CLASS 10 NOTES

CLASS 10 NOTES

PRASHANT KIRAD

ECONOMICS

ECONOMICS

Globalization Globalization and the Indian and the Indian

Economy Economy

GLOBALISATION AND THE INDIAN ECONOMY

PRODUCTION ACROSS COUNTRIES: Mul󰉃󰈎󰈞󰇽ti󰈡󰈝󰇽󰈘 co󰈸󰈦󰈡r󰇽󰉃i󰈡󰈞s (M󰈰󰉎s)

● A MNC is a company that owns or controls production in more

than one nation.

● MNCs set up offices and factories for production in regions

where they can get cheap labour and other resources.

● This is done so that the cost of production is low (almost

50-60%) and MNCs can earn greater profits .

● MNCs not only sell their finished products globally but also the

goods and services are produced globally .

● Eg: An American company manufactures its product in China, sells

it in Europe and its call center is in India.

INTERLINKING PRODUCTION ACROSS COUNTRIES:

MNCs link the production process of different countries. Some

ways of interlinking production across countries are:

● For󰈩󰈏󰈇󰈞 Dir󰈩󰇹󰉄 In󰉏e󰈼t󰈚󰈩󰈞t (F󰉍I): Investment made by a

company based in our country (usually an MNC), into a

company based in another country.

● Par󰉃󰈞󰈩r󰈻󰈋󰈏p󰈻: MNCs setup production units jointly with some

of the local companies of that region . Local companies get

new technology and money to expand their factories from

this partnership.

● Loc󰈀󰈗 co󰈚󰈦󰈀n󰈏e󰈻: The most common route for MNC is to buy

up local companies and then expand production.

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FOREIGN TRADE AND INTEGRATION OF MARKETS:

Foreign trade is a trade between different countries of the world.

It is also called international trade,external trade or

inter-regional trade. # Foreign trade helps in the integration of Markets as:

● It facilitates movement of goods and services between

countries.

● It facilitates movement of people, ideas and technology.

● It gives opportunities to producers to reach beyond local/

domestic markets .

● Increases competition, overall reduction in the price of

goods.

Foreign trade thus results in connecting the markets or

integration of markets in different countries.

Globalisation:

Globalisation is this process of rapid integration or

interconnection between countries. More and more goods and

services, investments and technology are moving between

countries. # FA󰉑󰈙󰈮R󰈠 T󰉀A󰈙 HA󰈐󰉋 EN󰉝󰉗󰈳󰉈D G󰈴O󰉔󰉝L󰈽󰈠A󰈙󰈾󰈭N:

● Development in transportation has led to cheap quick delivery

of goods over long distances.Eg: Trains, ships, highways etc.

● Information and communication Technology (ICT or IT) has

revolutionised the spreading of production of services across

the globe.

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● New technologies like ebanking, telephones, fax, internet

have made communication and payments easy for businesses.

● In 1991, the Indian government made changes in policies

and removed trade barriers to a large extent.

T󰈤A󰉌󰉋 BA󰈤󰈣󰈾󰉈R

● Government puts restrictions to control the foreign trade,

these restrictions are called trade barriers. Eg:- Tax on

imports etc.

● All developed countries, during the early stage of

development have given protection to domestic producers

through trade barriers.

● Removing barriers or restrictions set by the government is

what is known as liberalisation.The government imposes

much less restrictions than before and is therefore said to

be more liberal.

World Trade Organisation (WTO):

● It is an organisation whose aim is to liberalise

international trade.

● It was started by developed countries, now nearly 164

countries are members of WTO.

● it is seen that the developed countries have unfairly retained

trade barriers. On the other hand, WTO rules have forced

the developing countries to remove trade barriers.

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IMPACT OF GLOBALISATION IN INDIA: Pos󰈎󰉃󰈏󰉐e Im󰈥a󰇸t󰈻:

● MNCs have increased their investments in India over the

past 20 years, which means investing in India has been

beneficial for them.

● Several of the top Indian companies have been able to

benefit from the increased competition.

● Globalisation has enabled some large Indian companies to

emerge as multinationals themselves! For Example - Tata

Motors (automobiles), Infosys (IT), Ranbaxy (medicines),

Asian Paints (paints)

● Globalisation has also created new opportunities for

companies providing services, particularly those involving IT.

Neg󰈀󰉃󰈏󰉐e Im󰈥a󰇸t󰈻:

● Small local businesses/companies could not face the

competition and had to be shut down. Eg:-toys factories of

India etc.

● Labour laws were made flexible to attract foreign investment

which was against the employees .

● Regional products like dhoti , matka etc are not growing or

have been replaced by some foreign products.

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THE STRUGGLE FOR A FAIR GLOBALISATION:

● Govt. must protect the interest of all the people, not just

the rich such as by making better labour laws and

implementing them.

● Govt. can support small producers till the time they get

strong enough to compete. Govt . can use trade barriers in

favour of them.

● Govt. can align with other developing countries to fight

against the domination of developed countries in the WTO.

# Top Seven Questions:

Short Answer Type Questions (1 - 3 Marks)

1. Why do MNCs set up their offices and factories in those

regions where they get cheap labour and other resources?

{CBSE 2016}

Ans: MNCs set up their offices and factories in those regions

where they get cheap labour and other resources so that they can

reduce their cost of production and maximize the profit.

2. Why did the Indian government remove barriers to a large

extent on foreign trade and foreign investment? {CBSE

2015}

Ans: The Indian government removed barriers to a large extent

on foreign trade and foreign investment so that the Indian

companies could compete in the international market.

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3. “Globalisation and greater competition among producers has

been advantageous to consumers.” Justify the statement

with examples. {CBSE 2016}

Ans: It is true to state that Globalisation and greater competition

among producers has been of advantage to consumers. The

consumers are getting advantage in the following ways:

a. They get different brands of the product.

b. They get the goods and services at a cheaper rate.

4. What measures can be taken by the government of India to

make globalisation fairer? Explain. {CBSE 2017}

Ans: The various measures that can be taken by the government

of India to make globalisation fairer are:

a. Labour laws should be implemented properly and the workers

get equal rights.

b. Government should use trade barriers if required.

c. Government should negotiate at the WTO for fairer rules.

5. Explain the role of the government in making globalisation

fair. {CBSE 2011}

Ans: The government can play the following roles to make the

globalisation fairer:

a. Government policies should protect both the rich and the poor.

b. Labour laws should be implemented properly and the workers

get equal rights.

c. Government should support the small producers so that they can

improve their performance and compete.

Long Answer Type Questions (5 Marks)

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6.

Analyse any five positive effects of globalization on the

Indian economy. {All India 2017}

Ans: The five positive effects of globalization on the Indian

economy are:

a. Producers: The big producers who join hands with the MNCs are

getting the profit and expanding their business across the globe.

b. Workers: MNCs helped in reducing the unemployment in India.

c. Buyers: The buyers are getting a variety of brands with quality

at cheaper rates.

d. The Indian producers are getting an opportunity to reach

beyond the domestic market.

e. The Indian producers got foreign investment and newer

technologies from the MNCs.

7. Describe the major problems created by globalization for a

large number of small producers and workers. {CBSE 2016}

Ans: The major problems created by the globalisation for a large

number of small producers and workers are:

Small producers: The local small producers are not able to

compete with the MNCs and they have to shut down their

business. It is mainly due to the following factors:

a. Lack of newer technology.

b. MNCs have huge wealth to influence the price and market

condition.

Workers:

Due to globalization the MNCs don’t hire the workers on a

permanent basis.

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