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Chapter - 4 Globalisation

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47 views3 pages

Chapter - 4 Globalisation

Uploaded by

Manishka Chhillar
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Chapter -4

Globalisation

Q1. What do you understand by globalisation? Explain in your own words.


Globalisation is defined as the integration between countries through foreign trade and
foreign investments by multinational corporations (MNCs). It includes:
(i) Increase in foreign trade
(ii) Export and import of techniques of production.
(iii) Flow of capital and finance from one country to another
(iv) Migration of people from one country to another.

Q2. What was the reason for putting barriers to foreign trade and foreign investment
by the Indian government? Why did it wish to remove these barriers?
(1) The government had put restrictions on the import of goods to protect domestic producers
from foreign competition because industries were coming up in the 1950s and 1960s, and
competition from imports at that stage would not have allowed these industries to come up.
Thus, the government allowed imports of only essential items such as machinery, fertilizers,
and petroleum. These restrictions helped to attain technological capability within the country.
(2) Starting around 1991, the government wished to remove the barriers due to reasons
as mentioned below:
 India had attained technological capability.
 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.
 There would be an unrestricted exchange of capital, technology, and experience
between India and other countries of the world.
Thus, barriers to foreign trade and foreign investment were removed. Now goods could be
imported and exported easily. The government reduced taxes on imported goods, and encour-
aged investors from abroad to invest in India.

Q4. What are the various ways in which MNCs set up, or control, production in other
countries?
1. At times MNCs set up production jointly with local companies because the local
company has knowledge of the local business conditions. Moreover, the domestic
company has an established framework of business. MNCs provide money and latest
technology for production.
2. MNCs buy up local companies to expand production. MNCs with huge wealth can quite
easily do so. Some MNCs start as an independent entity right from the beginning. While
some of the MNCs produce entirely for the local market, many others produce for the
exports markets.
3. MNCs in developed countries place orders for production with small producers of
developing countries for various products such as garments, footwear. These products are
supplied to the MNCs which sell them under their own brand names to the customers.
The MNCs decide their price, quality, delivery, and labour conditions for these distant
producers.
Q5. “The impact of globalisation has not been uniform.” Explain this statement.
OR
Q10. Supposing you find two people arguing: One is saying globalisation has hurt our
country’s development. The other is telling, globalisation is helping India develop. How
would you respond to these arguments?

The impact of globalisation has not been uniform as explained below:


(1) Positive impact :
1. Globalization has resulted in more choices for the consumers who now get better
quality and at lower prices several products.
2. This has improved the standard of living of people, particularly living in urban areas.
3. MNCs have increased their investments in developing countries like India in industries
such as cell-phones, automobiles, electronics, soft drinks, etc. As a result of it new
jobs have been created in developing countries.
4. Some local companies that supply raw materials to MNCs have also benefited.
5. Some local companies in countries like India have been able to invest in newer
technology and production methods. They are successful in raising their production
standards.
6. Globalisation has enabled some large companies such as Tata Motors, Infosys to
emerge as multi-national companies.
7. Companies providing services particularly in the field of information and communica-
tion technologies have also benefited by globalisation. Similar is the case in services
like data entry, accounting, administrative tasks and engineering.
(2) Negative impact: The impact of globalisation has been harmful too as mentioned
below:
1. Creation of special economic zones has disrupted the lives of people who are
displaced such as tribals. Sometimes to produce more electricity dams are constructed
and their land is submerged and the people are left without any job.
2. Flexibility in labour laws: Flexibility in labour laws is allowed by the government to
attract foreign investment. This has resulted in worsening the condition of workers
because they are appointed on a temporary basis to avoid payment of provident fund
and other facilities. No overtime is paid for extra hours of work. The workers are paid
low wages.
3. Effect on small producers: Globalisation has hit the small producers because they are
unable to compete with MNCs or the big producers or manufacturers. Several units
have been shut down rendering many workers jobless. In India, small industries which
employ about 20 million workers have been hit adversely.
4. From above description, it is clear that the impact of globalisation has not been
uniform. It has positive as well as a negative impact.

Q7. How has liberalisation of trade and investment policies helped the globalisation
process?
Answer: The liberalisation of trade and investment policies helped the globalisation process
because:
1. It has helped remove trade barriers.
2. It has made foreign trade and investment easier.
3. The choices of the buyers have also expanded, as now they get to choose products
manufactured by not only domestic companies but also foreign companies.
4. Competition among traders has resulted in the lower price of products.
5. Liberalisation has spread globalisation as the decision-making power of export and
import now lies with the businessmen themselves.

Q9. Globalisation will continue in the future. Can you imagine what the world would be
like twenty years from now? Give reasons for your answer.
Answer: Globalisation will continue in the future as well. Twenty years from now:
1. the production of goods will be more efficient, competition in the market will increase
and advancement in every field will be evident
2. the quality and quantity of goods produced will also increase
3. small industries and entrepreneurs will increase as more opportunities are provided to
them
4. the world will be more globally connected and integrated into one international
economy, if this process continues on a fair and equitable basis
5. trade and capital flows will increase alongside the mobility of labour.
6. world would undergo a positive change which will possess the following features—
healthy competition, improved productive efficiency, increased volume of output,
income and employment, better living standards, greater availability of information
and modern technology.

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