Ch. 4 Globalisation And The Indian Economy
Q. What is meant by FDI?
A. The investment made by a foreign company by setting up production or starting its operations is called FDI i.e. Foreign Direct Investment.
Q. What are SEZs?
A. SEZs are Special Economic Zones. These are the industrial zones having world class facilities like electricity, water, roads, transport, storage, recreational and educational facilities etc. to attract foreign investment.
Q. Which is the most common way of investing by MNCs?
A. The most common route for MNCs to invest is to buy up the local companies and then to expand production.
Q. What are imports?
A. An import is any good or service which a country buys from another country.
Q. Name the major items imported by India.
A. Major items imported by India are:
i) Petroleum and petroleum products
ii) Pearls and precious stones
iii) Chemicals
iv) Coal, coke and briquettes
v) Machinery
vi) Bulk imports-fertilizers, cereals, edible oils, newsprint
Q. Explain three ways in which MNCs control production.
A.・At times MNCs set up production jointly with some of the local companies of the country in which they are investing. The benefit of this joint collaboration for the local companies is twofold:
i) MNCs can provide money for additional investments like buying new machinery for production.
ii) MNCs might bring with them the latest technology for production.
・The most common route for MNC investment is to buy up the local companies and then to expand production. MNCs with huge wealth can easily do so.
・Another way in which MNCs control production is by placing orders for production with small producers.
Q. How does foreign trade lead to the integration of markets across various countries?
A. ・Foreign trade creates an opportunity for producers to reach beyond their domestic market. It allows companies to compete in the markets located in other countries in the world.
・As goods travel from one market to another, the choice of goods in a market increase. Prices of similar goods in the two markets tend to become equal.
・Producers in two countries can now closely compete against each other even though they are located far away from each other.
Thus foreign trade results in integrating i.e. connecting the markets of different countries of the world.
Q. Impact of globalisation is beneficial for the people of India. Explain the social and economic values attached to it.
OR
Impact of globalisation on India has not been uniform. Explain the statement.
A. Globalisation comes with certain advantages as well as disadvantages for the people of India.
Advantages:
・Globalisation and greater competition among producers has benefited the customers. There is greater choice before them and they enjoy improved quality and lower prices for several products. Thus globalisation has increased the standards of living.
・MNCs have increased their investments in India over the past 20 years. They are interested in industries like cell phones, automobiles, electronics, soft drinks, fast food, banking in urban areas etc. Thus new jobs have been created in these industries and the local companies supplying raw materials to these have prospered.
・Several of the top Indian companies have invested in newer technology and production methods, and raised their production standards. Some have gained from successful collaborations with foreign companies.
・Globalisation has enabled some large Indian companies to emerge as MNCs themselves. e.g. Tata Motors, Ranbaxy, Infosys, Sundaram Fasteners, Asian Paints etc.
Disadvantages:
・Industries like batteries, capacitors, toys, plastics, tyres, dairy products, vegetable oil etc. where the small manufacturers are prevalent have been hit hard by the competition posed by the MNCs. Several of the units have shut down rendering many workers jobless.
・Globalisation and the pressure of competition have substantially changed the life of workers. Most employers, now employ workers 'flexibly' to reduce the cost of production. Thus workers have lost their job security.
・Not everyone has benefited from globalisation equally. The rich, educated and skilled people have made the best of the new opportunities it has brought. On the other hand, many people have not shared the benefits. The ideal of fair globalisation is yet to be realised.
Q. What led the Indian government to changes in trade and investment policy after the 1990s? Explain.
A.・Before 1990s, the Indian government had imposed trade barriers to foreign trade and investment. This was done to protect the domestic produces. 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. India only imported essential items like machinery, fertilisers, petroleum etc.
・Starting around 1991, some far reaching changes in trade policy were made in India. The government decided that the time had come for Indian producers to compete with producers around the globe.It felt that competition would improve the performance of producers within the country as they would have to improve their quality.
・ The government decided to liberalise the Indian economy and allow foreign trade and investment. Thus barriers on foreign trade and investment were removed to a large extent. This meant that goods could be imported and exported easily and foreign companies could set up factories and offices here.
Q. What are MNCs? What are the guiding factors of MNCs? What benefits do local companies get from MNCs?
A. A MNC (Multi National Corporation) is a company that owns or controls production in more than one nation.
Guiding factors of MNCs:
ii) where there is skilled and unskilled labour available at low costs
iii) where the availability of other factors of production is assured
Q. Mention any three factors responsible for globalisation.
A. Three factors responsible for globalisation are:
i) Technology: Rapid improvement in technology has stimulated the globalisation process. For instance, the past 50 years have seen several improvements in transportation technology. This has made delivery of goods across long distances faster and cheaper.
ii) Developments in Information and Communication Technology: Internet and telecommunication facilities like telegraph, telephone, mobile phones, fax etc are used to contact one another around the world, to access information instantly and to communicate from remote areas.
iii) Liberalisation: Removal of trade barriers like import taxes and liberalisation of trade has allowed businesses to make decisions freely about what they want to import or export. This has boosted globalisation.
A. The investment made by a foreign company by setting up production or starting its operations is called FDI i.e. Foreign Direct Investment.
Q. What are SEZs?
A. SEZs are Special Economic Zones. These are the industrial zones having world class facilities like electricity, water, roads, transport, storage, recreational and educational facilities etc. to attract foreign investment.
Q. Which is the most common way of investing by MNCs?
A. The most common route for MNCs to invest is to buy up the local companies and then to expand production.
Q. What are imports?
A. An import is any good or service which a country buys from another country.
Q. Name the major items imported by India.
A. Major items imported by India are:
i) Petroleum and petroleum products
ii) Pearls and precious stones
iii) Chemicals
iv) Coal, coke and briquettes
v) Machinery
vi) Bulk imports-fertilizers, cereals, edible oils, newsprint
Q. Explain three ways in which MNCs control production.
A.・At times MNCs set up production jointly with some of the local companies of the country in which they are investing. The benefit of this joint collaboration for the local companies is twofold:
i) MNCs can provide money for additional investments like buying new machinery for production.
ii) MNCs might bring with them the latest technology for production.
・The most common route for MNC investment is to buy up the local companies and then to expand production. MNCs with huge wealth can easily do so.
・Another way in which MNCs control production is by placing orders for production with small producers.
Q. How does foreign trade lead to the integration of markets across various countries?
A. ・Foreign trade creates an opportunity for producers to reach beyond their domestic market. It allows companies to compete in the markets located in other countries in the world.
・As goods travel from one market to another, the choice of goods in a market increase. Prices of similar goods in the two markets tend to become equal.
・Producers in two countries can now closely compete against each other even though they are located far away from each other.
Thus foreign trade results in integrating i.e. connecting the markets of different countries of the world.
Q. Impact of globalisation is beneficial for the people of India. Explain the social and economic values attached to it.
OR
Impact of globalisation on India has not been uniform. Explain the statement.
A. Globalisation comes with certain advantages as well as disadvantages for the people of India.
Advantages:
・Globalisation and greater competition among producers has benefited the customers. There is greater choice before them and they enjoy improved quality and lower prices for several products. Thus globalisation has increased the standards of living.
・MNCs have increased their investments in India over the past 20 years. They are interested in industries like cell phones, automobiles, electronics, soft drinks, fast food, banking in urban areas etc. Thus new jobs have been created in these industries and the local companies supplying raw materials to these have prospered.
・Several of the top Indian companies have invested in newer technology and production methods, and raised their production standards. Some have gained from successful collaborations with foreign companies.
・Globalisation has enabled some large Indian companies to emerge as MNCs themselves. e.g. Tata Motors, Ranbaxy, Infosys, Sundaram Fasteners, Asian Paints etc.
Disadvantages:
・Industries like batteries, capacitors, toys, plastics, tyres, dairy products, vegetable oil etc. where the small manufacturers are prevalent have been hit hard by the competition posed by the MNCs. Several of the units have shut down rendering many workers jobless.
・Globalisation and the pressure of competition have substantially changed the life of workers. Most employers, now employ workers 'flexibly' to reduce the cost of production. Thus workers have lost their job security.
・Not everyone has benefited from globalisation equally. The rich, educated and skilled people have made the best of the new opportunities it has brought. On the other hand, many people have not shared the benefits. The ideal of fair globalisation is yet to be realised.
Q. What led the Indian government to changes in trade and investment policy after the 1990s? Explain.
A.・Before 1990s, the Indian government had imposed trade barriers to foreign trade and investment. This was done to protect the domestic produces. 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. India only imported essential items like machinery, fertilisers, petroleum etc.
・Starting around 1991, some far reaching changes in trade policy were made in India. The government decided that the time had come for Indian producers to compete with producers around the globe.It felt that competition would improve the performance of producers within the country as they would have to improve their quality.
・ The government decided to liberalise the Indian economy and allow foreign trade and investment. Thus barriers on foreign trade and investment were removed to a large extent. This meant that goods could be imported and exported easily and foreign companies could set up factories and offices here.
Q. What are MNCs? What are the guiding factors of MNCs? What benefits do local companies get from MNCs?
A. A MNC (Multi National Corporation) is a company that owns or controls production in more than one nation.
Guiding factors of MNCs:
- MNCs set up production in places:
ii) where there is skilled and unskilled labour available at low costs
iii) where the availability of other factors of production is assured
- MNCs also look for government policies that look after their interests.
i) MNCs can provide money for additional investments, like buying new machines for faster production.
ii) MNCs might bring with them the latest technology for production.
Q. Mention any three factors responsible for globalisation.
A. Three factors responsible for globalisation are:
i) Technology: Rapid improvement in technology has stimulated the globalisation process. For instance, the past 50 years have seen several improvements in transportation technology. This has made delivery of goods across long distances faster and cheaper.
ii) Developments in Information and Communication Technology: Internet and telecommunication facilities like telegraph, telephone, mobile phones, fax etc are used to contact one another around the world, to access information instantly and to communicate from remote areas.
iii) Liberalisation: Removal of trade barriers like import taxes and liberalisation of trade has allowed businesses to make decisions freely about what they want to import or export. This has boosted globalisation.
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