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  1. 1. GLOBALIZATION IN INDIA 2/3/2014 By- Sumit Kumar 1
  2. 2. Globalization  Expansion of economic activities across the political boundaries of nation states  Increasing economic openness and growing economic interdependence between countries  Opening up of markets to foreign players and vice versa 2/3/2014 2
  3. 3. Globalization According to IMF globalization stands for ‘the growing economic interdependence of countries worldwide through increasing volume and variety of cross-border transactions in goods and services and of international capital flows, and also through the more rapid and widespread diffusion of technology’. 2/3/2014 3
  4. 4. What kinds of things cross international borders? • • • • • • Trade – goods and services. – You can buy a TV from China, car from Japan, clothes from Indonesia or Italy. – You can hire someone from India to write software or answer your telephone Capital – money, investment – You can put your savings into a bank in Zurich. – You can buy stock in SONY, a Japanese company People – immigrants, refugees, tourists – Immigrants come to Calgary from Asia, Africa, S. America, Europe – You can easily travel to Europe, Asia, S. America Communication – You can easily call or email people around the world Culture (art, music, cuisine) – You can hear music from Brazil, South Africa, India – Nearby restaurants: Chinese, Thai, Ethiopian, Indian 2/3/2014 4 Ideas
  5. 5. 1. International trade (lower trade barriers 2. 3. 4. 5. and more competition) Financial flows (FDI, Technology transfer/licensing, portfolio management, debt) Communications (traditional media and internet) Technological advances in transportation, electronics, bioengineerin g and related fields. Population mobility, especially labour. 2/3/2014 5
  6. 6. Driving Forces 1. Improvements in information technology 2. Trade liberalization 3. capital flows 4. Cheap travel 5. Less rigorous immigration policies 6. Marketing 2/3/2014 6
  7. 7. Market drivers  Per capita income converging among       industrialised nations Convergence of lifestyles and tastes Organisations beginning to behave as global customers Increasing travel creating global consumers Growth of global and regional channels Establishment of world brands Push to develop global advertising 2/3/2014 7
  8. 8. Cost drivers  Continuing push for economies of scale  Accelerating technological innovation  Advances in transportation  Emergence of newly industrialised countries with productive capability and low labour costs.  Increasing cost of product development relative to market life 2/3/2014 8
  9. 9. Government drivers  Reduction of tariff barriers  Reduction of non-tariff barriers  Creation of blocs  Decline in role of governments as producers and customers  Privatisation in previously state-dominated economies  Shift to open market economies from closed communist systems in eastern Europe  Increasing participation of China and India in the global economy 2/3/2014 9
  10. 10. Competitive drivers  Continuing increases in the level of world trade  Increased ownership of corporations by foreign     acquirors Rise of new competitors intent upon becoming global competitors Growth of global networks making countries interdependent in particular industries More companies becoming globally centred rather than nationally centred Increased formation of global strategic alliances 2/3/2014 10
  11. 11. Other drivers  Revolution in information and communication  Globalisation of financial markets  Improvements in business travel 2/3/2014 11
  12. 12. Pros of Globalization Increases economic prosperity and opportunity Higher degrees of political and economic freedom in the form of democracy Improved standard of living – reduction in poverty Improved gender relations Increased life-span 2/3/2014 12
  13. 13. Cons of Globalization Increased environmental damage increased poverty, inequality, injustice erosion of traditional culture Corporations are motivated by profit and have little concern for people economic globalization developments feed into ethnic, religious, and factional tensions that lead to wars and help breed terrorism Terrorists now globally interconnected and empowered with knowledge, create a whole new category of warfare based, in part, on the disruption of the interconnections which are both created by and necessary for globalization 2/3/2014 Corporations shape political policy of 13 countries e.g. over fishing
  14. 14. Benefits 1. Foreign capital if properly utilized can provide substantial benefit to the economic development of a nation e.g. China 2. Productivity will increase where countries are producing products where they have comparative advantage. Living standards will also increase 3. Increase competitiveness make companies more cost and quality conscious 4. Inflation is less likely to have damaging impact 5. Increased consumer choice. 2/3/2014 14 6. Export jobs often pay more than other jobs
  15. 15. 1. 2. 3. 4. 5. 6. Business freedom Facilities Government support Resources Competitiveness Orientation 2/3/2014 15
  16. 16. Adverse Effects 1. Global dominance of MNEs 2. Countries indiscriminate attitude toward foreign investment 3. Large number of takeovers of national firms by foreign firms 4. Replacement of traditional and indigenous products by modern products. 5. Sometimes liberalization is adopted to serve the best interest of a section of people not the masses 6. Domestic firms are playing with big MNEs without enough protection thus without a level playing field 2/3/2014 16
  17. 17. Adverse Effects 7. MNEs dump obsolete technology to the developing world. 8. The developing countries as a whole are being in a disadvantageous position by the international trading system. 9. Millions of people from developed world have lost their job due to the shift of the production in low cost location 10. The job loss, less pay, fear of loosing jobs are common in both manufacturing and service sector. 2/3/2014 17
  18. 18. Globalization Good news Bad news  Wider markets for trade  Reduction in sovereignty  Larger private capital inflows  Increase in competition may  Better access to technology  lead to some firms closing  Availability of a wider variety  down of goods  Risk of being left behind  Payoffs are larger, but so are  the penalties for policyin action or errors 2/3/2014 18
  19. 19. India Foreign Exchange Reserves  Foreign Exchange Reserves in India increased to 14760.70 INR Billion in June of 2013 from 14228.40 INR Billion in May of 2013.  Foreign Exchange Reserves in India is reported by the Reserve Bank of India. India Foreign Exchange Reserves averaged 4856.84 INR Billion from 1990 until 2013, reaching an all time high of 14760.70 INR Billion in June of 2013 and a record low of 23.86 INR Billion in June of 1991.  In India, Foreign Exchange Reserves are the foreign assets held or controlled by the country central bank. The reserves are made of gold or a specific currency.  They can also be special drawing rights and marketable securities denominated in foreign currencies like treasury bills, government bonds, corporate bonds and equities and foreign currency loans 2/3/2014 19
  20. 20. FOREIGN EXCHANGE RESERVES  1990-91 - 114.16  2000-01 -1972.04  2011-12 - 15061.30 In Billion ₨ 2/3/2014 20
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  22. 22. India Exports  Exports in India increased to 1430 INR Billion in June of 2013 from 1348.08 INR Billion in May of 2013.  Exports in India is reported by the Directorate General of Commerce.  India Exports averaged 243.74 INR Billion from 1978 until 2013, reaching an all time high of 1678.36 INR Billion in March of 2013 and a record low of 3.75 INR Billion in May of 1978.  India’s main exports are engineering goods (19 percent of total exports), gems and jewelry (15 percent), chemicals (13 percent), agricultural products (9 percent) and textiles (9 percent).  India is also one of Asia’s largest refined product exporters with petroleum accounting for around 18 percent of total exports. India’s main export partners are United Arab Emirates (12 percent of total exports) and United States (11 percent). Others include: China, Singapore, Hong Kong and Netherlands. 2/3/2014 22
  23. 23. EXPORT IN INDIA  1990-91 - 406.35  2000-01 - 2781.26  2011-12 - 21817.09 2/3/2014 23
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  25. 25. India Imports  Imports in India decreased to 2166 INR Billion in June of 2013 from 2456.19 INR Billion in May of 2013.  Imports in India is reported by the Directorate General of Commerce.  India Imports averaged 364.23 INR Billion from 1978 until 2013, reaching an all time high of 2475.94 INR Billion in January of 2013 and a record low of 4.98 INR Billion in April of 1978.  India is heavily dependent on coal and foreign oil imports for its energy needs.  Other imported products include: machinery, gems, fertilizers and chemicals. India’s main import partners are China (12 percent of total imports), United Arab Emirates, Switzerland, Saudi Arabia, United States, Iraq and Kuwait. 2/3/2014 25
  26. 26. Import of Goods and Services  1990-91 - 486.98  2000-01 - 2975.23  2011-12 - 26434.03 2/3/2014 26
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  28. 28. India GDP  The Gross Domestic Product (GDP) in India was worth 1841.70 billion US dollars in 2012.  The GDP value of India represents 2.97 percent of the world economy.  GDP in India is reported by the The World Bank Group. India GDP averaged 485.65 USD Billion from 1970 until 2012, reaching an all time high of 1872.90 USD Billion in December of 2011 and a record low of 63.50 USD Billion in December of 1970.  The gross domestic product (GDP) measures of national income and output for a given country's economy. The gross domestic product (GDP) is equal to the total expenditures for all final goods and services produced within the country in a stipulated period of time 2/3/2014 28
  29. 29. GDP IN INDIA  1990-91 - 5862.12  2000-01 - 21686.52  2011-12 - 88557.97 (Amount in Billion) 2/3/2014 29
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  31. 31. India GDP per capita PPP  The Gross Domestic Product per capita in India was last recorded at 3649.53 US dollars in 2011, when adjusted by purchasing power parity (PPP).  The GDP per Capita, in India, when adjusted by Purchasing Power Parity is equivalent to 17 percent of the world's average. GDP per capita PPP in India is reported by the World Bank.  India GDP per capita PPP averaged 1446.39 USD from 1980 until 2011, reaching an all time high of 3649.53 USD in December of 2011 and a record low of 419.87 USD in December of 1980. The GDP per capita PPP is obtained by dividing the country’s gross domestic product, adjusted by purchasing power parity, by the total population 2/3/2014 31
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  33. 33. India GDP Growth Rate  The Gross Domestic Product (GDP) in India expanded 1.30 percent in the fourth quarter of 2012 over the previous quarter.  GDP Growth Rate in India is reported by the OECD. India GDP Growth Rate averaged 1.63 Percent from 1996 until 2012, reaching an all time high of 5.80 Percent in December of 2003 and a record low of -1.70 Percent in March of 2009. In India, the growth rate in GDP measures the change in the seasonally adjusted value of the goods and services produced by the Indian economy during the quarter.  India is the world’s tenth largest economy and the second most populous. 2/3/2014 33
  34. 34.  The most important and the fastest growing sector of Indian economy are services. Trade, hotels, transport and communication; financing, insurance, real estate and business services and community, social and personal services account for more than 60 percent of GDP.  Agriculture, forestry and fishing constitute around 12 percent of the output, but employs more than 50 percent of the labor force. Manufacturing accounts for 15 percent of GDP, construction for another 8 percent and mining, quarrying, electricity, gas and water supply for the remaining 5 percent. 2/3/2014 34
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