Variety of ways in which the MNCs are spreading their production and interacting with local
producers in various countries across the globe.

 MNCs set up production jointly with some of the local companies of these countries.

Benefit to the local company:


1. MNCs can provide money for additional investments, like buying new machines for
faster production.
2. MNCs might bring with them the latest technology for production.

 Most common route for MNC investments is to buy up local companies and then to expand
production.
 Large MNCs in developed countries place orders for production with small producers.
 MNCs directly set up production.
FOREIGN TRADE AND INTEGRATION OF MARKETS
Foreign trade creates an opportunity for the producers to reach beyond the domestic markets,
i.e., markets of their own countries.
Producers can sell their produce not only in markets located within the country but can also
compete in markets located in other countries of the world.
Similarly, for the buyers, import of goods produced in another country is one way of expanding
the choice of goods beyond what is domestically produced.
Foreign trade thus results in connecting the markets or integration of markets in different
countries.
WHAT IS GLOBALISATION?

 Globalisation is this process of rapid integration or interconnection between countries.


 MNCs are playing a major role in the globalisation process. More and more goods and
services, investments and technology are moving between countries.
 Besides the movements of goods, services, investments and technology, there is one more
way in which the countries can be connected. This is through the movement of people
between countries.

FACTORS THAT HAVE ENABLED GLOBALISATION

Technolo Information Improvement Satellite Removing Internet


gy Technology in Communication Barriers
Transport Technology

TECHNOLOGY:

Rapid improvement in technology has been one major factor that has stimulated the
globalisation process. Due to technology there has been improvements in various fields as in :

1. Transportation technology.

 In past fifty years this technological improvements has led to faster delivery of goods
across long distances at lower cost.
 Containers for transport of goods: have led to huge reduction in port handling costs,
increased the speed with which goods can reach markets
 Airlines: the cost of air transport has fallen, this has enabled much greater volumes of
goods being transported by airlines.

2. Information and communication technology:


 IT, has played a major role in spreading out production of services across countries.
Remarkable improvements have in the areas of telecommunications, computers
&internet.
 Telecommunications: facilitated by the satellite communication devices, facilites such as
telegraph, telephone including mobiles, fax are used to contact around the world, to
access the information instantly,& to communicate in the remote areas.
 computers have entered in almost all the fields.
 Internet allows one to share information on almost every thing, we can send instant
email and talk through voice-mail across the world at almost negligible cost.

3. Liberalisation of Foreign Trade and Investment.

 Liberalisation:

It is the process of removing barriers or restrictions set by the government earlier on


trade or investment. It means allowing foreign companies to start their business as
government restrictions are removed.

 Trade Bariers:

Some restriction on foreign goods like tax on imports. Government can use trade
barriers to increase or decrease foreign trade and to decide what kinds of goods and
how much of each, should come into the country.

Example: Tariffs, Quotas

 The Indian government, after independence, had put barriers to foreign


investment
 This was considered necessary to protect the producer within the country from
foreign competition.
 In 1991, the government decided that time had come for Indian producers to
compete with producers around the globe.
 It felt that competition would improve the performance of producers within the
country since they would have to improve their quality.
 Barriers to foreign trade and foreign investment were removed to a large extent.
 Removing of these restrictions/ barriers set by the government was termed as
liberalization

WORLD TRADE ORGANISATION

World Trade Organisation (WTO) is organisation whose aim is to liberalise international trade.
Started at the initiative of the developed countries, WTO establishes rules regarding
international trade, and sees that these rules are obeyed.
As on July 2016, nearly 165 Countries of the world are currently members of the WTO.
IMPACT OF GLOBALISATION IN INDIA

Positive impacts:

 Create a greater competition among producers, both local and foreign producers. This
has been advantage to the consumers.

 Greater choice to the consumers

 Globalization lead to improve quality and lower the price of products.

 Due to high quality and lower price the cost of living decreased and standard of living
increased.

 Globalization created good opportunity to local companies particularly IT sector to


provide services to MNCs.

Negative Impacts:

 MNCs have been interested in industries such as cell phones, automobiles, electronics,
soft drinks, fast food or services such as banking in urban areas only. Well of sections
got benefit out of it but rural poor are neglected.

 Only very few industries got benefit by providing services to MNCs. but not all
industries.

 Several top Indian companies have been able to benefit from increased competition but
not small and medium scale industries.

 Globalization has enabled some large Indian companies to emerge as MNCs.(Tata


Motors, Infosys, Ranbaxy, Asian Paints Etc.)

 Globalization support the developed countries rather than developing countries.

 People with education skin and wealth have made the best use of new opportunities.

STEPS TO ATTRACT FOREIGN INVESTMENT.

• Flexibility in labour laws

• Setting up of special economic zones.(SEZs)


THE STRUGGLE FOR A FAIR GLOBALISATION.

While globalisation has benefited well-off consumers and also producers with skill, education and
wealth, many small producers and workers have suffered as a result of the rising competition. Fair
globalisation would create opportunities for all, and also ensure that the benefits of globalisation are
shared better.

 Government policy must protect the interest of not only rich and powerful but also other
people in the country.

Ex: Govt. properly implements labour laws and worker get their rights.

 Government policy should support small producers to improve their performance till they
compete with MNCs.

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