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    GLOBALISATION Ch4

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    SIMMI KUMARI

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    © All Rights Reserved
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    GLOBALISATION Ch4

    Uploaded by

    SIMMI KUMARI
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    GLOBALISATION_Ch4

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    3 views5 pages

    GLOBALISATION Ch4

    Uploaded by

    SIMMI KUMARI

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 5

    GLOBALISATION AND INDIAN ECONOMY

    Globalization refers to a process of integration of economies of different


    countries. In simple words, it refers to interconnection between countries.

    IMPACT OF GLOBALISATION

    (A) MERITS of GLOBALISATION

    1. Expansion of market- Due to Globalisation, there is a variety of goods


    available in the market. There are several options now to a single
    commodity. The market has transformed.
    2. Increase in Standard of Living- International competition requires
    standard quality goods at low prices to compete in the market. This has
    increased standard of living of domestic people also.
    3. Foreign Investment- Globalisation not only trade in goods & services but
    also in investments. It invites foreign companies and MNC to come and
    invest in the host country. This leads to increase in foreign exchange
    reserves.
    4. Technological development- Globalisation brings with it modern and
    advanced technology. This leads to technological development in a
    country.
    5. Helps in emergence of MNC- Globalisation enables some large scale
    companies to produce and trade globally. This helps in emerging them as
    MNCs.
    6. Employment Opportunities- Globalization helps in creating bumper
    employment opportunities in host countries as they do large scale
    production.

    1
    7. Healthy Competition- MNCs results in healthy and fruitful competition
    in the market by compelling the local firms to improve their efficiency in
    order to face competition from them.

    (B) DEMERITS OF GLOBALISATION

    1. Loss to small producers- Increased competition due to globalisation has


    proved to be unfavorable for small producers. Cheap imported goods
    replaced their domestically produced goods. It is too early for them to
    compete with these goods. Therefore, they perish.
    2. Uncertain Employment- Due to increased work and minimum labour costs,
    employers prefer to employ workers ‘flexibly’. They pay them on the basis
    of work done, not on regular basis. This kind of uncertain employment brings
    a lot of sufferings to the workers.
    3. Discard of Labour laws- To attract foreign investments; government has
    also allowed leniency in labour laws for some period of time. Employers do
    not obey labour laws and exploit their employees.
    4. Over exploitation of Natural resources- In order to maximize profits,
    MNCs put extra pressure on natural resources of host country.
    5. Creation of Monopoly- MNCs usually have a huge power to determine their
    own price, quality and market facilities. They dislike government
    interference and thus give rise to monopoly in the host country.

    PRODUCTION ACROSS COUNTRIES

    Globalization aims at not only selling goods and services globally but also
    producing them worldwide. This is done through Multi National Corporations
    (MNCs).

    2
    MULTI NATIONAL CORPORATION refers to a corporation whose
    ownership, management and control lies in the interest of more than one country.

    They have tremendous investment and excellent reputation in the market.

    HOW DO THEY OPERATE?

    They set up their production units (branches) where they get cheapest factors and
    resources. This enables them to minimize their costs and maximize their profits.

    INTERLINKING PRODUCTION ACROSS COUNTRIES

    There are many ways in which the MNCs are expanding their production &
    communicate with producers globally. These ares-

    1. Partnership with local companies


    2. Buying up loss going companies
    3. By placing orders for production with small producers.

    FACTORS AFFECTING GLOBALISATION

    The factors affecting globalisation are-

    1. TECHNOLOGY- Technological development in a country is the most


    important factor affecting globalisation. Greater the advanced technology in
    a country more will be the need of interconnecting with other countries. It
    includes Production Technology, Information and communication
    Technology and Transportation Technology.
    2. LIBERALISATION OF FOREIGN TRADE AND INVESTMENTS-
    The second factor affecting globalisation is liberalisation of foreign trade
    and investment policy. Setting up foreign trade and investment policy, free
    from trade barriers will allow countries to globalise themselves. They are
    allowed to take decisions more freely and can trade according to their wish.
    3
    WHAT IS LIBERALISATION?

    Removing barriers or restrictions (such as taxes, quotas) set by government is


    what known as liberalisation.

    TRADE BARRIER

    The restrictions and limitations to exports and imports are referred to trade
    barriers. There are two types of such barriers-
    1. Taxes
    2. Quotas (setting up limit on amount)
    WHY DOES GOVERNMENT USE TRADE BARRIER?

    Government uses trade barriers to increase or decrease foreign trade and to


    decide what kind of goods and what quantity should come in a country.

    During the early stages of development all the developing countries protect their
    domestic producers. For Example-The Indian government in 1950’s and 60’s had
    put barriers to foreign trade. The reason being, the domestic industries were just
    coming up that time and were not ready for international competition. In 1991,
    after recovery India become liberal in foreign trade and adopt globalisation policy.

    Liberalisation of foreign trade and investment policy was supported by an


    international organization in our country named WORLD TRADE
    ORGANISATION.

    Fact File of WTO

    The WTO was established on 1 January 1995 after the conclusion of Uruguay
    Round.

    Till now, the total number of countries having membership of WTO is 164.

    The head office of WTO is located in Geneva, Switzerland.


    4
    The main stress of WTO agreements is to promote international trade amongst the
    member themselves.

    It emerged as a super global agency for framing rules for international trade,
    investments, patents and copyrights and other economic issues.

    STEPS TO ATTRACT FOREIGN INVESTMENT

    The official authority of our country is continuously taking special steps to attract
    foreign investments.

    These ares-

    Setting up Special Economic Zones- These are industrial Zones having world
    class facilities for production. Companies who set up themselves in SEZ do not
    have to pay taxes for some period of time. These units expand their production to
    maximum level and trade internationally.

    Allowing flexibility in labour laws- In the recent years, the government has
    allowed companies to ignore labour laws and certain rules that aim to protect the
    worker’s rights.

    THE STRUGGLE FOR A FAIR GLOBALISATION

    Not everyone has benefited from globalization. Producers with huge wealth and
    people with skills and education have made the best use of the new opportunities.
    Thus, a clear need is to make globalization fairer. Government is playing a major
    role in making the Globalization fairer.

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