IMPACT OF GLOBALIZATION IN INDIA BY- DEEPTI MASAND
MEANING OF GLOBALIZATION <ul><li>Globalization describes an ongoing process by which regional economies, societies, and cultures have become integrated through a globe-spanning network of communication and execution . </li></ul><ul><li>Globalization is the rapid increase in cross-border economic, social, technological exchange under conditions of capitalism . </li></ul><ul><li>Globalization or is the process by which the people of the world are unified into a single society and function together. </li></ul><ul><li>Globalization is often used to refer to economic globalization: the integration of national economies into the international economy through trade, foreign direct investment, capital flows, migration, and the spread of technology. </li></ul>
GLOBALIZATION IS A CROSS BORDER INTEGRATION OF :
GLOBALISATION IN INDIA India's economy opened up during the early nineties. The policy measures on the domestic front demanded that there was a requirement of multinational organizations to set up their offices here. The market became more open and the economy started responding to the external (global) market. Due to globalization, contacts have been developed all across the globe, with the pace of integration dramatically increasing. Greater access to developed country markets and technology transfer hold out promise improved productivity and higher living standard.
Measures of Globalization in India Devaluation: The first initiative towards globalization had been taken the moment there was an announcement of devaluating the Indian currency by a hoping 18-19% against all the major global currencies. This was a major initiative in the international foreign exchange arena. The Balance of payment crisis could also be resolved by this measure. Disinvestment: The core elements of globalization are privatization and liberalization. Under the privatization scheme, bulk of the public sector undertakings have been/ and are still being sold to the private sector. Thus the concept of PPP (public private partnership) came up. Allowing Foreign Direct Investment (FDI): Allowing FDI inflows is a major step of globalization. The foreign investment regime has been quite transparent and thus the economy is getting boosted up. Various sectors were opened up for liberalizing the FDI regime.
BRIGHTER SIDE OF GLOBALIZATION Increased Competition One of the most visible positive effects of globalization is the improved quality of products due to global competition. Customer service and the 'customer is the king' approaches to production have led to improved quality of products and services. As the domestic companies have to fight out foreign competition, they are compelled to raise their standards and customer satisfaction levels in order to survive in the market. Besides, when a global brand enters a new country, it comes in riding on some goodwill, which it has to live up to. This creates competition in the market and a 'survival of the fittest' situation
BRIGHTER SIDE OF GLOBALIZATION Employment With globalization, companies have forayed into the developing countries and hence generated employment for them. But it is one of the positive and negative effects of globalization, depending on the point of view you wish to see it from. It has given an opportunity to invest in the emerging markets and tap up the talent which is available there. In developing countries, there is often a lack of capital which hinders the growth of domestic companies and hence, employment. In such cases, due to global nature of the businesses, people of developing countries too can obtain gainful employment opportunities. But the developed countries have lost jobs on account of this movement of jobs to the developing world and hence it is a pinch felt by people in the First World.
BRIGHTER SIDE OF GLOBALIZATION Investment and Capital Flows One of the most visible positive effects of globalization in India is the flow of foreign capital. A lot of companies have directly invested in India, by starting production units in India. Indian companies which have been performing well, both in India and off the shores, will attract a lot of foreign investment, and thus pushes up the reserve of foreign exchange available in India. This is also one of the positive effects of globalization in US and other developed countries as developing countries give them a good investment proposition . The fluctuation in Foreign portfolio Investment were much sharper then FDI, The FDI rate decreases by 36% from period 1990-00 and again shows upward growth rate in period 00-07 was 22.1%. FDI (net) shows a gradual upward growth from $97 million in 1990-1991 to $3272 million in 2000-2001 and again rising and touching the peak of $8779 million in 2006-2007
BRIGHTER SIDE OF GLOBALIZATION Foreign Trade While discussing the positive effects of globalization, how can we leave out the impact of foreign trade on an economy. Comparative advantage has always been a factor even in the old times. While trade originated in the times of early kingdoms, it has been institutionalized due to globalization. Previously, people had to resort to unfair means and destruction of kingdoms and countries to get what they wanted. Today, it is done in a more humane way, with mutual cooperation. People who operate in uncivilized ways, now have to face the WTO and other world organizations that have been established with a view to control and regulate the trade activities of the countries. Share in world exports raise from 0.52% in 1990 to 1% in 2007.
BRIGHTER SIDE OF GLOBALIZATION Spread of Technical Know-How While it is generally assumed that all the innovations happen in the Western world, due to globalization, the know-how also comes into developing countries due to globalization. Without globalization, the knowledge of new inventions, medicines would remain cooped up in the countries that came up with them and no one else would benefit. But due to improved political ties, there is a flow of information both ways. And this point - the spread of know-how, can also be expanded to include economic and political knowledge, which too has spread far and wide. The most obvious example of the spread of knowledge is that the Western world today are waking up to the benefits of Ayurveda and Yoga, while the Western antibiotics and flooding the Indian markets improving the quality of life (and the longevity too) of people in India.
BRIGHTER SIDE OF GLOBALIZATION Spread of Culture The positive effects of globalization on culture are many! Not all good practices were born in one civilization. The world that we live in today is a result of several cultures coming together. People of one culture, if receptive, tend to see the flaws in their culture and pick up the culture which is more correct or in tune with the times. Societies have become larger as they have welcomed people of other civilizations and backgrounds and created a whole new culture of their own. Cooking styles, languages and customs have spread all due to globalization. The same can be said about movies, musical styles and other art forms. They too have moved from one country to another, leaving an impression on a culture which has adopted them.
BRIGHTER SIDE OF GLOBALIZATION Spread of Education One of the most powerful positive effects of globalization on women and men both is the spread of education. Today, you can move in the search of the best educational facilities in the world, without any hindrance. A person living in US can even go to another continent for a new experience and some courses which one may not find in the home country. If one is interested, one can even get a specialization in subjects indigenous to a country and spread that knowledge to the home country. A good example of that is how the American managers went to Japan to learn the best practices in the field of mass production and incorporated that knowledge in their own production units.
BRIGHTER SIDE OF GLOBALIZATION Legal and Ethical Effects Gone are the days where the limited jurisdiction became a hindrance in the prosecution of criminals. These days due to international courts of justice, these criminals can no longer seek asylum in a foreign country, but will be brought forward and there will be justice. Due to globalization, there is also an understanding between the security agencies and the police of two or more different countries who will come together to curb global terrorism . Hence, it is now possible to catch the perpetrators of crime irrespective of which country they choose to hide in. This is undoubtedly one of the greatest positive effects of globalization on society.
BRIGHTER SIDE OF GLOBALIZATION Organizations for Environmental and Social Concerns In cognizance of the damage that has been caused to our world over the years, the individual nations have decided to come together to find a way to save our world from ourselves. Organizations monitoring climate change as well as those which look at the welfare of our animals and marine life, are undoubtedly one of the positive effects of globalization on the environment.
Increased media coverage draws the attention of the world to human right violations. This leads to improvement in human rights. Access to television grew from 10% of the urban population (1991) to 75% of the urban population (1999). Cable television and foreign movies became widely available for the first time and have acted as a catalyst in bulldozing the cultural boundaries Extension of internet facilities even to rural areas. In place of old cinema halls, multiplex theatre are coming up Scientific and technological innovations have made life quite comfortable, fast and enjoyable . In India, land-line or basic phone was a prestige symbol few years back but now you find people riding bicycle with a mobile in hand, talking or listening music. BRIGHTER SIDE OF GLOBALIZATION
BRIGHTER SIDE OF GLOBALIZATION The rate of growth of the GDP of India has been on the increase from 5.6 % during 1980-90 to 7% in the 1993-2001 period. In the last four years, the annual growth rate of the GDP was impressive at 7.5% (2003-04), 8.5% (2004-05),9% (2005-06) and 9.2% (2006-07). The foreign exchange reserves were $ 39 bn (2000-01), $107 bn (2003-04),$145 bn (2005-06) and $180 bn (in February 2007). India’s trade deficit during 1990-1991 to 2006-2007 ranged between 3.6% to 6.9% of GDP. India’s trade deficit during 1990-1991 to 2006-2007 ranged between 3.6% to 6.9% of GDP . In the rate of growth of per capita income there has been a sharp acceleration in the growth of per capita income, almost doubling to an average of 7.2% p.a. (2003-04 to 2007-08). India’s position in the global economy has improved from the 8 th position in 1991 to 4 th place in 2001 (PPP basis)
DARKER SIDE OF GLOBALIZATION Developed nations have outsourced manufacturing and white collar jobs. That means less jobs for their people. This has happened because manufacturing work is outsourced to developing nations like China where the cost of manufacturing goods and wages are lower. Programmers, editors, scientists and accountants have lost their jobs due to outsourcing to cheaper locations like India. Globalization has led to exploitation of labor. Prisoners and child workers are used to work in inhumane conditions. Safety standards are ignored to produce cheap goods. Job insecurity. Earlier people had stable, permanent jobs. Now people live in constant dread of losing their jobs to competition. Increased job competition has led to reduction in wages and consequently lower standards of living. Indian youths leaving education in mid-way and joining MNC's There has been a increase in the violence, particularly against women.
DARKER SIDE OF GLOBALIZATION Terrorists have access to sophisticated weapons enhancing their ability to inflict damage. Terrorists use the Internet for communicating among themselves. Companies have set up industries causing pollution in countries with poor regulation of pollution. Fast food chains like McDonalds and KFC are spreading in the developing world. People are consuming more junk food from these joints which has an adverse impact on their health. The benefits of globalization is not universal. The rich are getting richer and the poor are becoming poorer. Bad aspects of foreign cultures are affecting the local cultures through TV and the Internet. Enemy nations can spread propaganda through the Internet.
DARKER SIDE OF GLOBALIZATION Deadly diseases like HIV/AIDS are being spread by travelers to the remotest corners of the globe. Local industries are being taken over by foreign multinationals. The increase in prices has reduced the governments ability to sustain social welfare schemes in developed countries. There is increase in human trafficking. Multinational Companies and corporations which were previously restricted to commercial activities are increasingly influencing political decisions Growing inequality across and within nations,volatility in financial market and environmental deteriorations. Another negative aspect of globalisation is that a great majority of developing countries remain removed from the process
DARKER SIDE OF GLOBALIZATION Indian youths leaving education in mid-way and joining MNC's There has been a increase in the violence, particularly against women. Industrialization did not take place as per expectation. Share of agriculture in the GDP went down drastically to 24 per cent and further to 22 per cent in 2006-07. The number of rural landless families increased from 35 per cent in 1987 to 45 per cent in 1999, further to 55 per cent in 2005. Corruption, lack of efficiency in work and ineffective management became the common features of public sector. Decreased FDI: The data of FDI shows 50% (approx) gradual upward growth from 90-00. The FDI growth decreased by 20% from period 2000-07. Our progress in education has been slow and superficial , without depth and quality, to compete the international standards. People depending on agriculture in India is about 60% where as the same for U.K. Is 2% and U.S. Is 2%.
Despite this progress, poverty remains one of the most serious international challenges we face up to 1.2 billion of the developing world 4.8 billion people still live in extreme poverty . India has to concentrate on five important areas or things: Technological entrepreneurship, New business openings for small and medium enterprises, Importance of quality management, New prospects in rural areas and Privatisation of financial institutions DARKER SIDE OF GLOBALIZATION
Amartya Sen’s View India, as a geographical, politico-cultural entity has been interacting with the outside world throughout history and still continues to do so. It has to adapt, assimilate and contribute, even as we move into what is called a globalized world which is distinguished from previous eras from by faster travel and communication, greater trade linkages, denting of political and economic sovereignty and greater acceptance of democracy as a way of life.
CONCLUSION Globalization is a tool that should benefit all sections of mankind. One cannot ignore its negative effects. These must be addressed for the world’s peace and prosperity. The ultimate inference being that globalization hasn't shown positive results. To conclude the benefits of economic reforms on the Indian economy would get achieved, only if the negative impacts are settled or neutralized India gained highly from the LPG model as its GDP increased to 9.7% in 2007-2008. In respect of market capitalization, India ranks fourth in the world. But even after globalization, condition of agriculture has not improved. The share of agriculture in the GDP is only 17%. The number of landless families has increased and farmers are still committing suicide. But seeing the positive effects of globalization, it can be said that very soon India will overcome these hurdles too and march strongly on its path of development