Globalisation and the Indian Economy – PYQs – Answers

Ans. Investment made by the MNCs from foreign countries is called foreign investment.

Ans. Infrastructural facilities.

Ans. He is investing his money with a hope of earning profits from these assets

Ans. (i) Cargill foods is a very large American MNC. It has bought over smaller Indian companies such as Parakh Foods and expanded the range of its production of edible oils in India.

(ii) Parakh foods had built a large marketing network in various parts of India where its brand was well reputed. Also Parakh foods had four oil refineries whose control has now shifted to Cargil. It has become the largest producer of edible oils in India. It refines processes and markets various edible oils for the food industry.

(iii) Many popular brands like Sweekar, Nature Fresh, and Gemini are part of Cargill Foods.

Ans. The disadvantages of MNCs are: (i) Small manufacturers like-batteries, capacitors, plastic toys, tyres, dairy products and vegetable oil were victims of competition.

(ii) Closing down of small units rendered many workers jobless.

(iii) Most employers prefer to employ workers ‘flexibly’, this means that workers jobs are no longer secure. Small Indian companies were hard hit because of Government’s changed policies such as allowing import of the goods which were previously not allowed.

Ans. Factors that promotes MNCs:

(i) Close proximity to the market.

(ii) Availability of skilled and unskilled labour at low cost.

(iii) Assured production.

(iv) Government’s liberalised policies.

(v) Developed infrastructure.

(vi) Safety measure

Ans. The advantages of the Multi-national Cooperations (MNCs) are:

(i) MNCs also reduce the host countries dependence on imports. Imports reduce while exports from the country see a rise.

(ii) MNCs promote maximum utilisation of the country’s resources. This, in turn, leads to economic development.

(iii) The MNC is not only selling its finished products globally, but more important, the goods and services are produced globally.

(iv) MNCs might bring with them the latest technology for production, and generate employment opportunities.

Ans. Multinational companies are spreading their productions in different ways:

(i) By providing money for additional investment.

(ii) By bringing latest technology for production.

(iii) By setting up partnership with local companies.

(iv) By placing orders with local companies. For example, garments, footwear, sports items, etc.

(v) By closely competing with the local companies.

(vi) By buying local companies. To take an example, Cargill Foods, a very large American MNCs has bought over smaller Indian companies such as Parakh foods. Parakh food had built a large marketing network in various part of India, where its brand was well-reputed.

Ans. The Multinational Companies (MNCs) are controlling and spreading their production across the world in the following ways:

(i) MNCs set up their production units close to market.

(ii) MNCs set up production units jointly with local companies.

(iii) They setup units where there is skilled and unskilled labour available at low cost.

(iv) Large MNCs in developed countries place orders for productions with small producers.

(v) They have tremendous power to determine price, quality, delivery and labour conditions for distant producers.

(vi) By purchasing local companies.

Ans. (i) Through trade, goods can travel from one market to another.

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

(iii) Producers compete closely with each other.

Ans. (i) By movement of goods.

(ii) By movement of services.

(iii) By movement of investments.

(iv) By movement of technology.

(v) By the movement of people between countries.

Ans. (i) Foreign trade implies exchange of goods and services across the countries.

(ii) It helps to expand the size of market for producers.

(iii) Producers and consumers can get commodities produced in any part of the world.

(iv) It works to integrate markets in different countries.

Ans. Transformation of our markets:

(i) There is relatively a wide choice of goods and services before us in the market. The latest models of digital cameras, mobile phones and televisions made by the leading manufacturers of the world are within our reach.

(ii) Every season new model of automobile can be seen on Indian roads and the Indian are buying vehicles produced by the top companies of the world.

(iii) A similar explosion of brands can be seen for many other goods: from shirts to televisions to processed fruit juices.

Ans. A wide ranging choice of goods:

(i) We have a wide variety of goods and services before us in the market.

(ii) The latest models of the digital cameras, mobile phones and televisions made by leading manufacturers of the world are available in the market.

(iii) Every season, new models of automobiles can be seen on Indian roads.

(iv) Today Indians are buying cars produced by nearly all the top companies in the world.

(v) A similar explosion of brands can be seen for many other goods.

Ans. Several top Indian companies have been able to benefit from globalisation:

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

(ii) Some have gained from successful collaborations with foreign companies.

(iii) Globalisation has enabled some large Indian companies to emerge as multinational themselves. For example: Tata Motors and lnfosys

Ans. (i) Globalisation is a process of rapid integration or interconnection between countries through foreign trade and foreign investments by multinational companies (MNCs).

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

(iii) Globalisation is the integration between countries through foreign trade and foreign investments by Multinational companies (MNCs).

Ans. (i) Globalisation 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 centres are some examples.

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

Ans. Fair globalisation would create opportunities for all and also ensure that benefits of globalisation are shared better due to:

(i) Government policies must protect the interests not only of the rich and powerful but of all the people in the country.

(ii) Government can ensure that labour laws are properly implemented and the workers get their rights.

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

(iv) If necessary the government can use trade and investment barriers.

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

(vi) It can also align with other developing countries with similar interests to fight against the domination of developed countries in the WTO.

Ans. Yes, more Indian companies should emerge as MNCs. It would benefit the people in the country in the following ways:

(i) New job opportunities would be created by the emergence of Indian companies as MNCs.

(ii) Local companies that provide raw materials and other services to these companies to get prospered.

(iii) It would also lead to rise in production standards, and improvement in the standard of living of the people.

Ans. The following steps should be taken:

(i) Before imposing trade barrier interest of the developing countries should be taken care.

(ii) Rules and regulations should be uniform.

(iii) Ensure that the developed countries do not retain trade barriers unfairly.

(iv) Labour laws should be implemented properly.

(v) Small producers should be supported to improve their performance till they become strong enough to compete

Ans. Removal of barriers on foreign trade and foreign investment:

(i) Barriers on foreign trade and foreign investment were partially removed.

(ii) Goods could be imported and exported easily.

(iii) Foreign companies could set up factories and offices here.

(iv) Indian producers got opportunities to compete with producers around the globe.

Ans. Foreign trade has been integrating markets of different countries in following ways:

(i) Foreign trade creates an opportunity for the producers to reach beyond the domestic market, i.e. market of their own countries.

(ii) Producers can sell their produce not only in markets located within the country but can also compete in markets located in other countries of the world.

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

(iv) With the opening of trade, goods travel from one market to another. Choice of goods in the market rises. Prices of similar goods in the two markets tend to become equal.

(v) With the help of foreign trade, producers in the two countries now closely compete against each other even though they are separated by thousands of miles.

Ans. Advancement of International trade:

(i) Trade between two countries through sea, air or land route helps in the development of country.

(ii) No country can survive without International trade.

(iii) Export and Import are the component of trade.

(iv) Commodities in export- agriculture and allied products, areas and minerals, gems and jewellery etc.

(v) The commodities imported to India include Petroleum and its products, precious stores, chemicals etc.

Ans. Communication technology has played a major role in outspread of products and services across countries through its arms such as telecommunications (mobile, fax etc.), computers and internet. These have helped the people in communicating with each other living in different geographical locations.

Ans. Reasons for putting barriers to foreign trade and foreign investment by the Indian Government:

(i) To protect the domestic producers within the country from foreign competition.

(ii) The competition from importers would have crippled the new-born industries of India. In such a situation, imports of only such commodities were allowed, which were quite necessary such as machinery, fertilisers, petroleum, etc.

(iii) During 1950s and 1960s, competition from imports was giving a death blow to growing industries in India. Hence, India allowed imports of only essential goods.

The government wished to remove these barriers in the 1990s, because it felt that domestic producers were ready to compete with foreign industries. It also felt that foreign competition would in fact improve the quality of goods produced by Indian industries. This decision was also supported by powerful international organisations. Thus, the government decided that the time had come for Indian producers to compete with producers around the globe.

Ans. Rapid improvement in technology has stimulated the globalisation process:

(i) Transportation technology has made much faster delivery of goods across long distances 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 access information instantly, and to communicate from remote areas.

(iv) Through internet, one can obtain and share information on almost anything. it also allows to send e-mail and talk across the world at negligible costs.

(v) For example, a news magazine published for London readers is to be designed and printed in Delhi. The text of the magazine is sent through Internet to the Delhi office. The designers in the Delhi office get orders on how to design the magazine from the office in London using telecommunication facilities. The designing is done on a computer. After printing, the magazines are sent by air to London. Even the payment of money for designing and printing from a bank in London to a bank in Delhi is done instantly through the Internet.

Ans. Rapid improvement in technology has stimulated the globalisation process. The role of technology in promoting globalisation process are as follows:

(i) This has made much faster delivery of goods across long distances possible at lower costs.

(ii) Even more remarkable have been the developments in information and communication technology.

(iii) Technology in the areas of telecommunications, computers, Internet has been changing rapidly.

(iv) Telecommunication facilities (telephone including mobile phones, fax) are used to contact one another around the world, to access information instantly, and to communicate from remote areas.

(v) This has been facilitated by satellite communication devices

Ans. MNCs are setting up their customer care centres in India due to availability of cheap skilled labour and good English speaking people.

Ans. Due to globalisation, the latest models of digital camera, mobile phone, TV, etc. are available with us.

Ans. Government has given the permission to the MNCs to hire the workers flexibly i.e. hiring the workers on temporary basis and also ignoring the labour laws. This is what we call flexibility in labour laws. It will help the MNCs in reducing their labour cost and the total cost of production.

Ans. Foreign trade is an important component of globalisation because:

(i) Foreign trade implies exchange of goods and services across the countries.

(ii) It helps to expand the size of market for producers.

(iii) Producers and consumers can get commodities produced in any part of the world.

(iv) It works to integrate markets in different countries.

Ans. Effect of globalisation on the lives of people are:

(i) Increased their investment in industries such as cell phones, automobiles, electronics, soft drinks, fast food or services such as banking in urban areas.

(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. They have invested in newer technology and production methods and raised their production standards. Some have gained from successful collaborations with foreign companies.

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

Ans. Reasons for putting trade barriers to foreign trade and investment by the Indian government after Independence are:

(i) To protect local producers and goods from foreign competition.

(ii) Industries needed protection so that they could grow and develop in order to be ready to compete with developed countries later on.

(iii) It imposed restrictions on the import of certain goods.

Reasons to remove barriers were:

(i) To face competition and improve quality of products.

(ii) To attract foreign investments.

(iii) To place orders for production

Ans. Globalisation on small producers and workers:

(i) It has led to widening of income inequalities among various countries.

(ii) Workers jobs are no longer secure.

(iii) Expansion of unorganised sector.

(iv) Small manufacturers have been hit hard due to severe competition.

(v) Several units have been shut down rendering many workers jobless.

(vi) Lives of workers are on the whims of employers.

(vii) Workers are denied their fair share of benefits.

Ans. (i) While globalisation has benefited well off consumers and also producers with skill, education and wealth, many small producers and workers have suffered as a result of the rising competition.

(ii) Removal of trade barriers and liberalisation policies of the governments to facilitate globalisation have hit the local producers and manufactures hard.

(iii) Globalisation and the pressure of competition have substantially changed the lives of workers. Faced with grow in competition, most employers these days prefer to employ workers ‘flexibly’. This means that workers’ jobs are no longer secure.

Ans. Advantages of globalisation:

(i) Globalisation has also created new opportunities for companies providing services, particularly those involving IT.

(ii) Consumers now enjoy numerous choices, better quality and lower prices for most of the products.

(iii) Numerous jobs have been created by the work of the MNCs and local companies collaborating with them also have earned huge profits.

(iv) Many top Indian companies have improved technology and production methods due to competition. Some of them have become MNCs themselves like Infosys and Ranbaxy.

Ans. Contribution of technology in promoting the process of globalisation:

(i) Past fifty years have seen several improvements in transportation technology.

(ii) This has made much faster delivery of goods across long distance possible at former costs.

(iii) In recent times technology in the areas of telecommunication, computers and internet has been changing rapidly.

(iv) Technology has facilitated the satellite communication devices.

(v) Telecommunication facilities are used to contact one another around the world.

Ans. In the recent years, the Indian Government has taken special steps to attract foreign companies to invest in India:

(i) The government has set up industrial zones called SEZs (Special Economic Zones).

(ii) SEZs provide world class facilities, i.e. electricity, water, roads, transport, storage recreational and educational facilities.

(iii) Companies who set up production units in the SEZs do not have to pay taxes for an initial period of five years.

(iv) The government has also allowed flexibility in the labour laws to attract foreign investment.

(v) The companies can now lower workers ‘flexibly’ for short period when there is intense pressure of work. This is done to reduce the cost of labour for the companies.