ECONOMICS GLOBALIZATION AND THE

INDIAN ECONOMY

Done by Mrinali Grade - x

CONTENTS

Production across countries

Interlinking production across countries

Foreign trade and integration of markets

What is globalization?

Factors that have been enabled globalization

World trade globalization

Impact of globalization in India

The struggle for a fair globalization

PRODUCTION ACROSS COUNTRIES

Lets have a look

MID 20TH CENTURY

Production largely organized within countries.

Raw materials, food stuff and finished products crossed countries.

TRADE – was the main channel to connect distant boundaries

MNCs = MultiNational Corporations emerged then..

They are the companies that own or control production in more than on nation

CAN YOU NAME SOME MNCS??

MNC’S

Setup offices and factories for production in regions where they can get cheap labour and other resources

=> this helps in greater profits to the company as his supply is still in process, there is production at a region where the company has not paid much and te demand n supply or WANTED finished goods is taking place.

MORE OF MNC’S

Their goods and services are produced globally

RESULT = production is organized in increasingly complex ways.

Production is divided in small parts across the globe to gain advantage for their closeness to the markets of every country and can be easily produced there.

INTERLINKING PRODUCTION ACROSS

COUNTRIES…

MNC’S

Setup production offices and factories on the basis of the availability of skilled and unskilled labour at cheap prices.

They look at the government policies for their interests.

INVESTMENT

= the money that is spent on to buy assets such as,

LAND, BUILDING, MACHINES AND ON OTHER EQUIPMENTS

= made in the hope of earning profits.

- MADE BY MNCs is called FOREIGN INVESTMENTS.

MNC’S SETUP PRODUCTION WITH THE LOCAL COMPANIES ADVANTAGE –

Joint production is 2 fold

MNCs can provide additional investments like, buying new machines for faster production

MNCs might bring them the latest technology

MNCs investments is to buy up local companies and then expand production

LARGE MNCs in developed countries place orders for production with small producers.

The products are supplied to the MNCs, which then sell there their own brand names to the customers.

The MNCs have tremendous power to determine price,

Quality,

Delivery, and

Labour conditions for these distant products.

By setting up partnerships with local companies, by using the local companies for supplies, by closely competing with local companions or buying them up.

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

As a result, production in these widely dispersed locations is getting interlinked.

FOREIGN TRADE AND INTEGRATION OF

MARKETSLets see how this one is…

For a long time foreign countries have been THE MAIN channel connecting countries.

This creates the opportunity for the producers to reach beyond the domestic markets i.e. markets of their own country.

Producers can then sell their good not only within their country but also around the globe.

With this the production increases, employment of labour, capital, and with the help of technology newly designed products hit the market from each MNC. Competition increases.

Foreign trade thus results in connecting the markets or integration of markets in different countries.

WHAT IS GLOBALIZATION?

GLOBALIZATION Globalization is the process of rapid integration or interconnection between countries.

MNCs play a major role in the globalization process.

More and more good, services, technologies, investments etc. r moving around countries.

Besides these movements one such movement is also there through which countries can be connected that is the MOVEMENT OF PEOPLE BETWEEN COUNTRIES. This movement takes place in search of better jobs, better income, and better education.

FACTORS THAT HAVE ENABLED

GLOBALIZATION There are 2 factors…

1. TECHNOLOGY

Rapid improvement in technology has been a major factor that has stimulated the globalization process.

This has made much faster delivery of goods across long distance possible at lower costs.

2. INFORMATION AND COMMUNICATION TECHNOLOGYTelecommunication,computers,internet has been changing rapidly. Telecommunication facilties are used to contact one another around the world and to communicate from remote areas.

Examples; telegraph, telephone, including mobile phones, fax, etc.

Using IT in globalization

Information and communication technology (or IT in short) has played a major role in spreading out production of services across countries.

LIBERALIZATION OF FOREIGN TRADE AND INVESTMENT POLICY

Liberalization - the act of making less strict.

Tax on imports Is an example of trade barrier.

It is called a barrier because some restriction has been set up.

Governments can 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 investment.

This way considered necessary to protect the producers from within the country from foreign competition.

In 1991, the government decided that 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.

This decision was supported by powerful international organisations.

Liberalization of trade, businesses are allowed to make decisions freely about what they wish to import or export.

REMOVING BARRIERS OR RESTRICTIONS SET BY THE GOVERNMENT IS WHAT IS KNOWN AS LIBERALIZATION.

WORLD TRADE ORGANIZATION

WTO

It is one such organization whose aim is to liberalize international trade.

149 countries of the world are currently of the members of WTO (2006)

Thought WTO is suppose to allow free trade for all, in practice, but it is seen that the developed countries have unfairly retained trade barriers.

IMPACT OF GLOBALIZATION IN

INDIA In the last 15 years…

Globalization and greater competition among as- has been of advantage to consumers.

There is greater choice who now enjoy improved quality and lower prices for several products.

As a result these people today.

Enjoy much higher standards of living than was possible earlier.

1. firstly , MNCs have increased their investments in India over the past 15 years, which means investing in India has been interested in industries such as cell phones , auto mobiles, electronics , soft drinks , fat foods or services such as banking in urban areas.

These products have a large number of well-off buyers. In the industries and services new jobs are created.

TOP INDIAN COMPANIES

Secondly, several of the TOP INDIAN COMPANIES have benefited from increased competition.

They have invested in newer technology and production methods and raised their standards.

Some gained from successful collaboration with foreign companies.

Globalization has enabled some large Indian companies to emerge as multinations’

Example – TATA MOTORS, INFOSYS (IT) ASIAN PAINTS, etc., are some Indian companies which are spreading their operations world wide.

Globalization, created new opportunities for companies providing services, specially involving IT.

Have a group discussion and understand the experience of every individual and make sure you have understood everything RIGHT!

NO DIFINITION – JUST EXPLAIN!

LETS RE- CAP OF WHAT WE HAVE UNDERSTOOD ABOUT THE CHAPTER AS YET.

PROS AND CONS OF GLOBALIZATION

Let us see what to people have to say…

Globalization lets countries do what they can do best. If, for example, you buy cheap steel from another country you don’t have to make your own steel. You can focus on computers or other things.

Globalization gives you a larger market. You can sell more goods and make more money. You can create more jobs.

Consumers also profit from globalization. Products become cheaper and you can get new goods more quickly.

 

Globalization causes unemployment in industrialized countries because firms move their factories to places where they can get cheaper workers.

Globalization may lead to more environmental problems. A company may want to build factories in other countries because environmental laws are not as strict as they are at home. Poor countries in the Third World may have to cut down more trees so that they can sell wood to richer countries.

Some of the poorest countries in the world, especially in Africa, may get even poorer. Their population is not as educated as in developed countries and they don’t have the new technology that we do.

Human, animal and plant diseases can spread more quickly through globalization.

Developed countries can stifle development of undeveloped and under-developed countries.

Economic depression in one country can trigger adverse reaction across the globe.

It can increase spread of communicable diseases.

Companies face much greater competition. This can put smaller companies, at a disadvantage as they do not have resources to compete at global scale.

Resources of different countries are used for producing goods and services they are able to do most efficiently.

Consumers to get much wider variety of products to choose from. Consumers get the product they want at more competitive prices.

Companies are able to procure input goods and services required at most competitive prices. Companies get access to much wider markets

It promotes understanding and goodwill among different countries. Businesses and investors get much wider opportunities for investment.

Adverse impact of fluctuations in agricultural productions in one area can be reduced by pooling of production of different areas.

THE STRUGGLE FOR A FAIR GLOBALIZATION

The final segment

BEFORE READING THE FURTHER SLIDES READ THE TWO STORIES AND HAVE A GROUP DISCUSSION TO BE ABLE TO RECEIVE A BETTER UNDERSTANDING OVER THE TOPIC.

Not everyone is benefited from globalization.

People with education, skill and wealth have made the best use of the new opportunities.

On the other hand there are many people who have not shared the benefits.

Since GLOBALIZATION is not a REALITY, the question is how to make it more ‘FAIR’?

Fair globalization would create opportunities for all, and also-ensure that the benefits of globalization are shared better.

HOW DO U THINK CAN WE SHARE GLOBALIZATION? HOW DO WE MAKE IT FAIR FOR EVERYONE?

The government can play a major role in making globalization fair.

Its policies must protect the interests, not only of the rich and the powerful, but all the people in the country.

The government can ensure that labour laws are properly implemented and the workers get their rights.

It can help the small producers to improve to that they can strengthen themselves enough to compete.

It can negotiate at the WTO for ‘fair rules’.

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

WE ARE ALMOST THERE…

WHAT HAVE YOU LEARNT TILL NOW?

Discuss…recap! SUMMARY!

SORRY NO QUESTIONS! I THINK WE HAVE BEEN ABLE TO UNDERSTAND THE CHAPTER. IF ANY DOUBT PLEASE REFER THE TEXTBOOK AND SHARE YOUR VIEWS.

THANK YOU!