10th Class Social Science Globalisation Globalisation and The Indian Economy - Important Terms And Concepts

Globalisation and The Indian Economy

IMPORTANT TERMS  AND CONCEPTS

1. New Economic Policy. It refers to all those different economic reforms introduced since July 1991 or policy measures and changes which aim at increasing productivity and efficiency by creating an environment of competition in the economy.

2. Liberalisation. The process by which government controls over the industry are being loosened.

3. Globalisation. It means integrating the economy of a country with the economies of other countries under condition of free flow of trade and capital, and movement of persons across borders. In simple words, it means integrating our economy with the world economy.

   IMF defines globalisation as "the growing economic interdependence of countries worldwide though increasing volume and variety of cross border transactions in goods and services and of international capital flows, and also through the more rapid and widespread diffusion of technology."

   Mitchell puts it, "globalisation for better or worse, has changed the way the world does business. Though still in its early I   stages, it is all but unstoppable. The   challenge that individuals and businesses face is learning how to live with it, manage it, and take advantage of the benefits it offers."

4. Privatisation. It means allowing the private sector to set up more and more of such industries as were previously reserved for public sector. Under it, existing enterprises of the public sector are either wholly or partially sold to private sector.

5. Multinational Corporations (also known as international corporation, transnational corporation, global corporation). MNC is a company that owns or controls production in more than one nation.

   According to ILO report, "The essential nature of the multinational enterprises lies in the fact that its managerial headquarters are located in one country (referred to for convenience as the home country) while' the enterprise carries out operations in a number of other countries as well (host countries)."

   In other words, MNC is a corporation that controls production facilities in more than one country, such facilities having been acquired through the process of foreign direct investment.

6. (a) Foreign Direct Investment (or Foreign Capital). It refers to investments directly made in industry or other spheres of economic activity of a country by foreign industrial houses or MNCs with the objective of earning profits. In short, it is an investment made by MNCs. FDI is an important source of financing industrial development in less developed countries.

   (b) Foreign Trade. It refers to exchange of goods-purchase and sale-across geographical boundaries of the countries.

   (c) Value of Trade. Value of exports plus the value of imports during the year.

   (d) Volume of Trade. Physical quantities of goods exported plus imported in a year.

7. Process of Globalisation. It is possible through integration of production and markets.

8. Factors that have Facilitated/ Promoted Globalisation.

   (a) Rapid improvements in technology.

   (b) Liberalisation of foreign trade and foreign investment policies.

   (c) Pressures from international organisations such as WTO.

9. Ways in which MNCs make Investment or Control Production.

   (a) Directly setup factories and offices for production.

   (b) Set up production jointly with some of the local companies of these countries.

   (c) Buy up local companies and then expand production.

   (d) Place orders for production with small producers of the countries e.g., garments, footwear, etc.

10. Trade Barriers. It refers to the various restrictions which are used by the government to increase or decrease foreign trade, e.g., tax on imports.

11. Impact of Globalisation in India.

    (a) For consumers, wide varieties of good quality goods at lower prices are available which leads to higher standard of living.

    (b) New jobs are created in industries such as cell phones, electronics, fast food, automobiles.

    (c) Local companies have prospered through supplying raw materials to these industries.

    (d) Top Indian companies have gained from successful collaborations with foreign companies. Some of these companies have emerged as multinationals themselves.

    (e) Companies providing services have also benefited from new opportunities.

    (f) Small manufacturers producing toys, vegetable oils etc. have been hit hard due to competition.

    (g) In order to cut cost of the product, employers try to cut labour cost. Workers job is no longer secure.

12. Fair Globalisation. If refers to globalisation which creates opportunities for all and ensures that its benefits are better shared.

    Government can take following some steps to ensure achieving fair globalisation.

    (a) Labour laws should be implement properly.

    (b) Small producers should be supported.

    (c) Use trade and investment barriers efficiently.

    (d) Negotiate at the WTO for ‘fairer rules'.