Globalisation is a process of integrating the economy of a country with other economies of the world through trade, capital flows and technology. The term globalisation has four parameters:
Free flow of goods and services
Free flow of capital
Free flow of technology and
Free flow of labour
The merits of globalisation are:
Adoption of new and flexible production methods
Restructure of production and trade pattern
Raise foreign capital
Rise in employment
Rise in banking efficiency
The demerits of Globalisation are:
Devastation of local producers
Adverse effects on public employees
Weak social safety net provisions and
Widening of inequality gaps
The need for globalisation was felt in India. Many factors pushed India towards globalisation, but in particular, there were three main conditions, which are as follows:
1st major foreign exchange crisis, 2nd Conditionalities imposed by IMF and World Bank and 3rd fall of USSR.
The main features of globalisation policy of India are exchange rate reforms, import liberalization, foreign direct investment (FDI), foreign technology, etc.
The new economic policy had its both positive and negative effects on the Indian economy. The positive effects of Globalisation on Indian Industry are.
Inflow of multinational corporations (mncs)
Emergence of it and BPO sectors
Availability of advanced technology
Increased job availability
The negative effects of globalisation are:
Increased competition in the market
Loss of jobs
Takeovers and speculative investment
The framing of the new economic policy was possible due to many multilateral economic institutions. The most powerful multilateral economic institutions facilitating globalisation are:
International Monetary Fund (IMF)
World Bank and
World Trade Organisation (WTO)
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Consider the following statements and identify the Wrong one.
Liberalisation of Foreign Investment leads to decrease in international market activities. Also globalisation requires the barriers on international investment.
Liberalisation of Foreign Investment leads to increase in international market activities. Also globalisation requires the removal of barriers on international investment. It is particularly important to open up the economy to the foreign direct investment (FDI).
Identify the option which relates the positive effect of globalisation on Indian Industries.Marks:1
Emergence of IT and BPO Sectors
Emergence of IT and BPO Sectors: One of the major benefits of globalisation has been the emergence of information technology (IT) sector and business process outsourcing (BPO) sector. BPO provides outsourcing services to customers of other countries like USA and Europe.
India is committed to reducing trade barriers as a member of the World trade Organisation (WTO).
The following line refers to which feature of Globalisation Policy.Marks:1
Import Liberalisation: India is committed to reducing trade barriers as a member of the World trade Organisation (WTO). The government has taken a number of steps in the direction of import liberalisation.
India adopted the policy of globalisation in year __________.Marks:1
India adopted the policy of globalisation in year 1991.However the seeds of globalisation were seen in early 1980s. But globalisation of Indian economy started after July, 1991 as an essential part of economic reforms.
____________ is the process of integrating the economy of the country with other economies of the world.Marks:1
Globalisation is the process of integrating the economy of the country with other economies of the world through trade, capital flow and technology.