NCERT GLOBALIZATION AND INDIAN ECONOMY

                                       Department of Social Science

ECONOMICS(X)

GLOBALIZATION AND INDIAN ECONOMY

CHAPTER 04

NCERT TEXTBOOK QUESTIONS

Q.1. What do you understand by globalisation? Explain in your own words.

Ans. Globalisation means integrating the economy of a country with the economies of other

Countries under conditions of free flow of trade, capital and movement of persons across

Borders. It includes

(i) Increase in foreign trade

(ii) Export and import of techniques of production.

(iii) Flow of capital and finance from one country to another

(iv)  Migration of people from one country to another.

Q.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?

Ans. The Indian government had put barriers to foreign trade and foreign investment because at that

Time it was necessary to protect the Indian producers from the foreign competition.

In New Economic Policy in 1991, it was thought by the government to remove these barriers

so that Indian producers can compete with producers around the globe. Thus competition

Improves the quality of their products.

Q.3. How does foreign trade lead to integration of markets across countries? Explain with an

Example.

Ans. Foreign trade provides opportunities for both producers and buyers to reach beyond the

Markets of their own countries. Goods travel from one country to another.

Competition among producers of various countries as well as buyers prevails. Thus foreign

Trade leads to integration of markets across countries. For example, during Diwali season,

Buyers in India have the option of choosing between Indian and Chinese decorative lights and

Bulbs. So this provides an opportunity to expand business.

Q.4. supposing you find two people. One is saying globalisation has hurt our countries

Development. The other is telling, globalisation is helping India develop. How would you

Respond to these arguments?

Ans. Benefits of globalisation of India:

(a) Increase in the volume of trade in goods and services

(b) Inflow of private foreign capital and export orientation of the economy.

(c) Increases volume of output, income and employment.

Negative Impact / Fears of Globalisation.

(a) It may not help in achieving sustainable growth.

(b) It may lead to widening of income inequalities among various countries.

(c) It may lead to aggravation of income inequalities within countries.

Whatever may be the fears of globalisation, I feel that it has now become a process which is

Catching the fancy of more and more nations. Hence we must become ready to accept

Globalisation with grace and also maximise economic gains from the world market.

Q.5. Should more Indian companies emerge as MNCs?

There is much scope for Indian companies to emerge as MNCs. These are the companies

Mainly related to Information Technology (IT sector), accounting and administrative sector.

It will benefit the people in the country by providing them gainful employment and further

Enhance their quality of life.

MNCs have enormous wealth with them. They have a strong influence on production in

Different countries.

Q.6. Explain any three ways in which MNCs set up or control production in other countries.

Ans. Multinational Corporations (MNCs) set up their factories or production units close to markets

Where they can get desired type of skilled or unskilled labour at low costs along with other

Factors of production. After ensuring these conditions MNCs set up production units in the

Following ways:

·         Jointly with some local companies of the existing country.

·         Buy the local companies and then expand its production with the help of modern

Technology.

·         They place orders for small producers and sell these products under their own brand name

to the customers worldwide.

Q.7. Enumerate any three features of Multinational Corporation’s (MNCs)?

Ans. Multinational Companies (MNCs) are the companies that owns or controls the production of

Their goods in more than one country. The main features of MNCs are:

(a) They set up their factories and offices in more than one country.

(b) The set up their units where the cost of production is low and higher profits can be earned.

(c) They produce and sell their finished products globally.

Q.8. Why did India put barriers on foreign trade and investment after independence? Why

Was the policy changed in 1991? Mention any two reasons.

Ans. Soon after independence India put barriers on foreign trade and independent to create a large

Industrial base which helped in increasing the industrial production. Policies were changed in

1991 because:

·         Global competition of Indian producers will improve the quality of Indian goods.

·         Reduce the problems like unemployment, poverty, inflation etc. and support

Industrialisation.

Q.9. Define liberalisation. Mention two features of liberalisation.

Ans. Liberalisation means removing barriers or restrictions put by the government on the businesses.

Features of liberalisation are as follows:

  v     Reduction of trade barriers with a view to allowing free flow of goods among the countries.

  v     Allow private sector to do many of those activities which were earlier restricted to public

Sector.

Q.10. What is meant by trade barrier? Why do governments use it? Explain.

Ans. Barriers or restrictions that are imposed by government on free import and export activities are

Called trade barrier. Tax on imports is a vital trade barrier. Government can use the trade

Barriers in the following ways:

(a) Increase or decrease of foreign trade of the country.

(b) With the help of trade barriers government can decide what kinds of goods and how much

     of each, should be traded in the country.

Q.11. Mention any three steps which have been taken by the government of India to attract

Foreign investment in recent years?

Ans. Investment made by MNCs is known as foreign investment. In order to attract foreign

Investment following steps are taken by the Indian government:

(i) Restrictions on trade and investment, have been removed to a large extent.

(ii) India has allowed the Indian producers to compete with the producers of the world.

(iii) Allowing privatisation of many public sector industries by the government.

Q.12. What is WTO? What are its main aims? Mention any one of its limitation.

Ans. World Trade Organisation (WTO): It is an international organisation which was established

On 1st January, 1995 by the members of the UN to promote trade among countries.

The main aims of WTO are:

(a) To act as a forum for multilateral trade negotiations.

(b) Resolve trade disputes.

(c) Liberalise international trade and follow free trade for all.

One limitation of WTO is:

Developed countries unfairly impose trade barriers whereas WTO forces the developing

Countries to follow completely free trade.

Q.13. How have transportation technology and information and communication technology

Stimulated the globalisation process? Explain with suitable examples.

Ans. Transportation technology: Rapid improvement in transportation technology has been one

Major factors that has stimulated the globalisation process. There are fast trains connecting

Every nook and corner of a country and faster planes that cover the distance within a few hours

Between one country to another. Similarly, the cost of air transport has fallen.

Information and Communication Technology: In recent times communication and information

Technology got a boost from the invention of computers and internet etc.

Information Technology (IT) has played a major role in spreading out production of services.

For example, a news magazine published for London readers is to be designed and printed

in Delhi.

Q.14. How could you distinguish between ‘foreign trade’ and ‘foreign investment’? Explain the

Role of MNCs in foreign trade and foreign investments.

Ans. Foreign trade is integration of markets in different countries. For example, export and import

of goods and services from one country to another. But foreign investments are investments

Made by MNCs. For example, investment in land, machines, building etc. to earn profit.

Role of MNCs in foreign trade and foreign investments: MNCs can provide money for

Additional investments like buying new machines for faster production to small companies.

  v  MNCs can provide efficient managerial and advanced technology for faster production and

             Efficient use of resources. So MNCs play an important role in foreign investment.

  v  MNCs facilitate movement of goods and services between various countries. Movement of

             People across the globe also creates better job opportunities and better income. So MNCs

             Promote foreign trade also.

Q.15. What complaint do farmers of developing countries have against developed country

Governments?

Ans. In developing countries, governments have reduced trade barriers as per WTO rules. But

Developed countries have ignored the rules of WTO and have continued to pay their farmers

Vast sums of money for production and for export to other countries.

Therefore, farmers of developed countries are able to sell farm products at abnormally low

Prices in foreign markets which is adversely affecting the farmers of developing countries. This

is really a case of unfair trade.

Q.16. ‘Globalisation and competition among producers have been of advantage to the

Consumers.’ Give arguments in support of this statement.

(i) More choice for consumers: Globalisation and competition among producers has enabled

The consumer to have a wide range of choice available in market. For example, Chinese

Toys and Indian toys both are available. Consumer can compare quality, price, and suitability

And safety for both type of toys. So consumer is ultimately benefitted.

(ii) Better job opportunities: Globalisation and competition among producers have given rise

To better job opportunities for skilled persons. People can get better salary and facilities

For the specialised skills in other countries.

(iii) Expansion of information and communication technology: Globalisation has facilitated

Improvement in information and communication technology like computers, internet,

Telephone including mobile phones etc.

Q.17. Why do developed countries want developing countries to liberalise their trade and

Investment? What do you think should the developing countries demand in return?

Ans. Developed countries feel that all barriers to foreign trade and investment are harmful for

International trade. They want that trade between countries should be free. Developed countries

Like the USA and UK have high production capacity and latest technology.

Developing countries should demand fair globalisation which ensures opportunities and

Benefits for all. Interest of the workers should also be taken care of.

Q.18. Suggest any three measures to make globalisation just and fair ?

Ans. Globalisation means unification or integration of the domestic economy with the world

economy through trade, capital and technology flows.

Government can ensure fair globalization to its people in the following ways :

(a) Government needs to care about the labour laws so that workers get their trade union rights

and support small producers to improve their performance.

(b) Government can negotiate with world trade organisation for fairer rules and can align with

developing countries to stand against the domination of developed countries.

Q.19. Describe any three factors which have enabled globalisation in India.

Ans. Globalisation means unification or integration of the domestic economy with the world

Economy through trade, capital and technological flows. Factors that supported globalisation

in India are as follows :

(a) Reduction of trade barriers with a view to allowing free flow of goods to and from other

Countries.

(b) Involvement of various local producers with MNCs in various ways.

(c) Some of the large Indian companies like Tata Motors, Infosys (IT), Ranbaxy, and Asian Paints

etc. emerged as MNCs and start working globally.

Q.20. Describe any three ways in which Multinational Corporations (MNCs) have spread their

production and interaction with local producers in other countries.

Ans. Multinational Corporations (MNCs) set up their factories or production units close to markets

where they can get desired type of skilled or unskilled labour at low costs along with other following ways :

(a) Set up jointly with some local companies of the country.

(b) Buy the local companies and then expand its production with the help of modern

Technology.

(c) They place orders for small producers and sell their products under their own brand name

to the customers worldwide.

Q.21. ‘‘The impact of globalization has not been uniform’’. Explain this statement.

Ans. It is true that the impact of globalisation has not been uniform. This can be explained through

following points :

(a) It has some negative impacts on employment and real wages. Ushering in of new

Technology, output is increasing but the employment opportunities are not much especially

in rural areas where 75% of the population lives.

(b) It is mainly beneficial to large capitalists, industries and large companies. Consequently it

Increases the concentration of economic power and lead to inequality.

Q.22. Describe the impact of globalization on the lives of consumers.

Ans. (a) Globalization has improved the productivity of products which controlled the rate of

Inflation.

(b) Wide variety of products are available in the markets due to globalisation which has

Improved the standard of living of the consumers.