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What is Globalisation?


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.

So, Globalisation is the interconnection between countries. Now let us see how countries are interconnected.

1. MNCs are spreading their base and setting up factories or companies in other countries where labour is cheap.

2. There is huge foreign investments and transfer of latest technology.

3. Movement of people between countries increases due to globalisation.

The credit for globalisation rests entirely with MNCs. The investment made by these companies has raised the economic status of many developing countries.

 Foreign trade between countries has also risen rapidly. The activities of most MNCs involve trade in goods and also services.


Globalisation is the result of greater foreign investment and greater foreign trade.

Factors that enabled Globalisation

Factor 1 - Technology

Rapid improvement in technology has been one major factor that has stimulated the globalisation process.

(a) Transportation Technology

The dramatic improvement in transportation technology has played a vital role in faster delivery of goods across long distances at lower costs and in the movement of people from one country to another in a short time. As the basis of globalisation is foreign trade and foreign investment (MNCs) movement of goods and people are vital for globalisation.

(b) Information and Communication Technology


Information and communication technology (or IT in short) has played a major role in spreading out production of services across countries. Many MNCs are service based companies therefore the transfer of information is very vital to them. Computers , internet facilities, telegraph, telephones mobile phones, and fax are used to contact one another around the world, to access information instantly, and to communicate from remote areas. This has been facilitated by satellite communication devices. Internet also allows us to send instant electronic mail (e-mail) and talk (voice-mail) across the world at negligible costs.

Factor 2 - Liberalisation of foreign trade and investment policy

Liberalisation of foreign trade and investment policy is removing barriers or restrictions set by the government .

(a) Removing Trade Barriers
When the government on imports imposes tax it is called a trade barrier. Governments use trade barriers to increase or decrease (regulate) foreign trade and to decide what kinds of goods and how much of each, should come into the country. 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.

During the end of the 20th century, India removed trade barriers and Indian producers were allowed to compete with producers around the globe.

(b) Liberalisation of investment policies
Barriers on foreign investment were also removed to a large extent enabling many MNCs to set up their factories in India.

Thus the rapid improvement in technology and the liberalization of foreign policies paved the way for globalisation in India.

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