Globalisation

Introduction

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

    Quality improvement

    Rise in employment

    Rise in banking efficiency

The demerits of Globalisation are:

    Devastation of local producers

    Mounting strikes

    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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  • Q1

    Consider the following statements and identify the Wrong one.

    Marks:1
    Answer:

    Liberalisation of Foreign Investment leads to decrease in international market activities. Also globalisation requires the barriers on international investment.

    Explanation:

    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).

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  • Q2

    Identify the option which relates the positive effect of globalisation on Indian Industries.

    Marks:1
    Answer:

    Emergence of IT and BPO Sectors

    Explanation:

    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.

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  • Q3

    “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
    Answer:

    Import Liberalisation

    Explanation:

    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.

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  • Q4

    India adopted the policy of globalisation in year __________.

    Marks:1
    Answer:

    1991

    Explanation:

    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.

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  • Q5

    ____________ is the process of integrating the economy of the country with other economies of the world.

    Marks:1
    Answer:

    Globalisation

    Explanation:

    Globalisation is the process of integrating the economy of the country with other economies of the world through trade, capital flow and technology.

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