Haryana State Board HBSE 10th Class Social Science Notes Economics Chapter 4 Globalisation and the Indian Economy Notes
Haryana Board 10th Class Social Science Notes Economics Chapter 4 Globalisation and the Indian Economy
- Most regions of the world are getting increasingly interconnected. While this interconnectedness across countries has many dimensions – cultural, political, social and economic.
→ This chapter looks at globalisation in a more limited sense
- Globalisation is the integration between countries through foreign trade and foreign investment by multinational companies (MNCs).
- In a matter of years, our markets have been transformed. As consumers of today’s world, some of us have a vast choice of goods and services before us, which is a relatively recent phenomenon.
Economics Chapter 4 Class 10 Notes HBSE
→ Production Across Countries
- The early phase of globalisation involved export of raw materials from colonial countries such as India and import of finished products from industrially developed European countries and the USA.
- But from the middle of the 20th century, things began to change. Some companies became
Multinational Corporations (MNCs) as they spread their economic activities to various parts of the world. . .
- An MNC is a company that owns or controls production in more than one country. MNCs set-up offices and factories for production in regions where they can get cheap labour and other resources, to minimise cost and maximise profit.
- They sell their finished products globally and also produce the goods and services globally. The production process is divided into small parts and spread out across the globe. Interlinking Production Across Countries
- In general, MNCs set up production where it is close to the markets; where there is skilled and unskilled labour available at low costs; and where the availability of other factors of production is assured.
- In addition, MNCs might look for government policies that look after their interests. Same ways of interlinking production across countries are discussed below:
(i) Foreign Investment is made by a company based in one country (usually an MNC), into a company based in another country. MNCs set-up the production units by setting up factories or offices in the foreign country.
(ii) Sometimes MNCs merge with local companies and produce jointly. In this way, MNCs provide money for additional investments like buying new machines for faster production and bring latest technology for production.
(iii) MNCs buy local production units or merge with local companies to expand production. For example Cargill Foods of USA has taken over Parakh Foods in India and has become the largest producer of edible oil in India.
(iv) MNCs also place orders with small producers for production. The MNC determines the price, quality, delivery and labour conditions for these distant producers, etc.
Chapter 4 Globalisation And The Indian Economy Notes HBSE 10th Class
→ Foreign Trade and Integration of Markets
- For a long time foreign trade has been the main channel connecting countries.
- Foreign trade helps in the integration of markets in the following ways:
- (i) Facilitate movement of goods and services between countries
(ii) Facilitate movement of people, ideas and technology
(iii) Gives opportunity to producers to sell their products beyond local, domestic markets
(iv) Buyers get more choice of goods
(v) Increased competition among producers ensures better quality of goods and services.
- An example of foreign trade in India is that how the cheap and better quality of Chinese toys replaced the Indian toys.
→ What is Globalisation?
- Globalisation is the process of rapid integration or interconnection between countries by greater foreign investment and greater foreign trade.
- Globalisation causes integration of markets as well as production centres.
- In the process of globalisation, MNCs are playing a major role. More and more goods and services, investments and technology are moving among different countries.
→ Factors that have Enabled Globalisation
- Rapid improvement in technology has been one majqr factor that has stimulated the globalisation process.
- Information and communication technology has speeded up the communication services across the globe.
- Telecommunication facilities (telegraph, telephone, mobile phones, fax) and internet through satellite communication is used to contact one another around the world, to access information instantly and to communicate from remote areas.
- An example of this is a news magazine published for readers in London, which is designed and printed in Delhi by using telecommunication facilities and internet.
Class 10th Chapter 4 Economics Notes HBSE
→ Liberalisation of Foreign Trade and Foreign Investment Policy
- Trade Barrier 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.
- Governments use trade barriers to regulate foreign trade and to decide what kinds of goods and how much of each, should come into the country.
- After independence, the Governemnt of India had put barriers on foreign trade and foreign investment, to protect the domestic producers from foreign competition.
- 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.
- Removing barriers or restrictions set earlier by the government on foreign trade is know has liberalisation.
- With liberalisation of trade, businesses are allowed to make decisions freely about what they wish to import or export.
- Now, the government imposes less restrictions than before and is therefore considered to be more liberal.
→ World Trade Organisation
- World Trade Organisation is one such organisation whose aim is to liberalise intenational trade.
- WTO establishes rules regarding international trade, and sees that these rules are obeyed.
- Though WTO is supposed to allow free trade for all the countries, but it is found that the developed countries have unfairly implemented some rules to their own advantage. They have forced the developing countries to remove barriers from their countries. Impact of Globalisation in India
- Globalisation resulted in more competition among producers (both local and foreign). It gives greater choice of goods with improved quality at lower prices.
- MNCs have increased their investments in India in cell phones, automobiles, electronics, soft drinks, fast food and services such as banking in urban areas.
- Many new jobs have been created and local companies supplying raw materials and services to these industries have prospered.
- Globalisation brings in new and improved technology by which even the local companies benefit.
- Some large Indian companies like Infosys, Tata Motors, Asian Paints, Rartbaxy Sundaram Fasteners (nuts and bolts) have emerged as MNCs and set up companies in other countries.
- New companies that provide call centres, IT related services, accounts and administrative jobs have established.
- For a large number of small producers and workers globalisation has posed major challenges.
- Batteries, capacitors, plastics, toys, tyres, dairy products, and vegetable oil are some examples of industries where the small manufacturers have been hit hard due to competition.
- For attracting foreign companies to invest in India, the government has set up Special Economic Zones (SEZs).
- Globalisation and the pressure of competition have changed the lives of workers. With growing competition, most employers these days prefer flexible employment. This mean’s that workers jobs are no longer secure. For example, in the garment export industry.
Class 10 Social Science Economics Chapter 4 Notes HBSE
→ The Struggle for a Fair Globalisation
- People with education, skill and wealth have made the best use of the new opportunities created due to globalisation.
- In order to make globalisation fairer, the government should ensure that the benefits of globalisation are shared better and its policies must protect the interests of all the people in a country.
→ Important Terms
1. Multinational Corporation: A company that owns or controls production in more than one nation.
2. Investment: Expenditure made on assets, like- land, building, machine and other equipment, is called investment.
3. Foreign Investment: Investment made by multinational companies is called foreign investment.
4. Foreign Trade: The process of buying and selling goods and services between two or more than two countries is known as foreign trade.
5. Globalisation: Globalisation is a process of interconnection between countries of the world.
6. Trade Barriers: Barriers on export and import are known as trade barriers.
7. Liberalisation: Removing barriers, set by the government, is known as liberalisation.
Class 10th Economics Chapter 4 Notes HBSE
8. Quota: To fix a limit on exports and imports of goods by the government, is called Quota.
9. World Trade Organisation (W.T.O.): WTO is an international organisation, which establishes rules regarding international trade and sees, that these rules are obeyed.
10. Special Economic Zones (SEZs): Special Economic Zones (SEZs) are those industrial regions, which have world-class facilities of water, electricity, road, transport, storage, and recreational and educational facilities. Companies, that set up a production unit in the SEZs, do not have to pay taxes, for a period of five years.