Globalisation and the Indian Economy – CBSE Class 10 Economics Notes Chapter 4

Chapter 4 Globalisation and the Indian Economy is about the integration that occurs between countries as a result of international trade and investments made by multinational corporations (MNCs). This chapter is important to know how countries trade globally and how it affects the Indian economy. The last part of the chapter discusses the effects of Globalisation as well as the degree to which Globalisation contributes to the overall process of development.

Here is the list of topics that we gonna study in this chapter:

Up until the middle of the twentieth century, much of the organization of production took place within individual nations. Colonies like India are responsible for the export of raw materials and food things in addition to the final goods that are imported. The primary means of communication between far-flung nations was commerce. This activity took place before the emergence of major corporations that are now known as multinational corporations (MNCs). A multinational corporation (MNC) is a business that operates in more than one country, and either owns or controls the production there.

Multinational corporations typically locate their administrative headquarters and manufacturing facilities in areas of the world that have access to inexpensive labor and other resources. Not only do multinational corporations sell their final products all over the world, but also, perhaps more importantly, the goods and services themselves are produced all over the world. As a direct consequence of this, the organization of manufacturing is becoming more intricate.

Read More: Production Across Countries

Multinational corporations (MNCs) interact with local producers and spread their production in a number of different nations throughout the world using a range of strategies, including the following: They do this by establishing business relationships with regional firms and purchasing their goods from regional firms.

They engage in intense competition with regional businesses or buy them out. The enormous influence that multinational corporations have on production in far-flung locales ultimately results in the output of these widely separated locations becoming intertwined.

There are numerous ways through which MNCs are spreading their production and interacting with local producers in various countries across the globe. Some of them are:

1. By setting partnerships with local companies around.
2. Using local companies for supplies
3. By competing closely with local companies or even buying them up.

MNCs set up various production jointly with clubbing with local companies, which also benefit local companies in the following ways:

1. MNCs provide money for additional investments, that of buying new machines for faster production.
2. MNCs bring with them some of the latest and best technologies.

Read More: Interlinking Production Across Countries

Foreign trade helps in the creation of more opportunities for producers for reaching beyond the markets located within the country. Producers can sell their products in markets of not only the country but also compete with the markets which are situated in other countries. In the same way, buyers also have more options to choose from among the various good which is domestically produced. Thus, foreign trade results in connecting the markets or also the integration of markets in different countries.

Read More: Foreign Trade and Integration of Markets

The term “Globalisation” refers to the process of integrating the economy of India with the economy of the rest of the entire globe so that there can be an unrestricted flow of goods, services, and investments from other parts of the world. At the same time that there has been an increase in foreign trade between countries, there has also been a rise in the amount of foreign investment made by multinational corporations in Asia and Africa. Multinational corporations exercise significant influence over significant portions of the world’s trade.

The process of countries becoming more rapidly integrated or interconnected is referred to as Globalisation. The flow of commodities and services, investments, and technological advancements across countries continues to increase. The most common reasons for people to migrate from one nation to another are the pursuit of higher incomes, better jobs, or better educational opportunities.

Factors that have Enabled Globalisation

The factors which have enabled globalisation are as follows:

1. Technology

The improvement of technologies rapidly has been one of the major and important factors which have stimulated the process of globalisation. Globalisation has helped in making the process faster over long distances with less cost. The developments in information, as well as communication technology, have helped with instant accessibility.

2. Liberalisation of Foreign Trade and Foreign Trade Investment Policy

Different types of trade barriers are set up by the government for certain forms of restriction. The government can use the trade barriers for increasing as well as decreasing foreign trade and also to decide which goods and how much of each, should come from the country and taxes on imports are one of its examples.

Read More: Factors Responsible for Globalisation

The World Trade Organisation, also known as the WTO, is an international organization with 164 member countries that are concerned with the regulations that govern international trade. Its purpose is to make sure that commercial transactions go off without a hitch and with as much accuracy as possible. The World Commerce Organisation (WTO) is a global organization that deals with the rules of commerce between states. It comprises 164 member countries from across the world.

Read More: World Trade Organisation

Globalisation impacts lives of the people in the following manner:

1. Provides greater opportunities for consumers to enjoy improved quality and also for lowering the price of certain and several products.
2. Higher standards of living are a result of the help of Globalisation.

Globalisation has also created newer opportunities for companies providing services, particularly in the IT sector.

Read More: Impact of Globalisation on India

Globalisation that is more equitable would not only expand people’s access to possibilities but additionally guarantee that the advantages of Globalisation are more evenly distributed.

By guaranteeing that labour law are strictly adhered to and that workers get the protections they deserve, the government may encourage small-scale businesses to enhance their performance until they become sufficiently powerful to compete. This is an important part that the government can play by making regulations in order to safeguard the interests of all individuals in the country. The government has the ability to erect barriers to trade and investment wherever they are deemed appropriate, and they can also negotiate with the WTO for “fairer rules.”

In addition, it can form an alliance with other developing countries that share its objectives in order to combat the dominance of wealthier countries in the World Trade Organization (WTO). Massive campaigning and representation by people’s organizations have affected significant decisions regarding trade and investment at the WTO in recent years, as proven by the fact that these same organizations have had this same kind of influence.

Some important steps for ensuring fair Globalisation are as follows:

1. It can ensure that the labour laws are properly implemented and the workers also have their rights.
2. Support to the small producers for improving their performance.
3. It is important for the government to use both trade and investment barriers.
4. For negotiating WTO for “fairer rules”
5. Alignment of other developing countries with similar interests for fighting against the domination of developed countries in WTO.

What are the benefits of Globalisation?

The benefits of Globalisation include:

1. Access to foreign cultures.
2. Technological innovations
3. Improved living standards
4. The emergence of new talent
5. Higher standards of living

What are the main elements of Globalisation?

The important elements of Globalisation include Foreign investment, international trade, capital market flows, and labor migration.

What are the different types of globalisation?

The important types of Globalisation include political, economic and cultural Globalisation.