Globalisation and The Indian Economy 10 (NCERT) NOTES

 Globalisation and The Indian Economy

Note: To be evaluated in the Board Examination:
What is Globalization?
Factors that have enabled Globalisation

What is Globalization 

1. MNC Expansion: Over the last few decades, Multinational Corporations (MNCs) have expanded their operations globally.

2. Seeking Cost-Effective Locations: MNCs search for cost-effective production locations worldwide.

3. Increasing Foreign Investment: Foreign investment by MNCs in various countries is on the rise.

4. Surge in Foreign Trade: International trade between countries has grown significantly.

5. MNC Control: MNCs play a significant role in controlling a substantial portion of foreign trade.

Q: Why did Ford Motor-Company' (or any MNC) want to develop Ford India as supplying base for its other plants across the globe? [CBSE 2014 (D)]

• Example: Ford Motors' Indian plant produces cars for the local market, exports to other developing nations, and supplies car components globally.

6. Goods and Services: MNCs engage in extensive trade involving both goods and services.

Globalization and Its Facilitators:

Integration of Production and Markets: Foreign investment and trade have led to increased integration of production and markets globally.

Defining Globalization: Globalization is the rapid process of interconnection and integration among countries.

MNCs' Central Role: Multinational Corporations (MNCs) are pivotal in driving globalization.

Flow of Goods, Services, Investments, and Technology: More goods, services, investments, and technology move between countries.

Technological Advancements: Technological advancements, especially in transportation, have sped up globalization by enabling faster and cost-effective long-distance goods delivery.

Greater Global Contact: Most world regions are now in closer contact with each other than in the past.

Movement of People: People moving between countries in search of better income, jobs, or education is another form of connection, but this has been limited in recent decades due to various restrictions.

FACTORS THAT HAVE ENABLED GLOBALISATION

Q: What has made faster delivery of goods across long distances possible at lower costs?

Technology's Role in Globalization:

1. Technological Advancements: Rapid technological progress has driven globalization.

2. Transportation Advancements: Over the last five decades, transportation technology has greatly improved.

3. Faster and Cost-Effective Delivery: These advancements enable faster and more cost-effective long-distance goods delivery.

Example:

Container Transport Advantages:

1. Efficient Loading: Goods are placed in containers for seamless transfer onto ships, railways, planes, and trucks.

2. Cost Reduction: Containers have significantly cut port handling costs and accelerated export delivery.

3. Air Transport Benefit: Lower air transport costs have increased the volume of goods transported by airlines.

Information and Communication Technology Advancements:

1. Rapid Technology Evolution: Recent times have witnessed swift changes in telecommunications, computers, and the Internet.

2. Telecommunication Impact: Telecommunication tools like telegraphs, telephones (including mobile phones), and faxes connect people worldwide, provide instant information access, and facilitate communication, partly through satellite devices.

3. Ubiquitous Computing: Computers have become integral in nearly every field of human activity.

4. The Internet's Wonders: The Internet opens doors to obtaining and sharing vast information, enabling instant and low-cost worldwide communication via email and voice services.

Example: Using IT in Globalization:

1. Magazine Production Example: A London news magazine is designed and printed in Delhi, showcasing IT's role in globalization.

2. Internet Text Transfer: Magazine content is sent via the Internet from London to Delhi.

3. Telecommunication for Design: Design instructions are communicated from London to Delhi through telecommunications.

4. Computer-Based Design: Design work is carried out on computers.

5. Air Shipping: Printed magazines are transported to London by air.

6. Instant Payment: Money transfer from a London bank to a Delhi bank for design and printing is done instantly through Internet-based banking (e-banking).

Liberalization of Foreign Trade and Investment:

1. Trade Barrier Example: An import tax on Chinese toys in India raises their prices, reducing imports and benefiting Indian toy-makers.

2. Purpose of Trade Barriers: Governments use trade barriers to regulate foreign trade by either increasing or decreasing the flow of specific goods into the country.

3. Early Protection: After Independence, India implemented trade barriers to shield domestic industries from foreign competition, allowing only essential imports like machinery and fertilizers.

• Industries were just coming up in the 1950s and 1960s,
• Note: Developed countries have historically protected their domestic producers in the early stages of their development using various methods.

Q: Starting around 1991, some far reaching changes in economic policy were made in India. Justify.

4. Shift in Policy (Around 1991) (LPG Era): In 1991, India initiated significant policy changes. 

• The government encouraged Indian producers to compete globally, believing it would enhance quality and performance.
• supported by powerful international organisations like World Bank and IMF (International Monetary Fund)

5. Removal of Barriers: Foreign trade and investment barriers were largely removed, making it easier to import and export goods and allowing foreign companies to establish operations in India.

6. Liberalization Defined: Liberalization means reducing government restrictions, allowing businesses to make more independent decisions on imports and exports. 

• It signifies a more open and less restrictive government approach.

Q: State any two objectives of G -20. Ans.  (i) International financial stability  (ii) Sustainable Development