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Question-1

What do you understand by globalisation? Explain in your own words.

Solution:
Globalisation is the rapid integration or interconnection between countries mostly on the economic plane. In other words, Globalisation means integrating our economy with the world economy.

Question-2

What was the reasons for putting barriers to foreign trade and foreign investment by the Indian government? Why did it wish to remove these barriers?

Solution:
The Indian government, after Independence, had put barriers to foreign trade and foreign investment. This was considered necessary to protect the producers within the country from foreign competition. Industries were just coming up in the 1950s and 1960s, and competition from imports at that stage would not have allowed these industries to come up.


During the end of the 20th century, the government decided that the time had come for Indian producers to compete with producers around the globe. It felt that competition would improve the performance of producers within the country since they would have to improve their quality. So, India removed trade barriers and Indian producers were allowed to compete with producers around the globe.

Question-3

How would flexibility in labour laws help companies?

Solution:
Flexibility in labour laws help companies by reducing the cost of labour ,which in turn will help the company to bring down the cost of its product and the company will be in a position to compete in the global market.


Government has also allowed flexibility in the labour laws to attract foreign investment. Companies in the organised sector have to obey certain rules that aim to protect the workers’ rights. In the recent years, the government has allowed companies to ignore many of these rules. Instead of hiring workers on a regular , permanent basis, companies hire workers ‘flexibly’ for short periods when there is intense pressure of work. This helps reduce the cost of labour for the company.


Question-4

What are the various ways in which MNCs set up, or control, production in other countries?

Solution:
The most common strategy of a Multi National Corporation is to first buy a local company and then to expand production.

Depending on the product MNCs adopt another strategy also. In labour intensive products like garments and footwear, MNCs place huge orders from developing nations, and then sell these under their own brand names to the customers.

MNCs are spreading their production and interacting with local producers in various countries across the globe.

1. MNCs are setting up partnerships with local companies.

2. MNCs are using the local companies for supply of raw material or accessories.

3. MNCs are closely competing with the local companies.

4. MNCs are taking over local companies with their immense money power.

Thus MNCs are exerting a strong influence on production at distant locations.


Question-5

Why do developed countries want developing countries to liberalise their trade and investment? What do you think should the developing countries demand in return?

Solution:
Removing trade barriers or restrictions set by the government is known as liberalisation. With liberalisation of trade, developed countries will be able to flood the markets of the developing countries with their goods. So companies in developed countries will be able to produce more and prosper.


Suppose the Indian government puts a tax on imported goods , then the price of the goods will be higher for the consumers. As a result, the consumers will prefer to by goods produced locally. Consequently their will be no demand for imported goods and developed countries will not be able to sell their goods in developing countries.

In return for liberalisation of trade laws , producers in developing countries are demanding ‘fairer rules’.


In India the producers are demanding, that the Government should ensure that Labour laws are properly implemented and the workers get their rights.

The government should support small producers to improve their performance till the time they become strong enough to compete. If necessary, the government should use trade and investment barriers the protect small producers. The government should negotiate at the WTO for ‘fairer rules’. It can also align with other developing countries with similar interests to fight against the domination of developed countries in the WTO


Question-6

"The impact of globalisation has not been uniform." Explain this statement.

Solution:
The impact of globalisation has not been uniform. Globalisation has 2 sides - the positive and the negative.

On one hand we have people with education, skill and wealth who have benefited from globalisation, on the other hand, there are the uneducated, less skilled people who have not benefited from it.

If a balance has to be brought about we should strive towards fair globalisation. The government can play a major role in ensuring that the fruits of globalisation reaches everyone, the educated and the uneducated , equally. Its policies must protect the interests, not only of the rich and the powerful, but all the people in the country.


The Indian Government should ensure that …

• Labour laws are properly implemented and the workers get their rights.

• The government should support small producers to improve their performance till the time they become strong enough to compete.

• If necessary, the government should use trade and investment barriers the protect small producers.

• The government should negotiate at the WTO for ‘fairer rules’.

• It can also align with other developing countries with similar interests to fight against the domination of developed countries in the WTO.


Massive campaigns and representation by people’s organisations have influenced important decisions relating to trade and investments at the WTO. This has demonstrated that people also can play an important role in the struggle for fair globalisation.


Question-7

How has liberalisation of trade and investment policies helped the globalisation process?

Solution:
Liberalisation of trade and investment policies helped the globalisation process tremendously. In India during the end of the 20th century, trade barriers were removed and goods could be imported and exported easily and also foreign companies could set up factories and offices here. This enabled MNCs to set up their offices and factories in India.


As MNCs spread their wings to many countries across the globe , rapid integration and interconnection between countries took place. The movement of goods and people between countries increased. The advancement in transport and communication technology added to globalisation.

Thus greater foreign investment and greater foreign trade resulted in the mushrooming of MNCs , which in turn resulted in Globalisation.


Question-8

How does foreign trade lead to integration of markets across countries? Explain with an example other than those given here.

Solution:
For a long time foreign trade has been the main channel connecting countries. Even as early as the 8th century extensive trade took place between South Asia, including India, and the East and West. Trading interests attracted various trading companies such as the East India Company to India.

Foreign trade created an opportunity for the producers to reach beyond the domestic markets and market their goods in other countries of the world. This resulted in the movement of goods and people.

With the liberalisation of foreign trade, electronic goods, like digital cameras and lap top computers have flooded the Indian market from foreign countries. At the same time Indian textiles and leather goods are available all over the world. So foreign trade has lead to integration of markets .





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