10 Class Economics Chapter 4 Globalisation and the Indian Economy Notes
|Chapter Name||Globalisation and the Indian Economy|
|Category||Class 10 Economics Notes|
Class 10 Economics Chapter 4 Globalisation and the Indian Economy Notes. here we will be learn about Globalization, Globalization and Indian economy, Factors that make globalization possible, Free trade, MNCs, Foreign trade and integration of markets, WTO, India and globalization etc.
Class 10 Economics Chapter 4 Globalisation and the Indian Economy Notes
📚 Chapter = 4 📚
💠 Globalisation and the Indian Economy💠
❇️ Production across Countries :-
🔹 In the earlier time, globalization involved export of raw materials from the colonial countries and import of finished products from developed countries of Europe and USA. The things began to changes from the middle of the 20th century.
🔹 Some companies began their functioning in more than one country and became MNCS (Multinational Corporations). This spread the economic activities to various parts of the world.
❇️ Multinational Corporation ( MNC ) :-
🔹 MNC is an enterprise operating in several countries but managed from one country or group that derives a quarter of its revenue from operations outside of its home country.
❇️ How MNC’s can spread and get control over productions?
🔹 MNC’s can spread and control by :-
- Setting up joint production units with local companies.
- To buy up local companies and expanding its production base.
- Placing orders with small producers.
- By using their Brand.
❇️ Advantage of MNC’s Spreading Out :-
🔹 By spreading out production across different countries, the MNCs get the best quality resources at cheap prices.
🔹 This increases their profit. By spreading the production, the MNCs generate employment opportunities in underdeveloped countries.
❇️ Interlinking Production across Countries :-
🔹 MNCs link the production poorest of different countries in the following ways :-
- foreign investment
- Joint ventures
- To take over local companies
- Contracts with local Companies
🔶 Investment :- The money that is spent to buy assets such as land , building , machines and other equipment is called investment.
🔶 foreign investment :- Foreign Investment is when a company or individual from one nation invests in assets or ownership stakes of a company based in another nation.
🔶 Joint ventures :- MNCS also join hands with the local companies and provide additional investment to buy various assets.
🔶 To take over local companies :- MNCS buy companies or production units to expand production companies Example :- Cargill foods of USA has taken over Parakh foods in India.
🔶 Contracts with local Companies :- MNCS also place orders around the world with a large number of small producers under its brand name. It determines prices, quality, delivery and labour conditions for different producers.
❇️ Foreign Trade :-
🔹 Foreign trade is basically trade between two different countries of the world. It is also known as international trade.
❇️ Foreign Trade and Integration of Markets :-
🔹 Foreign trade helps in the integration (connection) of markets in the following ways :-
- It facilitates movement of goods and services among different countries.
- It provides more choices to consumers.
- Facilitate movement of people, ideas and technology.
- Gives opportunity to producers to sell their products beyond local/domestic markets.
- Buyers get more choice of goods.
- It increases competition among producers which in turn enhances the quality of the products.
❇️ Globalisation :-
🔹 Globalisation is a process of international integration arising from the interchange of world views , products ideas and other aspects of a culture.
❇️ Factors to stimulated the globalization process :-
- Improvement in Transportation
- Development of Information Technology
❇️ Factors that have enabled globalization :-
🔶 Technology :- Rapid improvement in technology is one of the major factors that has enhanced the globalization process by resulting in much faster delivery of goods across long distances at lower costs.
🔶 Information and Communication Technology :- Information and communication technology has made the world a very small place which has revolutionised the spreading of production of goods and services all over the world. Telecommunication facilities are used to contact one another around the world.
❇️ How Information technology is encouraging the Globalisation?
🔹 With Improvement in transportation technique now It become easier to send good at distance place at lower cost.
🔹 Sending and receiving information are now become easier.
🔹 There is rapidly increase in trade with the help of information and Technology.
❇️ Privatization :-
🔹 Privatization is the transfer of a business , industry , or service from public to private ownership and control.
❇️ Foreign Investment Policy :-
🔹 The policy of foreign investment adopted by the government also affects globalisation to a large extent.
🔹 It restricts or encourages foreign investment seeing the situation in the country. Trade barrier is one such foreign investment policy.
❇️ Trade Barrier :-
🔹 It is a restriction on the free international exchange of goods or services. Tax on imports (called import duty) is an example of a trade barrier. It is called a barrier because some restriction has been set-up.
❇️ Why Trade barriers are used by the government :-
- To increase, decrease or regulate foreign trade.
- To decide what kinds of goods and how much of each, should come into the country.
- To protect the producers within the country from foreign competition.
❇️ Restrictions on Foreign Trade :-
🔹 After independence, the Government of India had put barriers on foreign trade and foreign investment, to protect the domestic producers from foreign competition, as the industries were just coming up in 1950s and 1960s.
🔹 At that time, India allowed imports of only essential items such as machinery, fertilisers, petroleum, etc.
❇️ New Economic Policy, 1991 :-
🔹 Around 1991, it was felt that Indian producers must compete with producers around the globe, so that they can improve their production and quality of goods and services.
🔹 Therefore, Government of India in 1991 made some major changes in its foreign investment policy.
🔹 Liberalisation was one such change. This decision was supported by powerful international organisations like World Trade Organisation (WTO).
❇️ liberalisation policy was gradually adopted in India :-
- After Independence, the Indian government put barrier on foreign trade and foreign ‘investment.
- Initially, Indian Industries were just coming up after Independence, so competition from imports wouldn’t have allowed these industries to come up.
- In 1991, the government decided that the time has come for Indian producers to compete the producers around the globe.
❇️ Liberalisation :-
🔹 Liberalisation refers to the reduction or elimination of government regulation or restrictions on private business and trade.
❇️ Effects of liberalisation on the Indian Economy :-
- Competition would improve the performance of producers within the country.
- Barriers on foreign trade and foreign investment were removed to large extent.
- This meant that goods could be imported and exported easily.
- Foreign companies could set up factories and offices to boost up production. It allows making decision freely.
- The competition would improve the performance of producers within the country since they have to improve their quality.
❇️ World Trade Organization :-
🔹 WTO is World Trade Organization. It is an organization which is in favor of increasing the world trade through globalization.
🔶 The Aim of WTO :-
- To liberalize International trade by allowing free trade for all.
- To promote international trade among the countries of the world in an open uniform and non-discriminatory manner.
- Removal of both the import and export restrictions.
🔶 The Drawback of WTO :-
- It is dominated by developed countries.
- It is used by developed countries to support globalization in areas that are not directly to trade.
❇️ Impact of Globalisation in India :-
🔶 Positive Impacts :-
- Greater choice and improved quality of goods at competitive price and hence raises standard df living.
- MNC’s have increased investment in India.
- Top Indian companies emerged as multinationals.
- Created new opportunities for companies providing services like IT sector.
- Collaboration with foreign companies help a lot to domestic entrepreneurs.
🔶 Negative Impacts :-
- Indian economy faced the problem of brain drain.
- Globalization has failed to remove unemployment and poverty.
- Cut in farm subsidies.
- Closure of small industries.
❇️ Steps taken by government to attract foreign investment :-
🔹 Government can take following steps to attract foreign investment :-
- They have set-up industrial zones, called Special Economic Zones (SEZs). SEZs 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.
- Government has also allowed flexibility in the labour laws to attract foreign investment.
- The companies in the organised sector have to obey certain rules that aim to protect the workers’ rights.
- Instead of hiring workers on a regular basis, companies hire workers flexibly for short periods when there is intense pressure of work. This is done to reduce the cost of labour for the company.
❇️ Special Economic Zone (SEZ) :-
🔹 SEZ is a special economic zone of a country that is subject to unique economic regulations that differs from other areas in the same country. These regulations tend to be conductive to Foreign direct investment.
❇️ Rising Competition and Uncertain Employment :-
🔹 Globalization and pressure of competition have changed the lives of workers and also the local producers.
🔹 Workers are not getting the job securing and the local producers are not able to role with the technology adopted by the MNCS.
🔹 Many of the local producing units have been shut down and many are supposed to be shut down in near further.
🔹 Workers are also not getting the regular work as they are hired only on temporary basis. Workers no longer get the protection and benefits that they enjoyed earlier.
❇️ The struggle for a fair globalization :-
🔹 Globalization has not benefited all people. People with education, skill and wealth have made the best use of the new opportunities. On the other hand, there are many people who have not shared the benefits.
❇️ How Government plays a major role for To make the globalization fair to all :-
- It ensures that policies such as labour laws are strictly followed.
- It supports and protects small producers from global competition and to improve their performance.
- It negotiates with the WTO to ensure fair rules and concessions for developing countries.
- The government can also use trade and investment barriers to protect the interest of domestic produce.
- Government can also align with other developing countries with similar interests to fight against the authority of developed countries in the WTO.
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