Globalization and the Indian Economy

Globalization and the Indian Economy

1.      What are the special economic zones (SEZs)? Why is the government setting up SEZs.

Ans: SEZs or Special Economic Zones are industrial areas with world class facilities.

i)                    Companies who set up units in SEZs are exempted from tax for 5 years.

ii)                  They are set up to attract foreign investment.

2.      Why did the Indian Government put the barriers to foreign trade and investment after independence? Why did it wish to remove these barriers?

Ans:

i)                    The Indian Government after independence had put barriers to foreign trade and foreign investment.

ii)                  This was considered necessary to protect the producers within the country from foreign competition.

iii)                Industries were just coming up in the 1950s and 1960s.

iv)                Competition from imports at that stage  would not have allowed these industries to come up.

v)                  Thus India allowed imports of only essential items such as machinery, fertilizers, petroleum etc.

vi)                All developed countries during the early stages of development have given protection to domestic producers through a variety of means.

Reasons to remove barriers were:

a)      To face competition.

b)     To improve quality of certain goods.

c)      To attract foreign investments.

d)     To place orders for production.

3.      Describe the factors which have enabled globalization in India with examples?

Ans: Factors that have enabled Globalization in India are:

a)      Improvement in Transportation: This has made the faster delivery of goods across long distances possible at lower costs.

b)     Improvement in Information and Technology: It has played a major role in spreading out production of services across countries.

c)      Liberalization and removal of trade barriers: also facilitated globalization as MNC’s came to India to invest.

4.      The impact of Globalization has not been uniform in India? Explain this statement.

                                                               or

“The impact of globalization has not been visualized uniformly among producers and workers.” Support the statement with facts.

Ans: The impact of globalization has not been uniform among the producers and workers.

Positive impacts:

a)      Globalization has been beneficial for consumers, more so rich people  in the urban areas.

b)     A large number of jobs have been created in various industries like cell phone, automobile, electronics etc.

c)      The top Indian companies have been able to benefit from the increased competition by adopting advanced technology.

d)     It has also created new opportunities for companies which provide services.

e)      Local companies supplying raw materials to MNCs have prospered.

Negative Impacts:

a)      A number of industries such as toys, batteries, plastics, vegetable oil etc. have been hit hard due to foreign competition.

b)     Thousands of uneducated and unskilled labourers have become jobless.

a.      Globalization has a general impact on most of the small industries which employ the largest number of workers only after agriculture.

5.      What is Globalization? Explain.

Ans:

i)                    Globalization is a process of rapid integration or interconnection between countries.

ii)                  More and more goods and services, investments and technology are moving between countries.

iii)                Globalization is the integration between countries through foreign trade and foreign investments by Multi National Companies(MNCs).

6.      Describe the impact of Globalization on small producers?

Ans:

a)      Globalization encourages competition.

b)     Big industries and companies have been able to compete, but the small producers were hit badly.

c)      They could not stand the competition and had to shut down.

d)     Some industries like batteries, capacitors, plastics, toys, tyres, dairy products vegetable oils are the industries which have suffered a lot.

e)      Due to this, a lot of people lost their jobs and faced unemployment.

7.      Explain the meaning of fair globalization?

Ans: Fair globalization would create opportunities for all and also ensure that the benefits of globalization are shared better.

i)                    Government can play a major role in making this possible.

ii)                  Its policies must protect the interest of rich and poor both.

iii)                Labour laws properly implemented and the workers get their rights.

iv)                It can support small producers by putting some restrictions or barriers.

v)                  It can negotiate at the             WTO for fairer rules.

8.      How globalization has affected the lives of the people? Explain with any three examples.

Ans: Effects of globalization on the lives of people are:

i)                    Increased their investment in industries such as cell phones, automobiles, electronics, soft drinks, fast food etc.

ii)                  New jobs have been created.

iii)                Local companies supplying raw materials to these industries have prospered.

iv)                Increased competition.

v)                  Several top Indian companies have been able to benefit from the increased competition.

vi)                They have invested in newer technology and production methods and raised their production standards.

vii)              Some have gained from successful collaboration with foreign competition.

viii)            New opportunities for service such as data entry, accounting, administrative tasks, and engineering are now being done cheaply in countries such as India and are exported to the developed countries.

9.      Explain the role of technology in stimulating globalization process?

Ans: Rapid movement in technology has stimulated the globalization process.

i)                    Transportation technology has made much faster delivery of goods across long distance possible at lower costs.

ii)                  There are even more remarkable developments in information and communication technology.

iii)                Telecommunication facilities are used to contact one another around the world, to get information instantly and to communicate from remote areas.

iv)                Through internet, one can obtain and share information on almost anything.

10.  How has globalization created new opportunities for companies providing services in India? Explain

Ans:

i)                    Globalization has created new opportunities for companies providing services particularly those involving IT.

ii)                  The Indian company producing a magazine for the London based company and call centers are some examples.

iii)                Besides, a host of services such as data entry, accounting, administrative tasks, and engineering are now being done cheaply in countries such as India and are exported to the developed countries.

11.  How can the benefits of Globalization be shared better? Explain.

Ans: The benefits of globalization can be shared better in the following ways:

i)                    The government policy must protect the interest, not only of the rich and powerful, but of all the people in the country.

ii)                  The government can ensure that labour laws are properly implemented and workers get their rights.

iii)                It can support small producers to improve their performance till they become strong enough to compete.

iv)                It can use trade and investment barriers.

v)                  It can negotiate at the WTO for fairer rules.

12.  Explain the various ways in which Multinational Corporations set up or control production in other countries?

                                                   Or

Explain the various ways in which Multi National Corporations set up or control production in other countries?

Ans: The multinational corporations setup or control production in other countries in the following ways:

i)                    MNCs are spreading their production and interacting with local producers in various countries across the globe.

ii)                  By setting up partnerships with local companies.

iii)                By using the local companies for supply.

iv)                By closely competing with the local companies or buying them.  

13.   “Foreign trade results in connecting the markets or integration of markets in different countries”. Explain.

Ans:

a)      Foreign Trade creates an opportunity for the producers to reach beyond the domestic markets.

b)     For buyers, import of goods produced in another country is one way of expanding the choice of goods beyond what is domestically produced.

c)      Choice of goods in the market rises.

d)     Prices of similar goods in the two markets tend to become equal.

e)      Producers in the two countries now closely compete against each other.

14.  “Multi-National companies interlink productions across countries”. Support the statement with three examples.

Ans:

a)      MNCs set up their production where cheap labour is available .

b)     Where low cost of production is available.

c)      Foreign investments by MNCs are rising rapidly.

d)     Providing more and more goods and services.

e)      Movement of people between countries.

f)       Investments and technology are moving between countries.

15.  “Globalization and greater competition among producers both local and foreign has been of advantage to consumers”. Support the statement with examples.

Ans: Globalization and greater competition among producers

a)      Globalization and greater competition among producers- both local and foreign producers has been of advantage to consumers, particularly the well-off sections in the urban areas.

b)     There is greater choice before these consumers who now enjoy improved quality and lower prices for several products.

c)      As a result, these people today, enjoy much standards of living than was possible earlier.

16.  Why did Indian government put barriers to foreign trade? How was it justified?

Ans:

i)                    The Indian Government after independence had put barriers to foreign trade and foreign investment.

ii)                  This was considered necessary to protect the producers within the country from foreign competition.

iii)                Industries were just coming up in the 1950s and 1960s.

iv)                Competition from imports at that stage  would not have allowed these industries to come up.

v)                  Thus India allowed imports of only essential items such as machinery, fertilizers, petroleum etc.

vi)                All developed countries during the early stages of development have given protection to domestic producers through a variety of means.

17.  How does foreign trade connect the markets of different countries? Explain with examples?

                                                                           Or

Explain with an example hoe foreign trade leads to integration of markets across countries.

Ans:

a)      Through trade, goods can travel from one market to another.

b)     Choice of goods in the  markets rises and prices become equal.

c)      Producers compete closely with each other.

18.  Where do MNCs set up their production units? Explain.

Ans:

a)      MNCs set up production units at such a place where they can produce their goods at a minimum cost.

b)     The place where markets are closer.

c)      The place where skilled and unskilled labour is available at low cost.

d)     Other factors of production are assured.

e)      Government policies are favourable.

Value Based Questions

1.      “Information and Communication technology has played a major role in spreading out production of services across countries”. Support the statement with suitable examples.

Ans:

a)      Telecommunication facilities are used to contact and communicate and to access information.

b)     Internet includes transfer of technology, money and capital across countries.

c)      Speedy transfer of information technology, money and capital integrate different countries if the world.

2.      How can Globalization be made more “fair” so that it benefits all people?

Ans:

i)                    The government policy must protect the interest, not only of the rich and powerful, but of all the people in the country.

ii)                  The government can ensure that labour laws are properly implemented and workers get their rights.

iii)                It can support small producers to improve their performance till they become strong enough to compete.

iv)                It can use trade and investment barriers.

v)                  It can negotiate at the WTO for fairer rules

vi)                People can also play an important role in the struggle for fair globalization through massive campaigns and representation by people’s organizations .

3.      “Globalization has been advantageous to consumers as well as to producers”. Support the statement with suitable examples.

Ans: Globalization has been advantage to producer in the following ways:

i)                    The producers now have access to the international markets.

ii)                  Globalization has also enabled free movement of capital.

iii)                Globalization has enabled access to foreign investment in capital and technology.

Globalization has been advantageous to consumers in the following ways:

a)      Globalization has been beneficial for consumers, more so rich people  in the urban

 areas.

b)     There is greater choice before these consumers who now enjoyed improved quality at lower price.

c)      A large number of jobs have been created in various industries like cell phone, automobile, electronics etc.