Revision Notes for Chapter 4 Globalisation and the Indian Economy Class 10 Economics
CBSE NCERT Revision Notes1
Overview
Answer
• Production Across Countries
• Interlinking Products Across countries
• Foreign Trade and Integration of Market
• What is Gloablisation?
• Factors that Enable Gloablisation
• World Trade Organisation
• Impact of Gloablisation in India
• The struggle For Fair Gloablisation
• Interlinking Products Across countries
• Foreign Trade and Integration of Market
• What is Gloablisation?
• Factors that Enable Gloablisation
• World Trade Organisation
• Impact of Gloablisation in India
• The struggle For Fair Gloablisation
2
Production Across Countries
Answer
Multinational Corporations (MNC)
• A MNC is a company that owns or controls production in more than one nation. These came under emergence when world opted for Globalisation.
• Now a days, MNCs have not only selling units, but also production and development units outside the boundaries of their country. By taking such steps, the MNCs can get huge profit Margins. Therefore we can say that the goods and services are produced globally. As a result, production is organised in increasingly complex ways.
• Now a days, MNCs have not only selling units, but also production and development units outside the boundaries of their country. By taking such steps, the MNCs can get huge profit Margins. Therefore we can say that the goods and services are produced globally. As a result, production is organised in increasingly complex ways.
Where MNCs set Production Unit?
• Where there is availability of cheap work force in form of both skilled and unskilled labour.
• If Government policies are favorable to them, Government support global trade and give tax recessions to MNCs.
• Where Market is nearer and transportation of goods are cheaper.
• Where there is availability of cheap work force in form of both skilled and unskilled labour.
• If Government policies are favorable to them, Government support global trade and give tax recessions to MNCs.
• Where Market is nearer and transportation of goods are cheaper.
Benefits to Local Companies
• Local companies get access to decent amount of foreign Investments.
• Local companies get access to latest technology which might help them in future to boost productivity.
• Local companies get access to latest technology which might help them in future to boost productivity.
MNCs Controls Production
• Making collaborations with local companies
• Buying Local companies completely
• Giving order to small producers, thus , making chain of production and marketing of locally produced goods on their brand Name
• Buying Local companies completely
• Giving order to small producers, thus , making chain of production and marketing of locally produced goods on their brand Name
Effects of Foreign Trade
• Producers get opportunity to sell their products beyond boundaries by exporting their goods.
• Buyers can have choices among goods of local market as well as imported goods from foreign market
• Prices of similar goods in the two markets tend to become equal.
• Producers in the two countries can now closely compete against each other.
• Producers get opportunity to sell their products beyond boundaries by exporting their goods.
• Buyers can have choices among goods of local market as well as imported goods from foreign market
• Prices of similar goods in the two markets tend to become equal.
• Producers in the two countries can now closely compete against each other.
3
What is Globalisation?
Answer
Globalisation is the process of rapid integration or interconnection between countries.Globalisation has connected countries through:
• Movements of good, services, investments and technologies across boundaries of country.
• Movement of people between countries for the purpose of better income, better jobs and better education.
• Movements of good, services, investments and technologies across boundaries of country.
• Movement of people between countries for the purpose of better income, better jobs and better education.
Factors that have Enabled Globalisation
• Technology
→ Technology has improvised the sectors like transportation, communication and money transactions which play vital role in the movement of goods and services across countries.
→ Technology has improvised the sectors like transportation, communication and money transactions which play vital role in the movement of goods and services across countries.
→ This has made delivery of goods much faster across long distances possible at lower costs.
Technology has accelerated the process of Globalisation by:
→ Providing better efficiency
→ Cheap and easy transportation
→ Improvised communication
→ Easy money transaction
→ Cheap and easy transportation
→ Improvised communication
→ Easy money transaction
4
Liberalisation of foreign trade and foreign investment policy
Answer
Tax on any imported good is tax barrier on that good. This is barrier on import and foreign trade because imposing much tax will obviously demoralize the foreign trade.• Liberalisation: Removing barriers or restrictions set by the government is what is known as liberalisation.
• Liberalisation in India: After Independence, India imposed tax barriers so that local industries will get chance to flourish. India allowed imports of only essential items such as machinery, fertilisers, petroleum etc. In 1991, Indian Government adopted policy of Liberalisation.
5
World Trade Organisation
Answer
• World Trade Organisation (WTO) is an world organisation whose aim is to liberalise international
trade. It was initiated by developed countries.
• WTO establishes rules regarding international trade, and sees that these rules are obeyed.
• As on July 2016, nearly 165 Countries of the world are currently members of the WTO.
• This institution is criticized because it forces developing countries to remove trade barriers but there are no such compellations on developed countries.
• WTO establishes rules regarding international trade, and sees that these rules are obeyed.
• As on July 2016, nearly 165 Countries of the world are currently members of the WTO.
• This institution is criticized because it forces developing countries to remove trade barriers but there are no such compellations on developed countries.
6
Impact of Globalisation in India
Answer
Process of Globalisation in India was accelerated when Liberal policies were adopted in 1991. It has been a long period of time.Impacts on Consumers
• They got access to varieties of goods. They have now option to choose.
• Consumers got access to popular foreign brands.
• Consumers got improved quality at lower prices for several products.
• Consumers can enjoy much higher standards of living.
• They got access to varieties of goods. They have now option to choose.
• Consumers got access to popular foreign brands.
• Consumers got improved quality at lower prices for several products.
• Consumers can enjoy much higher standards of living.
Impacts on Producers
• Positive Impacts
→ MNCs have increased their investments in India over the past 20 years, which means investing in India has been beneficial for them.
→ Market has been established in India for imported goods which flourishing day by day by improvement in standard of living. Thus producers are getting a flourishing market in India.
→ Market has been established in India for imported goods which flourishing day by day by improvement in standard of living. Thus producers are getting a flourishing market in India.
→ Local industries are also benefited by supplying raw materials.
→ Top Indian companies have been able to benefit from the increased competition.
→ Some Indian companies are having successful collaborations with foreign companies.
→ Top Indian companies have been able to benefit from the increased competition.
→ Some Indian companies are having successful collaborations with foreign companies.
• Negative Impact
→ Small manufactures who were not able to compete have to face crisis.
→ Small manufactures who were not able to compete have to face crisis.
→ Several of the units have shut down rendering many workers jobless.
7
SEZ: Special Economic Zone
Answer
• 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.
• Instead of hiring workers on a regular basis, companies hire workers ‘flexibly’ for short periods when there is intense pressure of work. Thus labour laws are compromised in SEZ.
• Companies who set up production units in the SEZs do not have to pay taxes for an initial period of five years.
• Instead of hiring workers on a regular basis, companies hire workers ‘flexibly’ for short periods when there is intense pressure of work. Thus labour laws are compromised in SEZ.
8
Struggle For Fair Globalisation
Answer
Government need to ensure fair globalisation for its citizens.
• Government should not compromise with labour Laws.
• Government should negotiate at the WTO for ‘fairer rules’.
• Support small producers.
• Imposing trade barriers.
• Government should not compromise with labour Laws.
• Government should negotiate at the WTO for ‘fairer rules’.
• Support small producers.
• Imposing trade barriers.