DEVELOPMENT

DEVELOPMENT IS DEFINED AS PEOPLE’S ECONOMIC GROWTH ALONG WITH GROWTH OF

BASIC NEEDS LIKE EDUCATION, HEALTH, LIFESTYLE, ETC.

“DIFFERENT PERSONS CAN HAVE DIFFERENT DEVELOPMENTAL GOALS AND TWO,

WHAT MAY BE DEVELOPMENT FOR ONE MAY NOT BE DEVELOPMENT FOR THE
OTHER. IT MAY EVEN BE DESTRUCTIVE FOR THE OTHER.”

I. For A Women Development May Be Freedom And Equal Rights And

Opportunities

II. For A Rich Farmer Development May Be Modern Farming Tools , Good
Harvest And Earning Pro ts.

III. For A Poor Homeless Development May Be Shelter And Food.

IV. Thus From This One Thing Is Clear That Different People Have Different
Desires That May Be Con icting.

NATIONAL DEVELOPMENT

It Is De ned As A Country’S Ability To Enhance The Living Standards

Of Its Residents

Improvement In Peoples Living Standards Can Be Done By Providing Basic

Things To Citizens Like Food, Education, Social Service, Medical Aid, Etc And
Increase Per Capita Income
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“IT IS VERY IMPORTANT TO KEEP IN MIND THAT DIFFERENT PERSONS COULD HAVE
DIFFERENT AS WELL AS CONFLICTING NOTIONS OF A COUNTRY’S DEVELOPMENT.”

Different people have different goals for development which may development
for one and may be con icting for another because national development comes
with the development of a nation where as social development, cultural
development and economic development can be development for one but
disasters for another.

“FOR COMPARING COUNTRIES, THEIR INCOME IS CONSIDERED TO BE ONE OF THE

MOST IMPORTANT ATTRIBUTES.”

AVERAGE INCOME

Total Income Of The Country Divided By Its Total Population. The Average
Income Is Also Called Per Capita Income.
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WORLD DEVELOPMENT REPORT

In World Development Reports, Brought Out By The World Bank, This Criterion
Is Used In Classifying Countries:

1. Countries With Per Capita Income Of US$ 49,300 Per Annum And Above In
2019, Are Called Rich Countries

2. Those With Per Capita Income Of US$ 2,500 Or Less Are Called Low-
Income Countries.

3. India Comes In The Category Of Low Middle Income Countries Because Its
Per Capita Income In 2019 Was Just US$ 6700 Per Annum.

4. The Rich Countries, Excluding Countries Of Middle East And Certain Other
Small Countries, Are Generally Called Developed Countries.

OTHER THAN INCOME THERE ARE MANY OTHER CRITERIA WHICH ARE RESPONSIBLE FOR
THE DEVELOPMENT:

a. Security

b. Freedom

c. Respect From Others

d. Equal Treatment
“FOR DEVELOPMENT PEOPLE LOOK AT MIX OF GOALS”

It Is True That For Development, People Look At A Mix Of Goals, E.G. :

(I)If Women Are Engaged In Paid Work, Their Dignity In The Household And
Society Increases. So Dignity Is An Important Goal.

(II) However, It Is Also The Case That If There Is Respect For Women There
Would Be More Sharing Of Housework And Greater Acceptance Of Women
Working Outside.

(III) A Safe And Secure Environment May Allow More Women To Take Up A
Variety Of Jobs Or Run A Business. These Are Goals Other Than Income. Hence
Development Goal Is Not Only For Better Income But For Other Important
Things In Life.
Q. ACCORDING TABLE 1.3 AND TABLE 1.4 WE CAN SAY HARYANA HAS MORE
PER CAPITA INCOME BUT THE LITERACY RATE OF KERALA IS MORE WHY IS IT SO?

THE REASON IS —“ MONEY IN YOUR POCKET CANNOT BUY ALL THE GOODS AND
SERVICES THAT YOU MAY NEED TO LIVE WELL.”

1. Money in your pocket cannot buy pollution free environment

2. Money in your pocket cannot protect you from infections diseases

3. In rural areas many girls can’t attend high school due to lack of facilities

4. Kerala has low infant morality rate because it has adequate provision of
basic health and educational facilities

5. Public distribution system (PDS) also functions well thus, health and
nutritional status of people over state is certainly likely to be better.
(PDS - it is a system which is required to maintain food security in a nation)

6. By all this we can conclude that there is a role of community which can
control these above factors not money.

BMI

BODY MASS INDEX IS DEFINED AS THE RATIO OF THE WEIGHT IN KG BY SQUARE OF

HEIGHT THAT NUMBER YOU GET IS BMI.
Q. SUGGEST ANY THREE WAYS TO MANAGE BODY MASS INDEX

1. Balance Diet

2. Physical Exercise

3. Don’t Skip Breakfast And Divide Your Meals Into Smaller Portions

IMPORTANT KEYWORDS

HUMAN DEVELOPMENT REPORT(HDR)

Human Development Report Was Published By UNDP (UNITED NATIONS

DEVELOPMENT PROGRAMME) Which Compares Countries Based On :

1. The Educational Levels Of People

2. Health Status

3. Per Capita Income

From Table 1.6 (Ncert Pg 13) Two Thing Are Clear

1. Sri Lanka Is Much Ahead Of India In Every Respect

2. Nepal And Bangladesh Have Low Per Capita Income Than In India But
Higher Life Expectancy
SUSTAINABILITY OF DEVELOPMENT

Example 1. Depletion Of Groundwater

1. Groundwater Level Is Under Serious Threat

2. 300 Districts Reported A Ground Water Decline Of 4 Meters In Past 20

Years

3. One third of the country has been over using groundwater

4. In 25 years 60% of the country may be over using it.

5. Over use in Punjab, Western UP, Plateau areas of Central and South India.

Q. Why ground water is overused?

Groundwater is highly overused for the reasons listed:

1. Because of the vast and increasing population and the resultant higher
demand for and unequal access to water.

2. Water supplies are being over-exploited to increase irrigated regions and dry
season cultivation to promote increased demand for food grains for huge
populations.

3. There seems to be a system of own groundwater pumping equipment in

apartment complexes or communities in the cities to ful l water requirements.

Q. Can there be development without overuse?

Yes it is possible to have development without overuse. This is

possible if we practice sustainable development which involves using of
resources judiciously.
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Example 2. Exhaustion of natural resources

• The reserves would last only 53 years more.

• This is for the world as a whole.

• However, different countries face different situations.

• Countries like India depend on importing oil from abroad because they do not
have enough stocks of their own.

• If prices of oil increase this becomes a burden for everyone.

• There are countries like USA which have low reserves and hence want to
secure oil through military or economic power.

Q. Is crude oil essential for the development process in a country?

Discuss.

Yes, crude oil is essential for the development of a country as it provides the
base of industrial advancement. 97% of the energy required for transportation is
provided by crude oil.

Q. India has to import crude oil. What problems do you anticipate

for the country looking at the above situation?

The problems related to import of crude oil in India are as follows :

i. Value of rupee plays very important role in world market.
ii. Imports are expensive than exports (India exports petroleum to other
countries).
iii. Rising crude oil prices.
 SECTORS OF INDIAN

ECONOMY
THERE ARE THREE SECTORS OF INDIAN ECONOMY:

1. PRIMARY SECTOR : ACTIVITIES THAT ARE DIRECTLY UNDERTAKEN BY USING

NATURAL RESOURCES. WHEN WE PRODUCE GOOD BY EXPLOITING
NATURAL RESOURCES IT IS AN ACTIVITY OF PRIMARY SECTOR. EX-
SUGARCANE, COTTON , JUTE, RUBBER, ETC.

2. SECONDARY SECTOR: SECONDARY SECTOR COVERS ACTIVITIES IN WHICH

NATURAL PRODUCTS ARE CHANGE INTO OTHER FORMS THROUGH WAYS
OF MANUFACTURING. EX- SUGAR, CLOTHES, JUTE BAGS, CARPETS,ETC.

3. TERTIARY SECTOR: ACTIVITIES WHICH HELP PRIMARY AND SECONDARY

SECTOR COMES UNDER THE CATEGORY OF TERTIARY SECTOR OR SERVICE
SECTOR. THESE ACTIVITIES BY THEMSELVES DO NOT PRODUCE GOODS BUT
THEY PROVIDE SOME KIND OF SUPPORT TO THE PRODUCTION PROCESS.
EX-TEACHERS ,LAWYERS, DOCTORS, MARKETS, TRANSPORT,
COMMUNICATION, BANKING ,ETC.
COMPARING THREE SECTORS

HOW DO WE COUNT GOODS AND SERVICES AND KNOW THE TOTAL

PRODUCTION IN THE SECTOR?

TO GET AROUND THIS PROBLEM ECONOMICS SUGGEST, THAT THE VALUES OF

GOODS AND SERVICES SHOULD BE USED RATHER THAN ADDING UP THE ACTUAL
NUMBERS

PRECAUTIONS TAKEN BEFORE CALCULATING THE GDP:

1. NOT EVERY GOOD OR SERVICE THAT IS PRODUCED AND SOLD NEEDS TO

BE COUNTED.

2. THE VALUE OF ONLY FINAL GOODS AND SERVICES ARE TO BE INCLUDED

AND CALCULATED.

3. VALUE OF INTERMEDIATE GOODS AND SERVICES ARE NOT TO BE INCLUDED

AND CALCULATED.

GDP

THE VALUE OF FINAL GOODS AND SERVICES PRODUCED IN EACH SECTOR

DURING A PARTICULAR YEAR PROVIDES THE PRODUCTION OF THE SECTOR FOR
THE YEAR.

THE SUM OF PRODUCTION AND THE THREE SECTORS GIVES WHAT IS CALLED
GROSS DOMESTIC PRODUCT OF A COUNTRY.

HISTORICAL CHANGE IN SECTORS:

1. INITIALLY, MOST PEOPLE WERE DEPENDENT ON PRIMARY SECTOR.

2. WITH TIME, FACTORIES CAME UP, THE SECONDARY SECTOR DEVELOPED
AND EMPLOYED MORE PEOPLE.

3. NOWADAYS, TERTIARY SECTOR IS MOST IMPORTANT SECTOR. MOST

WORKING PEOPLE ARE EMPLOYED IN SERVICE SECTORS.

REASONS BEHIND THE RISING IMPORTANCE OF TERTIARY SECTOR:

I. SOME SERVICES ARE BASIC SERVICES SUCH AS - HOSPITALS, EDUCATIONAL

INSTITUTIONS, BANKING,DEFENCE,TRANSPORT , POLICE STATIONS, COURTS,
ETC. HAS NOWADAYS BECOME BASIC NEED OF PEOPLE AND IN A DEVELOPING
COUNTRY, THE GOVERNMENT HAS TO TAKE RESPONSIBILITY FOR THE
PROVISION OF THESE SERVICES.

II. THE DEVELOPMENT OF AGRICULTURE AND INDUSTRY LEADS TO THE

DEVELOPMENT OF SERVICES SUCH AS TRANSPORT, TRADE, STORAGE.

III. AS INCOME LEVELS RISE, CERTAIN SECTIONS OF PEOPLE START

DEMANDING MANY MORE SERVICES LIKE EATING OUT, TOURISM, SHOPPING,
PRIVATE HOSPITALS, PRIVATE SCHOOLS, PROFESSIONAL TRAINING ETC.

IV. OVER THE PAST DECADE OR SO, CERTAIN NEW SERVICES SUCH AS THOSE
BASED ON INFORMATION AND COMMUNICATION TECHNOLOGY HAVE
BECOME IMPORTANT AND ESSENTIAL. THE PRODUCTION OF THESE SERVICES
HAS BEEN RISING RAPIDLY.
WHY THERE HAS BEEN NO SHIFT IN THE SHARE OF SECTORS IN
EMPLOYMENT AS IT HAS BEEN SHARE OF SECTORS IN GDP?

● IT IS BECAUSE NOT ENOUGH JOBS WERE CREATED IN THE SECONDARY AND

TERTIARY SECTORS.

● EVEN THOUGH INDUSTRIAL OUTPUT OR THE PRODUCTION OF GOODS WENT

UP BY MORE THAN NINE TIMES DURING THE PERIOD, EMPLOYMENT IN THE
INDUSTRY WENT UP BY AROUND THREE TIMES.

● WHILE PRODUCTION IN THE SERVICE SECTOR ROSE BY 14 TIMES,

EMPLOYMENT IN THE SERVICE SECTOR ROSE AROUND FIVE TIMES.

UNDEREMPLOYMENT OR DISGUISED UNEMPLOYMENT

THE UNEMPLOYMENT IS HIDDEN IN CONTRAST TO SOMEONE WHO DOES NOT

HAVE A JOB OR IS CLEARLY VISIBLE AS UNEMPLOYED. IT IS ALSO KNOWN AS
DISGUISED UNEMPLOYMENT.

HOW TO CREATE MORE EMPLOYMENT?

1. PROVIDING IRRIGATION FACILITIES: IT WILL HELP IN REDUCTION OF

DISGUISED UNEMPLOYMENT, EMPLOYMENT IN CONSTRUCTION WORK.

2. INVESTMENT IN TRANSPORTATION AND STORAGE FACILITIES: LEAD TO

EMPLOYMENT TO FARMERS AND OTHERS INVOLVED IN TRANSPORT, OR
TRADE

3. AVAILABILITY OF CHEAP CREDIT/LOANS: IT WILL BE USEFUL IN BUYING

EQUIPMENT AND STARTING NEW WORK

4. IDENTIFY, PROMOTE AND LOCATE SMALL SCALE INDUSTRIES.

MGNREGA: MAHATMA GANDHI NATIONAL RURAL EMPLOYMENT GUARANTEE ACT
OF 2005

THE CENTRAL GOVERNMENT IN INDIA MADE A LAW IMPLEMENTING THE

RIGHT TO WORK IN ABOUT 625 DISTRICTS OF INDIA.

● UNDER MGNREGA 2005, ALL THOSE WHO ARE ABLE TO, AND ARE IN
NEED OF, WORK IN RURAL AREAS ARE GUARANTEED 100 DAYS OF
EMPLOYMENT IN A YEAR BY THE GOVERNMENT.

● IF THE GOVERNMENT FAILS IN ITS DUTY TO PROVIDE EMPLOYMENT, IT WILL

GIVE UNEMPLOYMENT ALLOWANCES TO THE PEOPLE.

● THE TYPES OF WORK THAT WOULD IN FUTURE HELP TO INCREASE THE

PRODUCTION FROM LAND WILL BE GIVEN PREFERENCE UNDER THE ACT.

ORGANISED SECTOR V/S UNORGANISED SECTOR

PROBLEMS WITH UNORGANISED SECTOR

ORGANISED SECTOR IS THE MOST DESIRABLE SECTOR, BUT THE EMPLOYMENT

OPPORTUNITIES IN ORGANISED SECTOR HAD BEEN EXPANDING VERY SLOWLY
THATS WHY PEOPLE ARE MOVING TO UNORGANISED SECTOR WHICH LED TO
EXPLOITATION OF WORKER. THUS, WORKER NEED PROTECTION.
 PUBLIC SECTOR V/S
PRIVATE SECTOR

IMP. PYQS

Q. EXPLAIN THE INTERDEPENDENCY OF PRIMARY, SECONDARY AND TERTIARY SECTOR

OF AN ECONOMY.

i) The primary sector provides the base for all economic activities as it involves
production at the most basic level i.e, through the exploitation of natural resources.
eg. agriculture, horticulture, sheries, forestry, mining, etc.
ii) the goods that are produced are converted into processed forms through
manufacturing. This is the secondary sector. This sector depends upon primary sector
for raw materials and in turn, provides a market for the producers of the primary
sector.
iii) The tertiary or service sector provides support to the process of production. It
includes transportation, storage, marketing and sale of products. Other services
include banking and communication. These sectors are necessary to aid production
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while themselves deriving their sustenance from it. Thus, it can be concluded that all
three sectors of the economy are interdependent.

Q. WHY SHOULD WE BE WORRIED ABOUT UNDEREMPLOYMENT? IN WHAT WAYS CAN

ONE INCREASE EMPLOYMENT FOR PEOPLE?

We should worry about underemployment, as it ultimately leads to poverty. If a

person has no job, he/she cannot be able to ful ll their basic needs, and results in a
poor standard of living.
The following are some causes of underemployment
• Underemployment can result from a recession and the cyclical unemployment
that follows.
• Technological progress has also resulted in underemployment.
• Trends change frequently, and not every employee can keep up with them all of
the time.
• Underemployment is sometimes caused by resistance to change.
Impact of Unemployment
Unemployment in any nation has the following effects on the economy:
• The problem of unemployment gives rise to the problem of poverty.
• The government suffers an extra borrowing burden because unemployment
causes a decrease in the production and less consumption of goods and services
by the people.
• Unemployed persons can easily be enticed by antisocial elements. This makes
them lose faith in the democratic values of the country.
• People unemployed for a long time may indulge in illegal and wrong activities
for earning money, which increases crime in the country.

Q. COMPARE AND CONTRAST THE CHANGES IN INDIA WITH THE PATTERN THAT WAS
OBSERVED FOR DEVELOPED COUNTRIES. WHAT KIND OF CHANGES BETWEEN SECTORS
WERE DESIRED BUT DID NOT HAPPEN IN INDIA?

In case of developed countries, the evolution of the economy happened

on the most logical pattern. Growth in the primary sector was followed
by a growth in the secondary sector. After that, the growth of the
tertiary sector followed.

The employment generation also kept pace with related changes in

different sectors. The case of India is somewhat different.
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 The growth of the primary sector was not followed by the growth of the
secondary sector, rather it was the tertiary sector which took the lead.
But employment generation in either the secondary or tertiary sector
could not keep pace.

Still a larger number of people depend on the primary sector for

employment; compared to the other two sectors. This shows a disturbing
trend because the primary sector is best with the problem of hidden
unemployment.

Q. HOW WOULD INCOME AND EMPLOYMENT INCREASE IF FARMERS WERE PROVIDED

WITH IRRIGATION AND MARKETING FACILITIES?

IF IRRIGATION AND MARKETING FACILITIES ARE AMPLY PROVIDED, BOTH INCOME AND
EMPLOYMENT CAN INCREASE AS -

5. A farmer with irrigation infrastructure may be able to harvest a second crop,

such as wheat, which will help provide jobs for more people and raise revenue.
6. With marketing, farmers can also sell their produce in nearby and even further
areas thus generating income. The availability of marketing facilities would aid
farmers in obtaining a fair price for their products.
7. An increase in crops means more storage and more transportation, this will in
return create jobs in industries like transportation and storage.
8. Assuming a new dam is built and irrigation canals are completed, this might
signi cantly increase employment within the agriculture sector and help solve the
underemployment issue.
9. Further, with proper marketing facilities, farmers can be provided fertilisers/
pesticides for better growth of harvest. This harvest can be later sold in bulk.

Q. FOR EACH OF THE SECTORS THAT WE CAME ACROSS IN THIS CHAPTER WHY SHOULD
ONE FOCUS ON EMPLOYMENT AND GDP? COULD THERE BE OTHER ISSUES WHICH
SHOULD BE EXAMINED? DISCUSS.

For each of the sectors that we came across in this chapter, one should focus on
employment and GDP because these determine the size of a country’s economy. A
focus on employment and GDP helps determine two important things—per capita
income and productivity. Hence, in each of the three sectors, employment rate and
status as well as its contribution to the GDP help us understand how that particular
sector is functioning and what needs to be done to initiate further growth in it.
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 Q. “TERTIARY SECTOR IS NOT PLAYING ANY SIGNIFICANT ROLE IN THE DEVELOPMENT
OF THE INDIAN ECONOMY.” DO YOU AGREE? GIVE REASONS IN SUPPORT OF YOUR
ANSWER.

No, I do not agree with the statement that tertiary sector is not playing any
signi cant role in the development of Indian economy. The tertiary sector has
contributed vastly to the Indian economy, especially in the last two decades. In the
last decade, the eld of information technology has grown, and consequently, the
GDP share of the tertiary sector has grown from around 40% in 1973 to more than
50% in 2003.

Q. “THE PROBLEM OF UNDEREMPLOYMENT IS NOT CONFINED ONLY TO

AGRICULTURE”. SUPPORT THE STATEMENT WITH EXAMPLES.

The problem of agriculture is not con rmed to agriculture only. It can also happen in
other sectors too:

• For example: There are thousands of casual workers in the service sector in urban
areas who search for daily employment. They are employed as painters, plumbers,
repair person and other odd jobs. Many of them don’t nd jobs everyday.

• Similarly, we see other people of service sector on the street pushing a cart or
selling something where they may spend the whole day but earn very little. They
are doing such work only due to the lack of better employment opportunities.

• The unorganised sector includes small and scattered units outside governmental
control. Employment is not secure. People can ask to leave without any reason.
When there is less work, such as during some reasons, some people may be asked
to leave.

Q.EXPLAIN ANY THREE WAYS TO SOLVE THE PROBLEM OF UNDEREMPLOYMENT.

Underemployment is a situation where there is under utilization of labour, either they are
not in job where they can use their skill or they do not get full time job. these methods
may help to solve the problem of underemployment-
• Problem of underemployment can be solved by offering right job to the right person.
if highly quali ed person opts for job which does not need his his quali cations then
he will remain underemployed.
• By creating new job opportunities so that the part time workers who are looking for
full time job may get such job.
• Opening new industries which will solve both the the above problem.
• By implementing new programmes such as MGNREGA.
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Globalisation and the Indian
Economy
PRODUCTION ACROSS COUNTRIES

BEFORE AFTER
Production was largely organised within Coming up of companies called
countries Multinational Corporations (MNCs)

Raw material, food stuff and nished Owns or controls production in more than
products were traded one nation

Trade was the main channel connecting

distant countries

But what are MNCs?

A MNC is a company that owns or controls production in more than

one nation. MNCs set up of ces 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 pro ts.

THIS IS HOW A MNC WORKS

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 CHINA MEXICO AND INDIA
EASTERN EUROPE
Advantage of being a Closeness to the markets Skilled engineers
cheap manufacturing in the US and Europe English speaking youth
location.
This Reduces The Cost

INTERLINKING PRODUCTION ACROSS COUNTRIES

Q. What are the factors MNCs consider before setting up any
production units?

1. Is it close to the markets

2. Is there skilled and unskilled labour available at low cost

3. Whether the availability of other factors of production is assured

4. MNCs might look for government policies that look after their interests.

Having assured of these conditions MNCs invest in 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.

Ways through which MNCs set up their production are:

I. MNCs set up production jointly with some of the local companies

of these countries

Bene ts to local companies:

a. Get money for additional investments, like buying new machines for faster
production.

b. MNCs might bring with them the latest technology for production.
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II. MNCs buy up local companies and then expand production

To take an example,

Cargill Foods, a very large American MNC, has bought over smaller
Indian companies such as Parakh Foods. Parakh Foods had built a
large marketing network in various parts of India, where its brand
was well-reputed. Also, Parakh Foods had four oil re neries, whose control
has now shifted to Cargill. Cargill is now the largest producer of edible oil in
India, with a capacity to make 5 million pouches daily.

III. Large MNCs in developed countries please orders for

production with small producers

FOREIGN TRADE AND INTEGRATION OF MARKETS

1. Advantage of foreign trade to producers?

Foreign trade creates opportunities for the producers to reach beyond the
domestic markets
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 Producers can sell their products not only in markets located within the country
but can also compete in the markets located in the other countries of the
world.

Cost of production gets reduced

2. Advantages of foreign trade to buyers?

Import of goods produced in another country is one way of expanding the

choice of goods beyond what is domestically produced.

Competition among producers reduces the price and quality improves.

 WHAT IS GLOBALISATION?
Globalisation is this process of rapid integration or interconnection between
countries.

FACTORS THAT HAVE ENABLED GLOBALISATION

Technology

1. More the improvement in transportation technology lead to much faster

delivery of goods across long distances at lower cost

2. More the development in information and communication

technology lead to the development of telecommunication, computers and
internet which helps the world to connect with remote areas with
satellite communication devices. Internet also allows us to send
instant electronic mail (e-mail) and talk (voice-mail) across the
world at negligible costs.
Liberalisation of foreign trade and foreign investment policy

Tax on import is an example of trade barrier, 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.

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.

Starting around 1991, some far- reaching changes in policy were made in India.
The government decided that the 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. This decision was supported by
powerful international organisations.

Thus, 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 of ces
here.

LIBERALISATION ▶
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LET’S SUMMARISE

IMPACT OF LIBERALISATION? FOREIGN TRADE, FOREIGN

INVESTMENT

● GOODS COULD BE IMPORTED AND EXPORTED EASILY AND ALSO

FOREIGN COMPANIES COULD SET UP FACTORIES AND OFFICES HERE.

● BUSINESSES ARE ALLOWED TO MAKE DECISIONS FREELY ABOUT WHAT

THEY WISH TO IMPORT OR EXPORT.

● THE GOVERNMENT IMPOSES MUCH LESS RESTRICTIONS THAN BEFORE

AND IS THEREFORE SAID TO BE MORE LIBERAL.

WORLD TRADE ORGANISATION

What is WTO?

● An organisation whose aim is to liberalise international trade.

● It is an initiative of the developed countries.

● WTO establishes rules regarding international trade, and sees that these rules
are obeyed.

● About 164 countries of the world are currently members of the WTO as on
2016.

IMP.

Though WTO is supposed to allow free trade for all, in practice, it is seen that
the developed countries have unfairly retained trade barriers. On the other
hand, WTO rules have forced the developing countries to remove trade barriers.
An example of this is the current debate on trade in agricultural products.
Explanation
AS A RESULT,

Due to this massive money that they receive, US farmers can sell the farm
products at abnormally low prices. The surplus farm products are sold in
other country markets at low prices, adversely affecting farmers in these
countries.

∴ Farmers in developing countries are facing problem, this is the point of debate
on trade practices in WTO.

IMPACT OF GLOBALISATION IN INDIA

Positive impact of globalisation on producers?

1. MNCs have increased their investments in India

MNCs have been interested in industries such as cell phones, automobiles,

electronics, soft drinks, fast food or services such as banking in urban areas.

So due to this:

● In these industries and services, new jobs have been created.

● Local companies supplying raw materials, etc. to these industries have

prospered.

2. Several of the top Indian companies have been able to bene t

from the increased competition

● Some have gained from successful collaborations with foreign companies.

● They have invested in newer technology and production methods and raised
their production standards.
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3. Globalisation has enabled some large Indian companies to
emerge as multinationals themselves.

Example:

Tata Motors (automobiles), Infosys (IT), Ranbaxy (medicines), Asian Paints

(paints), Sundaram Fasteners (nuts and bolts)

4. Globalisation has also created new opportunities for companies

providing services.

● Example of IT services.

● A host of services such as data entry, accounting, administrative tasks,

engineering are now being done cheaply in countries such as India and are
exported to the developed countries.
 Negative impact of globalisation?

1. Small producers: compete or perish

Batteries, capacitors, plastics, toys, tyres, dairy products, and vegetable oil are
some examples of industries where the small manufacturers have been hit hard
due to competition.

Several of the units have shut down leaving many workers jobless.

2. Competition and uncertain employment

MNCs try to cut workers cost and look for the cheapest supplier to maximise
pro ts.

Workers are hired on temporary basis

Workers have to work long working hours

Vocals are paid very low wages

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 THE STRUGGLE FOR A FAIR GLOBALISATION
How to make globalisation more fair? ………………..5 marks

● The government can ensure that labour laws are properly implemented and
the workers get their rights.

● It can support small producers to improve their performance till the time they
become strong enough to compete.

● The government can use trade and investment barriers.

● Developing countries can negotiate at the WTO for ‘fairer rules’.

● Developing countries can come together to ght against the developed

countries in the WTO.

Result of fair globalisation:

Fair globalisation would create opportunities for all, and also ensure that the
bene ts of globalisation are shared better.
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