• Globalization is a common term for processes of
international integration arising from increasing human
connectivity and interchange
of worldviews, products, ideas, and other aspects
• In particular, advance in transportation and
telecommunications infrastructure, including the rise
of the Internet, represent major driving factors in
globalization and precipitate further interdependence of
economic and cultural activities.
• “It is the process of integrating country’s economy
with global economy with a view to capture global
opportunities for long term growth &
• Deepak Nayyar defines Globalization as, "the
expansion of economic activities across political
boundaries of nation states.”
Exchange Rate & Convertibility.
• In 1993-94, full convertibility current account &
unified exchange rate system was introduced.
Opening up of Indian Economy.
• In the New Economic Policy, since
1995, Government has offered various
incentives to foreign investors & NRI’s.
• The New EXIM Policy of 1992-97 allowed the
free import of all items, except those in
negative list only.
Increase in Trade.
The International Monetary Fund (IMF) was
established on 27th December, 1945 when 30
countries signed the Articles of Agreement.
The Fund was established to remove all restrictions
on trade & exchange.
It also provided short term capital to the member-
state to overcome their balance of payment
difficulties to promote the multilateral trade.
Today it has about 185 countries associated to it.
Role of I.M.F
To provide Credit assistance.
To establish a multilateral system.
To maintain orderly arrangement.
To serve as a reservoir of Currencies.
To promote Exchange Stability.
To promote Balanced Growth.
To act as a Forum.
IBRD or World
The International Bank of Reconstruction &
Development (IBRD) was set up to help the member
countries with long term capital for reconstruction of
the war-damaged economies & development of
• The International Finance Corporation. (IFC)
• The International Development Association. (IDA)
• The Multilateral Investment Guarantee Agency. (MIGA)
• The International Bank of Reconstruction & Development. (IBRD)
• The International Centre for the Settlement of Investment Disputes.
The World Bank in the early 90’s expanded from
single institution to group of 5 development
Role of World Bank
The poverty reduction & sustainable growth in the poorest
countries, especially Africa.
The solutions to the special challenges of post-conflict
countries & fragile states.
The development solutions with customized services as well as
financing for middle-income countries.
The regional & global issues the cross national boarders-
climate change, infectious disease & trade.
The greater development & opportunity in the Arab world.
The pulling together of the global knowledge to support
A recession refers to downswing, when the economy is shrinking & the GDP is
growing at a negative rate.
No country can remain isolated from the fluctuations of the world trade
Heavy losses suffered by the major international banks is going to affect all the
countries of the world as these financial institutions have their investment
interests in almost all the connected countries.
India is now experiencing the following features of global recession:
• Our share markets have been falling everyday.
• Our Rupee is weakening against the US Dollar.
• Our banks have been facing severe cash crunch towards liquidity in markets.
It is the spread of market disturbances on
the downside from one country to the
other, through co-movements in exchange
rates, stock prices, sovereign spreads &
It is a significant increase in cross market
linkages after shock to an individual
country or the group of countries.
It is a cross country transmission of
economic shocks or any of the general
cross country spill over effects whether
real, financial or from exogenous
During the Uruguay Round of GATT (General
Agreement on Trade & Tariff), W.T.O (World Trade
Organization) was established to give the way of
further liberalization of international trade.
From 77 member countries in 1995 of the GATT
completely increased to 127 member countries by
1996 to 147 countries, including India by April 2004.
W.T.O is a institutional frame-work established for
free global trade at the international level.
• Increase in
• Export of
The disputes in the WTO are about broken
A dispute arises when one country adopts a
trade policy measure or takes some action that
one or more fellow WTO members consider to
break the WTO agreement.
• The Consultation.
• The Panel.
The Dispute Settlement has following stages.
• Case in Writing.
• First Hearing.
• First Draft.
• Interim Report.
• Final Report.
Need of Foreign
Initial Stage of
Role of MNCs
Causes of Rising
Source of Technology.
Low Cost Opportunities.
Rapid Economic Progress.
No Barriers or Permission.