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J, 10 ONO Ee, a, , , , THE INDIAN ECONOMY, , BASIC CONC, , * What is Globalisation?, , () Globalisation is this process of rapid integration or interconnection between countries., , (i) MNCs are playing a major role in the globalisation process. More and more goods and services,, investments and technology are moving between countries., , * Production Across Countries, , (i) Trade was the main channel connecting distant countries. This was before large companies, called multinational corporations (MNCs) emerged on the scene., , (i) AMNC is a company that owns or controls production in more than one nation., , ii factories for production in regions where they can get cheap labour, m ee al oie is done so that the cost of production is low and the MNCs can earn, reater profits. ., _ . al ee is not only selling its finished products globally, but more important, the goods and, e i, , duction is organised in increasingly complex, ji lobally. As 4 result, pro:, services are produced 9, om tries, Interlinking Production across Countr, , ion where it is close to the markets; where there is skilled and unskilled, (i) MNCs setup ee costs; and where the availability of other factors of production is, labour available 4, , assured., , (ii) The money cnet, , is called invest ‘ocalorn pany of such joint production is two-fold. First, MNCs can provide, (iii) The benefit to the ‘al investments, like buying new machines for faster production. Second,, , money for ae vo with them the latest technology for production., , i ri |, , MNCs might artnerships with local companies, by using the local companies for supplies,, (iv) By setting UP Pp ting with the local companies or buying them up, MNCs are exerting a strong, , by closely comPguction at these distant locations., , nm, , J Integration of Markets, , rtunity for the producers to 7, , reates an opportu reach beyond the do:, , () Foreig” me their own countries. y mestic markets,, ie., ma!, , nt to buy assets such as land, building, machines and other equipment, is sPtnvestment made by MNCs is called foreign investment., ent., , ® Foreign Trade a”, , gell their produce not only in markets located withi, (ii) produce’s Cr rkets located in other countries of the world. SUPERS NS ony also, com
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(iii) For the buyers, import of goods produced in another country is one way of expanding the, choice of goods beyond what is domestically produced., , (iv) Foreign trade thus results in connecting the markets or integration of markets in different, countries., Factors that have Enabled Globalisation, (i) Technology, (a) Rapid improvement in technology has been one major factor that has stimulated the, globalisation process., (b) Even more remarkable have been the developments in information and communication, technology., (ji) Liberalisation of foreign trade and foreign investment policy, (a) Tax on imports is an example of trade barrier. It is called a barrier because some restriction, has been set up. Governments can use trade barriers to increase or decrease (regulate), , foreign trade and to decide what kinds of goods and how much of each, should come into, the country., , (b) The Indian government, after Independence, had put barriers to foreign trade and foreign, investment. This was considered necessary to protect the producers within the country, from foreign competition., , (c) Starting around 1991, some far-reaching changes in policy were made in India. Barriers, on foreign trade and foreign investment were removed to a large extent. This meant that, goods could be imported and exported easily and also foreign companies could set up, factories and offices here., , (d) Removing barriers or restrictions set by the government is what is known as liberalisation., @ World Trade Organisation, (i) World Trade Organisation (WTO) is one such organisation whose aim is to liberalise, international trade., , (ii) Started at the initiative of the developed countries, WTO establishes rules regarding, international trade, and sees that these rules are obeyed. Nearly 160 countries of the world, are currently members of the WTO (as on June 2014)., , (iii) Though WTO is supposed to allow free trade for all, in practice, it is seen that the developed, countries have unfairly retained trade barriers., , (iv) WTO rules have forced the developing countries to remove trade barriers., , IMPORTANT TERMS, , © Globalisation: It is a process of international integration arising from the interchange ot world, views, products, ideas and other aspects of a culture., , @ Multinational Corporation (IMNC): An enterprise operating in several countries but managed, from one country or group that derives a quarter of its revenue from operations outside of its, home country is considered to be a multinational corporation., , © Investment is the purchase of goods that are not consumed today but are used in the futur, , create wealth. ,, e Foreign Investment is when a company or individual from one nation invests in assets or owners! 1p, , stakes of a company based in another nation., , e to
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rl, , pomestic Market: It refers to an internal market or domesti j, ' mestic t, of goods, services and securities within a single country. ic trading. It is the supply and demand, , tei ek rds Technology is an extended term for information technology (IT), which stresses the role of unified communications and the integration of telecommunications., , ¢ Liberation: It refers to laws or rules being liberalised or relaxed by a government., , ¢ Foreign Tr ade is basically trade between two different countries of the world. It is also known as, international trade., , e Trade Barrier: They are mainly measures that are taken by the government or public authorities to, make imported goods or services less competitive than locally produced goods and services. Not, everything that prevents or restricts trade can be characterised as a trade barrier., , ® World Trade Organisation is the only global international organisation dealing with the rules of, trade between nations. At its heart are the WTO agreements, negotiated and signed by the bulk, of the world's trading nations and ratified in their parliament., , GDP is a monetary measure of the market value of all final goods and, , ® Gross Domestic Product services produced in a period., , esi ESTIONS, , 1. What do you understand by Gl, , Ans, Globalisation in today's world has come to imp, economy of a country with the economes of ol, trade, capital and movement of persons across borders., , It also includes —, (i) Export and impor, (ii) Migration of peop, , e in foreign trade., utting barriers to foreign trade and foreign investment by the, , obalisation? Explain in your own words., , ly many things. It is a process of integrating the, ther countries under conditions of free flow of, , t of techniques of production., , Je from one country to another., , (ii) Increas', the reasons for p', , Why did it wish to remove these barriers?, , 2. What were st, Indian government?, , Ans. Barriers to foreign wa, , the domestic producer’, come up in the 1950s an (, been a hard blow on the grow!, , imported., , n investment were put by the Indian government (o protect, from foreign competition, especially when industries had just begun to, 1960s. During this time, the competition from the imports would have, ng industries. Therefore, India allowed only essential goods to be, , de and foreig, , e changes 1? the Policy, the government decided to remove these barriers, But in Is veemed 25 the time, when the domestic producers were ready to compete with foreign, because it © was also supported by the powerlul international organisadon,, , industries- This d ;, jpility in labou, , ecisioD, laws help companies?, , , , d flex, . ow woul ‘ slegontt a . a, 3. F anies tO sustain themselves in competition and progress, flexibility in labour plays a, com ws, any heads ca, Ans. For ©? a : i rompany heads can negotiate wages and terminate, i rT a et conc s. This es a % . :, mae yment depend idions. This results in an increase in the company's, emplo ‘, P titivenes*, , compe
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4. What are the various ways in which MNC’s set up, control or produce in other countries?, Ans. The way are:, , () MNCsset up productions where itis close to the markets, where there is skilled and Unskilleq, labour available at low costs, and where the availability of other factors of Production jg, assured,, , (i) In addition MNGs might look for government policies that look after their interests,, , (iit) MNC set up production jointly with some of the local companies of these countries, But the, , Most common route for MNC investments is to buy up local companies and then to expand, production,, , (wv) Large MNGs in developed countries place orders for production with small producers,, Garments, footwear, sports items are examples of industries where production is carried, out by a large number of small producers around the world., , v) The products are supplied to the MNCs, which then sell these under their own brand, names to the customers., , Why do developed countries want developing countries to liberate their trade and investment?, What do you think should the developing countries demand in return?, Ans. Developed countries want developing countries to liberate their trade and investment because, , the MNCs belonging to the developed countries can set up factories in less-expensive developing, , nations and could increase their own profits. It would be beneficial for them as the manufacturing, price would be lower but the sales price would remain the same., , In my opinion, the developing countries should demand for some sorts of protection of domestic, , producers against competition from imports in return. Also, charges should be levied on MNCs, planning to set base in developing countries., , “The impact of globalisation has not been uniform,” Explain with examples., , [CBSE 2020 (32, , , , Ans. The impact of globalisation has not been uniform”:, , (i) Among producers and workers, the impact of globalisation has not been uniform. MNCs, have been interested in industries such as cell phones, automobiles, electronics, soft drinks., fast food or services such as banking in urban areas. These products have a large number, of well-off buyers., , (it), , (iti), (ww), , In these industries and services, new jobs have been created., , Local companies supplying raw materials, etc, to these industries have prospered., , i . eased, Several of the top Indian companies have been able to benefit from the increase’, competition., , isati sationals, (v) Globalisation has enabled some large Indian companies to emerge as multination®, themselves-Tata Motors (automobiles), Infosys (IT),, isati 5 a cred + se ices:, (vi) Globalisation has also created new Opportunities for companies providing servi, particularly those involving in IT., , NEGATIVE impacts , (vii) Small manufacturers have been hit hard due lo competition., , (viii) Several of the units have shut down rendering many wi, , orkers jobless. soi, (ix) Competition and Uncertain Employment Glo, , i etl, i A balization and the pressure of comp:, have substantially changed the lives of worker., ‘To be assessed as whole.
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>, , 7, , Ans., , w, , Ans., , , , , , How has liberalisation of trade and investment policies helped the globalisation process?, , Earlier, several developing countries had placed barriers and restrictions on imports and, investments from abroad to protect domestic production. Nevertheless, to improve the quality of, domestic goods, these countries have, therefore, removed those barriers. Thus, eralisation is, leading to a further spread of globalisation because now business companies are allowed to make, their own decisions on imports and exports. This has led to a deeper integration of national, economies into one business as a whole., , , , , , tries? Explain +, , How has foreign trade been integrating markets of different coun tk, [CBSE 2016 (32/1/1,, , examples., , , , , , , , CO a ee, bia ace sega ba, he And ip oe sbi >} ——], paddies haute greater choices avoilamie ~, , , , , , , , , , pep ee a at Saal, 7 parka Ly —tirimaA ,Ossembles, Gren pe , |
