Globalisation is the process of the rapid integration or interconnection between the countries, and it has transformed the world economy in the last few decades. The chapter examines the concept of the globalisation, the role of the multinational corporations (MNCs) in the globalisation, the factors that have enabled the globalisation, the impact of the globalisation on the Indian economy, and the ways in which the globalisation can be made fair for the developing countries.
Globalisation is the process of the integration of the markets, the production, the trade and the investment across the countries, and the multinational corporations are the agents of the globalisation. The MNCs set up the production in the different countries and sell their products in the world markets, and they have spread the production across the world. The chapter examines the ways in which the MNCs have changed the pattern of the production and the employment in the world.
For the board examination, students must understand the concept of the globalisation, the role and the working of the MNCs, the factors that have enabled the globalisation, such as the technology and the liberalisation, the impact of the globalisation on the Indian economy, the winners and the losers of the globalisation, and the ways in which the globalisation can be made fair.
The production in the world is no longer confined to the individual countries, and it is now spread across the countries. The multinational corporations (MNCs) are the companies that own or control the production in more than one country, and they are the agents of the globalisation. An MNC, such as the Ford Motors, sets up the factories and the offices in the different countries, and it produces the goods and the services for the markets in the world.
The MNCs set up their production where it is the cheapest for them, and they look for the low cost of the production, the cheap labour, the availability of the raw materials, the proximity to the markets and the favourable government policies. The MNCs set up the production in the developing countries, where the labour is cheap, and they sell their products in the markets of the developed countries. The MNCs thus spread the production across the world and integrate the economies of the different countries.
The MNCs also get the goods and the services from the local companies, and they enter into the partnerships and the joint ventures with the local companies. The MNCs provide the capital, the technology and the management skills, and the local companies provide the labour, the land and the access to the markets. The working of the MNCs has thus connected the production of the world, and it has created the global production chains.
The foreign trade is the exchange of the goods and the services between the countries, and it has played an important role in the integration of the markets across the world. The foreign trade allows the producers to sell their goods in the markets of the other countries, and it allows the consumers to buy the goods from the other countries. The foreign trade thus connects the markets of the different countries, and it is the main channel of the globalisation.
The integration of the markets through the foreign trade and the foreign investment means that the producers and the consumers of the different countries are connected with each other. The producers can sell their goods in the markets of the other countries, and the consumers can buy the goods from the producers of the other countries. The foreign trade and the investment have thus created a single market for the goods and the services in the world.
The chapter stresses that the foreign trade is important for the integration of the markets, and that the expansion of the foreign trade has been a major factor in the globalisation. The trade in the goods, the services and the investment across the countries has increased enormously in the recent decades, and this has led to the growth of the interdependence of the countries.
The globalisation has been enabled by the two important factors: the rapid improvement in the technology and the liberalisation of the policies of the foreign trade and the foreign investment. The technology has made the communication, the transportation and the production cheaper and faster, and it has connected the people and the markets of the world. The improvements in the information technology, the communication technology, the transportation and the containerisation have all enabled the globalisation.
The technology has also enabled the development of the internet, the mobile phones, the emails and the video-conferencing, which have made the communication across the countries instant and cheap. The transportation technology, such as the container ships, has reduced the cost of the transportation of the goods, and the computers and the software have enabled the coordination of the production across the countries.
The liberalisation is the removal of the restrictions and the barriers on the foreign trade and the foreign investment. The government of India, which had earlier imposed the barriers on the imports and the foreign investment, liberalised its policies in 1991, and this opened the Indian economy to the foreign trade and the investment. The liberalisation has enabled the globalisation, as it has allowed the MNCs to invest in the Indian economy and the Indian companies to trade and to invest in the world.
The globalisation has had a significant impact on the Indian economy, and it has created new opportunities as well as new challenges. The globalisation has opened the Indian economy to the foreign competition, and the Indian companies have had to face the competition from the foreign companies. The globalisation has also provided the Indian companies the access to the world markets, and the exports of the Indian goods and the services have increased.
The globalisation has benefited the consumers, as they now have the access to a wide variety of the goods and the services at the competitive prices. The globalisation has also benefited the Indian companies, which have been able to grow and to expand, and the Indian professionals, such as the software engineers, who have found the employment in the world markets. The globalisation has also brought the foreign investment, the technology and the management skills to the Indian economy.
However, the globalisation has also created the challenges. The small producers and the workers have been adversely affected, as they have had to face the competition from the cheap imports, and the workers in the small industries have lost their jobs. The globalisation has also increased the inequality, as the benefits of the globalisation have gone mainly to the large companies and the skilled workers, while the small producers and the unskilled workers have been left behind.
The globalisation has created the winners and the losers in the Indian economy. The winners of the globalisation are the large companies, which have been able to grow and to expand, the skilled professionals, such as the software engineers and the IT professionals, who have found the employment in the world markets, and the consumers, who have the access to a wide variety of the goods at the competitive prices.
The losers of the globalisation are the small producers, who have had to face the competition from the cheap imports, and the workers in the small industries, who have lost their jobs. The globalisation has also adversely affected the farmers and the small traders, who have had to face the competition from the imports and the multinational corporations. The chapter stresses that the government has to protect the interests of the small producers and the workers, and it has to ensure that the benefits of the globalisation are shared by all the sections of the society.
The government can protect the interests of the small producers and the workers by the provision of the support, such as the subsidies, the credit and the training, by the strengthening of the social security, and by the negotiation of the fair trade agreements. The government can also use the trade barriers, such as the tariffs and the quotas, to protect the domestic industries, but these measures have to be used in the fair and the judicious manner.
The globalisation has created the opportunities for the growth and the development, but it has also created the challenges of the inequality and the injustice. The chapter argues that the globalisation can be made fair, and that the developing countries should have a fair share in the benefits of the globalisation. The fair globalisation requires the protection of the interests of the developing countries, the small producers and the workers.
The fair globalisation can be achieved through the fair trade agreements, which provide the developing countries the better access to the markets of the developed countries, through the strengthening of the institutions and the rules of the international trade, and through the protection of the domestic industries from the unfair competition. The fair globalisation also requires the provision of the support to the small producers and the workers, and the strengthening of the social security.
The chapter concludes that the globalisation has to be made fair, and that the benefits of the globalisation have to be shared by all the countries and all the sections of the society. The fair globalisation is essential for the sustainable and the inclusive development of the world, and it requires the cooperation of the governments, the international institutions, the civil society and the people.
| Term | Meaning |
|---|---|
| Globalisation | Rapid integration or interconnection between countries |
| MNC | Company that owns or controls production in more than one country |
| Liberalisation | Removal of restrictions and barriers on foreign trade and investment |
| Foreign trade | Exchange of goods and services between countries |
| Factor Enabling Globalisation | Description |
|---|---|
| Technology | Cheaper and faster communication, transportation, information technology |
| Liberalisation of policies | Removal of barriers, opening of the economy to foreign trade and investment (India 1991) |
Globalisation is the process of the rapid integration of the markets and the production across the countries, and it has transformed the world economy. The multinational corporations, as the agents of globalisation, have spread the production across the world, and the foreign trade has integrated the markets of the different countries. The globalisation has been enabled by the rapid improvement in the technology and the liberalisation of the policies, and India opened its economy to the globalisation in 1991. The globalisation has created both opportunities and challenges for the Indian economy: it has brought the benefits of the exports, the consumer choice and the growth of the IT sector, but it has also created the challenges of the competition for the small producers, the job losses and the inequality. The chapter concludes that the globalisation must be made fair, so that its benefits reach all the countries and all the sections of the society, and the developing countries, the small producers and the workers are protected and empowered.