N C E R T GLOBALIZATION AND
INDIAN ECONOMY
ECONOMICS(X)
CHAPTER 04
NCERT TEXTBOOK
QUESTIONS
Q.1. What do you understand by globalization? Explain in your own words.
Ans. Globalization 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.
·
Buying 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
Industrialization.
Q.9. Define liberalization. Mention two features of liberalization.
Ans. Liberalization means removing barriers or
restrictions put by the government on the businesses.
Features of liberalization 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 privatization 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 globalization process? Explain with suitable examples.
Ans. Transportation technology: Rapid
improvement in transportation technology has been one
Major factors
that has stimulated the globalization 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 benefited.
(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.
