Back to: MBOSE Social Science Class 10

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

Globalisation in today’s world has come to imply many things. It is a process of integrating the economy of a country with the economies of other countries, under conditions of free flow of trade capital and movement of person across borders. Globalisation has grown due to advances in transportation and communication .It also includes

• Export and import of techniques of production.
• Migration of people from own country to another.
• Increase in foreign trade.
• Flow of capital and finance from one country to another.

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?

• The Indian Government put barriers to foreign trade and investments to protect the domestic producers from foreign competition. At the time, competition from imports would have been a death blow to growing industries. Hence, India allowed import of only essential goods.
• In India 1991, the government wishes to remove these barriers because it felt that domestic producers were ready to compete with foreign industries, It felt that foreign competition would improve the quality of goods in Indian industries.
• This marked the beginning of new economic policy in India.

How would flexibility in labour laws help companies: Flexibility in labour laws will help companies in being competitive and progressive. By easing up on labour laws, company heads can negotiate wages and terminate employment, depending on market conditions. This will lead to an increase in the company’s competitiveness. 

What are the various ways in which MNCs set up, or control, production in other countries?

• MNCs set up production where it is close to the market: 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.
• MNCs set up production jointly with some of the local companies of these countries. The benefit to the local company of such joint production is two- fold. First , MNCs can provide money for additional investments, like buying new machines for  faster production. Second, MNCs might bring with them the latest technology for production.
• The most common route for MNC investment is to buy local companies and then to expand production. MNCs with huge wealth can quite easily do so.
• Another way in which MNCs control production. Large MNCs in developed countries place orders for production with small producers. These products are supplied to the MNCs, which they sell these under their own brand names to the customers.
• There are a variety of ways in which the MNCs are spreading their production and interacting with local producers in various countries across the globe. By setting up partnerships with local companies, by using the local companies for supplies by closely competing with the local companies or buying them up, MNCs are exerting a strong influence on production at these distant locations. As a result production in these widely dispersed locations is getting interlinked.

Why do developed countries want developing countries to liberalise their trade and investment? What do you think should the developing countries demand in return?

WTO 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 forced the developing countries to remove trade barriers.

That is why, developing countries are asking the developed countries “we have reduced trade barriers as per WTO rules, but you ignored the rules of WTO and have continued the trade barriers. It is not a fair trade”

I think developing countries should demand in return the free and fair flow of their labour abd reduction in the subsidies in agriculture sector of developed countries.

It is true that “The impact of globalisation has not been uniform.” This can be explained through the following points.

Globalisation has some negative impacts on employment and real wages. Due to  ushering in of new technologies , output increases , but employment opportunities are not much, especially in rural areas, where over 60% of the population lives.

Globalisation is mainly beneficial to large capitalists, industries and large companies. Consequently, it increases the concentration of economic power and leads to inequalities.

In India, during 1990-91 more than 33% of national product originated in the agricultural sector, but this share has come down to 23% in 2004-2005

Liberalisation of trade and investment policies helped the globalization process by making foreign trade and investment easier. Earlier, several developing countries had placed barriers and restrictions on imports and investments from abroad to protect domestic production. However to improve the quality of domestic goods, these countries have removed the barriers. Thus, liberalization has led to a further spread of globalization because now businesses are allowed to make their own decisions on imports and exports. This has led to a deeper integration of national economics into one conglomerate whole.

How does foreign trade lead to integration of markets across countries? Explain with an example other than those given here.

• Goods produced in a country can be exported or imported through foreign trade.
• Increase in the choice of goods in the market
• Decrease in the price of commodities or equalizing the price.
• Producers compete with each other and improve the quality of goods.
• It provides more employment opportunities and easy movement of workers.

For example, the automobile industries in India have the option of importing cars from various car manufacturer s. This provides an opportunity for the sellers’ to expand their business. With the liberalization of foreign trade, electronic goods have flooded the Indian market and give good opportunities to the buyer to select the item of their choice

Globalisation will continue in the future. Can you imagine what the world would be like twenty years from now? Give reasons for your answer.

Globalisation will continue in the future. Twenty years from now, the world will be more globally connected and integrated into one international economy, if this process continues on a fair and equitable basis. Trade and capital flows will increase alongside the mobility of labour. This will occur because liberalization will get augmented and MNCs will converge with other companies. These are the favourable factors for globalization.

• Availability of human resources both quantity wise and quality wise will increase.
• Broad resource and industrial base of major countries.
• Expansion of entrepreneurship.
• Expansion of markets.
• Economic liberalizations.
• Growing competitions.

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?

Benefits of Globalisation	Negative Impact of Globalisation
Globalisation has encouraged Foreign Direct Investments	Globalisation has failed to solve the problem of poverty and unemployment
Goods produced in the developed countries can easily be obtained by developing economy	Developing countries have not acquired expected benefits through increased exports.
Developing countries like India can withstand competition at international level.	Large scale industries have acquired more benefit while small scale industries have not obtained benefit.

MNCs buy at cheap rates from small producers	Garments, footwear, sports
Quotas and taxes on imports are used to regulate trade items.	Trade barriers
Indian companies who have invested abroad	Tata Motors, Infosys, Ranbaxy
It has helped in spreading of production of service	Call Centres
Several MNCs have invested in setting up factories in India for production	Automobiles