Globalisation

Advantages of Globalisation

  1. More MNCs have started Investing in India
  2. Top Indian companies have been able to benefit from increased competition | have invested in newer technologies | Some have gained from collaborations with foreign companies
  3. Some Indian companies have emerged as MNCs
  4. New opportunities for companies providing services, particularly involving IT

Indian companies that emerged as MNCs :(Automobiles)(IT)(Medicines)(Paints)(Nuts and bolts)

  1. Tata Motors (Automobiles)
  2. Infosys (IT)
  3. Ranbaxy (Medicines)
  4. Asian Paints (Paints)
  5. Sundaram Fasteners (Nuts and bolts)

SEZS
Special Economic Zones

Measure taken by governments in India to attract foreign companies to invest in India.

  1. Industrial Zones called SEZs are being set up (with world class facilities like electricity, water, roads, transport, storage, recreational and educational facilities). Companies who set up production units here do not have to pay taxes for an initial period of 5 years.
  2. Govt. has allowed flexibility in labour laws.
       Instead of hiring workers on a regular basis, hiring them 'flexibly' for short periods when there is intense workload - done to reduce costs of labour.
       Companies are demanding still more flexibility in Labour Laws.

Liberalization
Removing barriers or restriction set up by the government.

When were policy changes made in India in order to remove barriers in foreign trade and foreign investments ? Why ?
1991, Govt. decided it was time for Indian producers to compete with producers around the Globe - Competition would improve performance of producers within the country since they would have to improve quality.

Aim of WTO
To liberalize international trade

No. of countries who are a member of the WTO
164

why was the WTO started
At the demand of the developed countries of the world.

An example of trade barrier would be
tax

What does the Govt. use to regulate trade ?
Trade barriers

Globalization
The process of rapid integration or interconnection between countries

Who are the few people who have benefitted from globalization
People with
-Education
-Wealth
-Skill

Trade barrier
Restrictions to free trade
Govts. use trade barriers to regulate foreign trade.
Tax is an example

How can Globalization be made more fair?
-Govts. play a major role in making this possible
-Its policies must protect the interest All people of country
-Ensure labour laws are implemented properly
-support small producer until they are strong enough to compete
-Use trade and investment barriers if necessary
-Negotiate at WTO for Fairer rules
-align with other developing countries with similar interests to fight against the domination of developed country in WTO.
-People also play an important role.
In the past few years, massive campaigns and representation by peoples' organizations have influenced important decisions relating to trade and investments at the WTO

MNC
multinational company; company that owns and controls production in more than one country.
-Goods and services are produced globally
-production is organized in increasingly complex ways.

Where is an ideal location for an MNC to set up
-Close to markets
-Availability of skilled and Unskilled Labour
-Cheap labour
-Availability of other factors of production is ensured
-Favorable government policies

Variety of ways in which MNCs spread out production and interact with Local producers
-Setting up production jointly with Local companies
-Buying up Local companies
-MNCs in developed countries can place orders for production with small producers

Two advantages for Local companies when MNCs set up production jointly with Local companies .
-MNCs can provide money for additional investments
-MNCs will bring latest technology for production with them.

What happens when MNCs place orders for production with small producers.
-The products are supplied to MNCs who then sell these under their own Brand name to customers.
-MNCs have tremendous power to determine price, quality, delivery, and labour conditions for the distant producers

What is the result of MNCs interacting with local producers in various locations around the world.
Production in these widely dispersed locations are getting interlinked.

For a long time, ___ has been the main channel connecting countries
Foreign Trade

What does foreign trade do ?
Creates an opportunity for producers to reach beyond their domestic markets, i.e., Markets of their own country

How does foreign trade prove advantageous to buyers ?
expands choice of goods beyond what is domestically produced

What is foreign trade ?
exchange of capital, goods, and services across international borders or territories

What does foreign trade result in
connecting or integrating markets in different countries.

A large part of foreign trade is controlled by whom?
MNCs

___ is the result of great greater foreign trade and foreign investments?
Globalization

Countries can be connected by the movements of
Goods, Services, Technology, Investments and movement of people.

What has happened to the movement of people between countries in the past few decades?
there has been not much movement of people due to various restrictions

factors that have enabled Globalization
-Technology
-Liberalization of foreign trade and foreign investment policy

How many workers does the small industries in India employ
20 million, largest number of workers, next only to agriculture.