Lesson -4 Globalisation and the Indian Economy
Q1. How have markets been transformed in the recent years?
Explain with example.
Ans. As consumers in today’s world, some of us have a wide
choice of goods and services before us. The latest models of digital cameras,
mobile phones and televisions made by the leading manufacturers of the world
are within our reach. Every season, new models of automobiles can be seen on
Indian roads. Gone are the days when Ambassador and Fiat were the only cars on
Indian roads. Today, Indians are buying cars produced by nearly all the top
companies in the world. A similar explosion of brands can be seen for many
other goods.
Q2. What do you mean
by MNC’S ?
Ans. Multinational
corporations (MNCs) emerged on the scene. A MNC is a company that owns or controls
production in more than one nation. MNCs set up offices 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
profits.
Q3. How are MNC’S
spreading production across the globe? Explain
Ans. A large MNC, producing industrial equipment, designs
its products in research centres in the United States, and then has the
components manufactured in China. These are then shipped to Mexico and Eastern
Europe where the products are assembled and the finished products are sold all
over the world. Meanwhile, the company’s customer care is carried out through
call centres located in India. The MNC is not only selling its finished
products globally, but more important, the goods and services are produced
globally. As a result, production is organised in increasingly complex ways.
Q4. Which factors are responsible for the setup of MNC’s in
other countries?
Ans. They setup productions at regions close to market.
2. A place where skilled and cheap labour is available.
3. A place where all other factories for productions are
available.
Q5. What are the various ways in which company links different
country?
Or
“Production is widely
dispersed locations is getting interlinked”. Comment
Ans. There are variety of ways in which MNC’s are spreading
their productions and interacting with local producers in various countries
across the globe, they are linking countries by:
1.
Setting up partnership with local companies.
2.
By using the local companies for supply under
the name of their brand.
3.
By closely competing with local companies or
buying them.
4.
By bringing the latest technology.
5.
MNC’s are executing strong influence or
production at these distant locations.
6.
Hence production is widely dispersed is getting
interlinked.
Q6. What do you mean by foreign investment?
Ans. MNCs set up factories and offices for production. 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. Any investment is made with the hope that these assets will earn
profits.
Q7. Distinguish between foreign trade and foreign investment.
Ans. Foreign Investment- Investment of money in foreign
countries in any large industry or MNC.
Foreign Trade- Exchange of goods and resources through
ecological boundaries of two countries.
Q8. How does foreign trade help in integrations of the
foreign markets of different countries? Give Examples.
Ans. foreign trade creates an opportunity for the producers
to reach beyond the domestic markets, i.e., markets of their own countries.
2. Producers can sell their produce not only in markets
located within the country but can also compete in markets located in other
countries of the world.
3. Similarly, for the buyers, import of goods produced in
another country is one way of expanding the choice of goods beyond what is
domestically produced.
4. For Eg- Chinese manufacturers exports toys to India, which
are sold at a high price.
Q9. What are the advantages of international trade to consumers.
Ans. with the opening of trade, goods travel from one market
to another. Choice of goods in the markets rises. Prices of similar goods in
the two markets tend to become equal. And, producers in the two countries now
closely compete against each other even though they are separated by thousands
of miles!
Q10. What is Globalisation?
Ans. Globalisation is this process of rapid integration or
interconnection between countries.
Q11. What are the factors that have enabled globalisation?
Ans. 1. Technology
Rapid improvement in technology has been one major factor
that has stimulated the globalisation process.
2. Liberalisation of
foreign trade and foreign investment policy
Liberalisation of foreign trade and
foreign investment policy has also contributed towards globalisation .
Q12. How has the rapid movement in technology stimulated
globalisation . state some examples.
Ans. Rapid improvement in technology has been one major
factor that has stimulated the globalisation process.
2. Improvements in transportation technology has made much faster delivery of goods across
long distances possible at lower costs.
3. Developments in information and communication technology
brought remarkable changes in globalisation.
4. Telecommunication facilities (telegraph, telephone
including mobile phones, fax) are used to contact one another around the world.
5. Information and communication technology (or IT in short)
has played a major role in spreading out production of services across
countries.
Q13. What is trade barrier ?
Or
Why is tax seen as trade barrier?
Ans. Tax on imports is an example of trade barrier. It is
called a barrier because some restriction has been set up. 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.
Q14. What do you understand by liberalisation of foreign
trade?
Ans. Removing barriers or restrictions set by the government
is what is known as liberalisation. With liberalisation of trade, 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.
Q15. Why did India set up trade barrier after independence?
Ans. 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.
·
Industries were just coming up in the 1950s and
1960s, and competition from imports at that stage would not have allowed these
industries to come up.
Thus, India allowed imports of only essential items such as
machinery, fertilisers, petroleum etc.
Q16. “Barriers to foreign investment were removed to a large
extent in 1991 in India” Explain.
Ans. Around 1991, some far reaching changes in policy were
made in India, as all the trade barriers were removed and it was announced that
indian producers could compete with foreign countries. They believe that it
would improve the inside industries. This was supported by investment
organisations. This meant that resources can easily be exported around the
world.
Q17. Write a short note on WTO.
Ans. World Trade Organisation (WTO) is one such organisation
whose aim is to liberalise international trade. Started at the initiative of
the developed countries, WTO establishes rules regarding international trade,
and sees that these rules are obeyed. 149 countries of the world are currently
members of the WTO (2006).
Q18. Developed countries are benefited by foreign trade at
the cost of welfare for developing countries? Explain with the help of an
example.
Ans. WTO is supposed to allow free trade for all, in
practice, it is seen that the developed countries have unfairly retained trade
barriers.
Eg:- The agriculture sector provides the bulk of employment
and a significant portion of the GDP in India. Compare this to a developed
country such as the US with the share of agriculture in GDP at 1% and its share
in total employment a tiny 0.5%! And yet this very small percentage of people
who are engaged in agriculture in the US receive massive sums of money from the
US government for production and for exports to other countries. 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 our country.
Q19. What has been the impact of Globalisation on the
countries?
Or
Globalisation and greater competition among producers has
given advantages to consumers?
Ans. Globalisation
and greater competition among producers - both local and foreign producers -
has been of advantage to consumers, particularly the well-off sections in the
urban areas.
2. There is greater choice before these consumers who now
enjoy improved quality and lower prices for several products.
3. As a result, these people today, enjoy much higher
standards of living than was possible earlier.
Q20. Describe the problems associated with globalisation for
producers at local level and small workers.
Ans. Small producers or workers are unable to compete in
international market therefore they are forced to either reduced their expectations
or ever shit down.
2. Income inequalities have increased in many countries.
3. The overall inequalities rate has increased.
4. Most of the workers today are employed in unorganised
sector.
5. Faced with growing competition, most employers nowadays
prefer to employ workers flexibly, which leads to insecurity of job for the
workers.
Q21. Describe the impact of globalisation on Indian Economy?
Ans. Globalisation has created competition among both local
and foreign producers which benefited to consumers by producing greater
choices.
2. It has also created new opportunities for employement
mainly in IT.
3. It has grabbed some indian industries to become MNC’s for
rg- TISCO , TATA MOTORs etc.
4. New jobs are created and industries are set up.
5. Globalisation helped in the growth of society.
Q22. What are special Economic Zones? Why have they been set
up?
Ans. In recent years, the central and state governments in
India are taking special steps to attract foreign companies to invest in India.
Industrial zones, called Special Economic Zones (SEZs), are being set up. SEZs
are to have world class facilities: electricity, water, roads, transport,
storage, recreational and educational facilities. Companies who set up
production units in the SEZs do not have to pay taxes for an initial period of
five years.
Q23. What are the characteristics of SEZ?
Ans. Government has also allowed flexibility in the labour
laws to attract foreign investment.
2. SEZs are to have world class facilities: electricity,
water, roads, transport, storage, recreational and educational facilities.
3. Companies who set up production units in the SEZs do not
have to pay taxes for an initial period of five years.
Q24. How government can ensure fair globalisation to its
people
Or
‘Fair globalisation would create opportunities for all, and
also ensure that the benefits of globalisation are shared better’. Support the
statement.
Ans. Its policies must protect the interests, not only of
the rich and the powerful, but all the people in the country.
2. The government can ensure that the labour laws are properly implemented and the
workers get their rights.
3. It can support small producers.
4. It can negotiate at the WTO for ‘fairer rules’.
5. It can also align with other developing countries with
similar interests to fight against the domination of developed countries in the
WTO.