ECONOMICS Done by GLOBALIZATION AND Mrinali Grade - xTHE INDIAN ECONOMY
CONTENTSProduction across countriesInterlinking production across countriesForeign trade and integration of marketsWhat is globalization?Factors that have been enabled globalizationWorld trade globalizationImpact of globalization in IndiaThe struggle for a fair globalization
MID 20 TH CENTURYProduction largely organized withincountries.Raw materials, food stuff andfinished products crossed countries.TRADE – was the main channel toconnect distant boundariesMNCs = MultiNational Corporationsemerged then..They are the companies that ownor control production in more thanon nation
MNC’SSetup offices and factories forproduction in regions where theycan get cheap labour and otherresources=> this helps in greater profits tothe company as his supply is still inprocess, there is production at aregion where the company has notpaid much and te demand n supplyor WANTED finished goods istaking place.
MORE OF MNC’STheir goods and services areproduced globallyRESULT = production is organizedin increasingly complex ways.Production is divided in small partsacross the globe to gain advantagefor their closeness to the markets ofevery country and can be easilyproduced there.
MNC’SSetup production offices andfactories on the basis of theavailability of skilled and unskilledlabour at cheap prices.They look at the governmentpolicies for their interests.
INVESTMENT= the money that is spent on to buyassets such as,LAND, BUILDING, MACHINESAND ON OTHER EQUIPMENTS= made in the hope of earningprofits.- MADE BY MNCs is calledFOREIGN INVESTMENTS.
MNC’S SETUP PRODUCTIONWITH THE LOCALCOMPANIESADVANTAGE – LARGE MNCs in developed countries place orders forJoint production is 2 fold production with small producers.MNCs can provide additionalinvestments like, buying newmachines for faster productionMNCs might bring them the latesttechnologyMNCs investments is to buy uplocal companies and then expandproduction
The products are supplied to the By setting up partnerships withMNCs, which then sell there their local companies, by using the localown brand names to the customers. companies for supplies, by closely competing with local companionsThe MNCs have tremendous power or buying them up.to determine price, MNCs are exerting a strongQuality, influence on production at thereDelivery, and distant locations.Labour conditions for these distant As a result, production in theseproducts. widely dispersed locations is getting interlinked.
FOREIGN TRADE AND INTEGRATION OF Lets see how this one is… MARKETS
For a long time foreign countries have Foreign trade thus results inbeen THE MAIN channel connecting connecting the markets or integrationcountries. of markets in different countries.This creates the opportunity for theproducers to reach beyond thedomestic markets i.e. markets of theirown country.Producers can then sell their good notonly within their country but alsoaround the globe.With this the production increases,employment of labour, capital, and withthe help of technology newly designedproducts hit the market from eachMNC. Competition increases.
GLOBALIZATIONGlobalization is the process of rapidintegration or interconnection betweencountries.MNCs play a major role in theglobalization process.More and more good, services,technologies, investments etc. r movingaround countries.Besides these movements one suchmovement is also there through whichcountries can be connected that is theMOVEMENT OF PEOPLE BETWEENCOUNTRIES. This movement takesplace in search of better jobs, betterincome, and better education.
FACTORS THAT HAVE ENABLED There are 2 factors… GLOBALIZATION
1. TECHNOLOGYRapid improvement in technologyhas been a major factor that hasstimulated the globalizationprocess.This has made much faster deliveryof goods across long distancepossible at lower costs.
2. INFORMATION ANDCOMMUNICATIONTECHNOLOGYTelecommunication,computers,inter Using IT in globalizationnet has been changing rapidly.Telecommunication facilties are Information and communicationused to contact one another around technology (or IT in short) hasthe world and to communicate from played a major role in spreadingremote areas. out production of services across countries.Examples; telegraph, telephone,including mobile phones, fax, etc.
LIBERALIZATION OF FOREIGN TRADE AND INVESTMENT POLICY of making less The Indian government, afterLiberalization - the actstrict. Independence, had put barriers to foreign investment.Tax on imports Is an example of tradebarrier. This way considered necessary to protect the producers from within theIt is called a barrier because some country from foreign competition.restriction has been set up. In 1991, the government decided thatGovernments can use trade barriers to time had come for Indian producers toincrease or decrease (regulate) compete with producers around theforeign trade and to decide what kinds globe. It felt that competition wouldof goods and how much of each, improve the performance of producersshould come into the country. within the country since they would have to improve their quality. This decision was supported by powerful international organisations.
BARRIERS ORRESTRICTIONSSET BY THEGOVERNMENT ISWHAT IS KNOWNASLiberalization of trade, businesses are allowedLIBERALIZATION.to make decisions freely about what they wishto import or export.
AS WE HAVEUNDERSTOODTHE ABOVEMENTIONEDSLIDES…. WHATDO U THINKWORLD TRADEORGANIZATIONMEANS?
It is one such organization whoseaim is to liberalize internationaltrade.149 countries of the world arecurrently of the members of WTO(2006)Thought WTO is suppose to allowfree trade for all, in practice, but it isseen that the developed countrieshave unfairly retained tradebarriers.
IMPACT OFGLOBALIZATION IN In the last 15 years… INDIA
Globalization and greatercompetition among as- has been ofadvantage to consumers.There is greater choice who nowenjoy improved quality and lowerprices for several products.As a result these people today.Enjoy much higher standards ofliving than was possible earlier.
1. firstly , MNCs have increasedtheir investments in India over thepast 15 years, which meansinvesting in India has beeninterested in industries such as cellphones , auto mobiles, electronics ,soft drinks , fat foods or servicessuch as banking in urban areas.These products have a largenumber of well-off buyers. In theindustries and services new jobsare created.
TOP INDIAN COMPANIESSecondly, several of the TOPINDIAN COMPANIES havebenefited from increasedcompetition.They have invested in newertechnology and production methodsand raised their standards.Some gained from successfulcollaboration with foreigncompanies.
Globalization has enabled somelarge Indian companies to emergeas multinations’Example – TATA MOTORS,INFOSYS (IT) ASIAN PAINTS, etc.,are some Indian companies whichare spreading their operations worldwide.Globalization, created newopportunities for companiesproviding services, speciallyinvolving IT.
LETS RE- CAP OF WHAT WE HAVE UNDERSTOOD ABOUT THE CHAPTER ASHave a group discussion and understand the YET.experience of every individual and make sureyou have understood everything RIGHT!NO DIFINITION – JUST EXPLAIN!
PROS AND CONS OF Let us see what to people have GLOBALIZATION to say…
Globalization causes unemployment in industrialized countries because firms move Globalization lets countries do what they their factories to places where they can get can do best. If, for example, you buy cheaper workers. cheap steel from another country you Globalization may lead to don’t have to make your own steel. You more environmental problems. A company may can focus on computers or other things. want to build factories in other countries Globalization gives you a larger market. because environmental laws are not You can sell more goods and make more as strict as they are at home. Poor countries in money. You can create more jobs. the Third World may have to cut down more trees so that they can sell wood to richer Consumers also profit from globalization. countries. Products become cheaper and you can get new goods more quickly. Some of the poorest countries in the world, especially in Africa, may get even poorer. Their population is not as educated as in developed countries and they don’t have the new technology that we do. Human, animal and plant diseases can spread more quickly through globalization.
Resources of different countries are used Developed countries can stiflefor producing goods and services they development of undeveloped and under-are able to do most efficiently. developed countries.Consumers to get much wider variety of Economic depression in one country canproducts to choose from. Consumers get trigger adverse reaction across thethe product they want at more globe.competitive prices. It can increase spread of communicableCompanies are able to procure input diseases.goods and services required at mostcompetitive prices. Companies get Companies face much greateraccess to much wider markets competition. This can put smaller companies, at a disadvantage as they doIt promotes understanding and goodwill not have resources to compete at globalamong different countries. Businesses scale.and investors get much wideropportunities for investment.Adverse impact of fluctuations inagricultural productions in one area canbe reduced by pooling of production ofdifferent areas.
THE STRUGGLE FOR A The final segment FAIR GLOBALIZATION
BEFORE READING THEFURTHER SLIDES READ THETWO STORIES AND HAVE AGROUP DISCUSSION TO BEABLE TO RECEIVE A BETTERUNDERSTANDING OVER THETOPIC.
Not everyone is benefited from Fair globalization would createglobalization. opportunities for all, and also- ensure that the benefits ofPeople with education, skill and globalization are shared better.wealth have made the best use ofthe new opportunities.On the other hand there are manypeople who have not shared thebenefits.Since GLOBALIZATION is not aREALITY, the question is how tomake it more ‘FAIR’?
HOW DO U THINK CAN WESHARE GLOBALIZATION?HOW DO WE MAKE IT FAIR FOREVERYONE?
The government can play a major It can negotiate at the WTO for ‘fairrole in making globalization fair. rules’.Its policies must protect the It can also align with otherinterests, not only of the rich and developing countries with similarthe powerful, but all the people in interests to fight against thethe country. domination of developed countries in the WTO.The government can ensure thatlabour laws are properlyimplemented and the workers gettheir rights.It can help the small producers toimprove to that they can strengthenthemselves enough to compete.