Class 10th - Globalisation and the Indian Economy

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.