Economics

Chapter– 4 Globalization And The Indian Economy

New economic policy: it refers to all these different economic reforms introduced since July 1991 or policy measures and changes which aim at increasing productive and efficiency by creating an environment of competition in the economy.Liberalization: The process by which government controls over the industry are being loosened.

Privatization: It means allowing the private sector to set up more and more of such industries as were previously reserved for public sector. Under it, existing enterprises of the public sector are either wholly or partially sold to private sector.Trade Barriers: It refers to the various restrictions which are used by the government to increase or decrease foreign trade., eg., tax on imports.

Impact of globalization in India

1. For consumers, wide varieties of good quality goods at lower prices are available which leads to higher standard of living.
2. New jobs are created in industries such as cell phones, electronics, fast food, automobiles.
3. . Local companies have prospered through supplying raw materials to these industries.

Fair globalization:

1. Labour laws should be implemented properly.
2. Small producers should be supported.
3. Use trade and investment barriers efficiently.
4. Negotiate at the WTO for fairer rules.

Mention two shortcoming of globalization:

1. Small manufacturers producing toys, vegetable oils, etc have been hit hard due to competition.
2. In order to cut costs of the products, employers in exports industry try to cut labour cost. Workers job is no longer secure.

Q. 1. What are the various ways in which countries can be linked?

Ans.

1. MNCs can buy the local companies.
2. MNCs can jointly produce with local companies of other countries.
3. MNCs can place order for production with small producers of other countries.

Q. 2.How has competition benefited people in India?

Ans.

1. Buyers can easily get good variety of quality products of different countries at reasonable prices.
2. Producers now sell their products not only in domestic market but also in different countries and thereby increase their profits.

Q. 3.Characteristics of MNCs.

Ans.

1. They are of a giant size. The assets and sales of MNCs run into billions of dollars and they also make supernormal profits.
2. A multinational conducts international operations.
3. It grows in a spontaneous and conscious manner.
4. It facilitates of multilateral transfer of resources.

Q. 4How do the MNCs help in the growth of local companies?

Ans.

1. Availability of modern techniques and management: Modern technology and managerial services are made available to the local companies or to the host country. As a result, the productivity of the local enterprises increases and the resources are optimally utilized.
2. Money: MNCs can provide money for additional investments, like buying new machines, raw materials etc. for fast production. The MNCs also keep the flow of work.