Globalisation and the Indian Economy Fastracl« Revision > Globalisation isthe increasing interaction of people, states fr countries through the growth of international Flow oF money, ideas and culture. Its the process of integration of social and cultural aspects. >» Multinational Corporations (MNCS) play an important role in promoting globalisation. More and mare goods and services, foreign investments and technology are moving between countries of the world > Countries are also connected with each other through movement of people. People usually move from one country to another In search of better income, better jobs or better education » The Indian economy has witnessed transformation post the economic reforms due to the measures adopted to promote globalisation. » The transformation in Indian economy can be attributed tothe following causes: > Production across Countries: With the emergence of MNCs, production has spread across countries. > Interlinking Production across Countries: MNCs are characterised by the very Fact that thelr offices and factories operate in different parts of the world and the production Is intertinked across countries. This Is done by the following methods: ‘Foreign Direct Investment (FO!) ‘© By Entering into Partnership/Joint Venture ‘+ Buying out Local Companies/Mergers/Takeover + By Giving Orders/Contracts to the Local Companies for Supplies > Forelgn Trade and Integration of Markets: Foreign trade creates opportunity for producers to reach beyond the domestic markets and compete in markets located In other countries of the world. Forelgn trade leads to integration of markets. » Many Factors have enabled globalisation. Some of them are discussed ahead: > Rapid improvement in technology has been one major factor that has stimulated the globalisation process. > Ueralisation of foreign trade and forelgn investment policy has also contributed tawards globalisation, ledge BOOSTER & As an July 2016, nearly 164 countries were the members © of Word Trade Organisation > World Trade Organisation (WTO) Is an organisation which alms to Uberalise international trade. Started at the Initiative of the developed countries, WTO establishes rules regarding international trade and sees that these rules are obeyed. > At present, Central and State Governments in india are taking special steps to attract foreign companies to Invest in India, For this, Special Economic Zones (SEZs) are being ‘set up which have world class Facies of electricity, telecommunication, broadband Internet, roads, transport, storage and recreational facilities to attract investment From MNCs and other companies. > The impact of globalisation can be Felt on all sections of Indian society. The consumers enjoy improved quality and lower prices For @ wide variety of products. But the ‘effect on producers and workers has not been positive In all aspects. » Globalisation has posed major challenges for small producers of Items lke batterles, capacitors, plastic toys, tyres, dairy products and vegetable oil. Many of these tunits have been shut down due to intense competition from Imported goods which are avallable at low prices, rendering many workers jobless. > Fair globalisation creates opportunities for all and also ensures that the benefits of globalisation are shared better. For this, the government must protecttheInterests| ‘of all the people in the country andi should ensure that the labour lawsare properlyimplemented and the workers ‘get thelr rights > Rapid improvement in technology and liberalisation of Foreign trade have been major factors that has enabled ‘labalisation process.aR Practice Exercise Multiple choice Questions w au is the increasing interaction of people, states or countries through the growth of international flow of money, ideas and cultures. 2 Uberalisation Globalisation Privatisation 6. Allof the above 2. Company that owns and controls production jin many countries of the world is called 2, Multinational company . Domestic company Bath a, and b 4. None of the above Q3. The reason due to which multinational companies set up their branches in other countries 2. cheap labour and resources . welfare motive to generate employment 4. to generate income Q4. Globalisation will resut i '. mare campetition among praducers b. Less competition among producers ‘< no change in competition among producers . None of the above QS. Till which time period, production was organised within the countries? 3. Middle of twentieth century b, End of twentieth century Starting of twentieth century 4. Tillnineteenth century Until the mid of 20th century, the goods were produced ‘ond organised within @ country. Colonial countries 2) such 95 India exported raw materials and foodstuff to © mainly Britain and imported finished products. Q6. Why did the Indian government liberalise trade regulations in 19942 (cose 2023) 2. Government wanted Foreign exchange equivalent to Indian Currency. b. Government wanted to maintain good relations with Western Countries Government wanted indian producers to compete In the Worid Market. 4. Government wanted ta provide socio-economic justice to all Q7. An important factor causing globalisation Is: 2 more income . expansion of markets € technological developments 4. urbanisation 8. Choose the reason for which MNCs are attracted to India for investments. 2. India has educated English speaking people b, India has skilled professionals India has lot of natural resources . All ofthe above Q9. MNCs set up their units in Eastern Europe because OF snes 2. cheap labour b, closeness to the markets in US and Eurape highly skilled engineers . All ofthe above 10. MNCs set up units in different countries: a. through farelgn direct Investment b. by entering inta joint ventures through mergers 4. All ofthe above QL The most common route for investments by MNCs in countries around the world is to (ween) a. set up new factaries 'b buy existing local companies form partnerships with lacal companies 4. None of the above Large MNCs in developed countries place orders for production with small producers which include: . garments, b. footwear € sports 0. Allo these 13. Which of the following statement Is not correct about a multinational company? 2. Itset up new factories for production bt may buy existing local companies to expand its business It forms partnership with tocal companies 4. It does nat have new technology and large huge money with it ‘Which one of the following companies is not 2 multinational company? (cen) a, Tata Mator b. Reliance india Ltd. ¢ Ranbaxy Infosys quz 14 STER enabled some Globalisation has large Indian ‘companies to emerge as multinationals themselves. For example, Tata Motors (automobites), Infosys (IT), Ranbaxy (medicines), Asian Palats (paints), Sundaram Fasteners (nuts and bolts) are some Indion companies Sie which are spreading their operations worldwide. €QIS. Which of the following attributes are not determined by MNCS? 1. Price, quality, delivery and raw material bs. Price labour conditions. quality detivery Delivery and price only dd. Raw material and transport cost Cargill Foods, in very large MNCs, is the Largest producer of edible oll in India. Which one of these ‘countries does it belong to? (case 2023) India France Great Britain d. United States of America What is foreign investment? 2. Investment made by the foreign government Investment made by the foreign banks Investment made by the MNCs d. Investment made by the IMF and World Bank ‘An organisation whose aim is to liberate international trade is: a World Bank b International Monetary Fund (IMF) c World Trade Organisation (WTO) dd. United Nations Organisation (UNO) Ford Motors has production units spread over countries of the world. be Gar BOOSTER Ford Motors ison American company and is one ofthe ©) wore’ targest automobile manufacturers Q20. Chinese toys are popular in India because of: 1a cheap prices b. new designs Botha. and b. 4d. None of these Globalisation has led to Improvement in tiving conditions: a. of all the people 'b of people in the developed countries cof workers in the developing countries . None of the above Why did the Indian Government restricted foreign trade after independence? 1. To protect domestic producers bb To Increase competition c. Toknow the international level af quality d. All of the above When did the Indian Government introduced 2 policy of liberalisation known as ‘New Economic Policy’? 27860 = 2000 -< 994 =. 1991 Removing trade barriers or restrictions set by the government is known as: a. Uberaiisation © Botha and b. Que. Qu. aus. Qu. 2.25 28 ga. gee. Qa. a4. b. Globalisation . Privatisation gas 26. Qe, 28. Q29. 930. ga. gaz 933 As on July 2016, nearly ‘were members of World Trade Organisation. 2.162 bigs 164 4.165 ‘countries dominate WTO. . Under developed 4, None of these -ountries 2. Developed © Both a. and. With what objective was World Trade Organisation (WTO) set up? 2 To lberalise International trade b.Toallow free trade forall € To establsh rules regarding International trade 4. Allof the above Whats the idea behind the development of Special Economie Zones (SEZs) in India? 2. Ta boost Indian industries b. Ta solve the prablem af unemployment « To produce handicrafts 4. To attract foreign investment Globalisation will co order to: 2. provide a large amount of employment b. increase the mobility of labour Botha and b 4. None of the above The past two decades of globalisation has seen rapid movements in: 2, goods, services and people between countries b. goods. services and Investments between counties goods investments andpeoplebetweencountri 4. None of the above Choose the correct statement about factors of globalisation in india. () Improvement in transportation technology. (i Liberalisation of foreign trade and foreign investment. (il) Favourable rules of WTO towards India in comparison to developed countries. CChoose the correct options from the codes given ue in the future in India in below: (case 2020) a. (i)and (i) (i) and (i) (i) and (i) 4. Only (i) AA situation in which all the countries reap the benefits of foreign trades equally Is known as: a Internatianalisation _b. Fair globalisation 4. Equal globalisation To check the free flow of Chinese goods in the Indian markets, what the Indian Government can do? 2, Ban trade with China. Impose tax on imports «. Impose tax on exports d. Complain to UNO «. UberalisationQ34. Read the given context of ‘globalisation’ and choose the correct option. (€#SE SOP 2020) a. Its the only way for economic development of the country b.Interlinks only production based activities in dispersed locations in the world Ithas always given only positive results in all the countries Leads to spread of technology, cultures and diseases from a reglon to anather 35. Under liberal policy, there has been removal of: 2. restrictions ». wade Botha, and b 4. Ucense 36. The money spent on buying assets such as land, building, machinery, etc is known as: a. Capital b, Rent Investment 4. Praduction (7. Improvement in transport has helped in promotion of: 2. Globalisation ». liberalisation Privatisation 4. None of these statements in 38. Enabling producers of one country to sell their {goods in other countries is known as: 2. Globalisation », Trade Foreign trade 4. International trade 939. Match column | with column Il and choose the correct options: Column | Column t ‘A china 1 Skilled engineers . Eastern Europe] 2. Cheap manufacturing location C india 3, Close ta the markets In US and Europe ABC ABC a2ai b3a21 c1a2 4231 Q40. Identify the incorrect option: Column} Column i (Key terms) (Meanings) 1. Globalisation ‘A Integration between economies: 2 Uberalisation 3. Tax barrier 8. Removing trade barriers C Reduce the cost of production Dinvestment by multinationals ara b28 cat 40 Q4L Read the source given below and answer the question that follow: The early phase of globalisation involved export of raw material from colonial countries such as India and import of finished goods from industrially developed European countries and the USA. 4, Foreign investment] ga. a4 aaa. 4s. Select the option that leads to the change in the ‘economy in 20th century. ‘2. Human Development Index b, World Trade Organisation © Multinational Corporation Information and Communication Technology Read the source given and answer the question, that folloy World Trade Organisation (WTO) is one such organisation whose aim is to liberalise international trade. Started at the initiative of ‘the developed countries, WTO establishes rules regarding international trade and sees that these rules are obeyed. At present 164 countries of the ‘world are currently members of the WTO. Find the incorrect option about WTO. 2. WTO was the national organisation that varies from country-to-country b. 160 countries of the word were members of wro WTO Is supposed to allow free trade forall 4. 164 member countries were the part of WTO on 23 July, 2016 Arrange the following in the correct sequence: {0) Anews magazine published for London readers is to be designed and printed in Delhi. (i) The designing is done on a computer. After printing, the magazines are sent by air to London, (ii) The payment of money for designing and printing from a bank in Londen to a bank in Dethi is done instantly through the Internet (E-banking) (jv) The text ofthe magazines is sent through Internet to the Delhi office. The designer in Delhi office get orders on how to design the magazine from the office in London using telecommunication facilities. 2. (i). Qu). (0.0) . (ud (W). () © GW). (0. Gi. Gi) 4. (id. Cv). ‘The process of rapid Integration or interconnection between countries through movement of goods and services, investments and technology between countries is called as.. (case sop 2023-24) b. Globalisation 4. Competition 2. Privatisation Uberalisation Evaluate the Impacts of opening foreign trade on the global economy by identifying the appropriate statements among the following options:() The choice of goods in the markets increase. (i) Producers from two countries closely compete against each other despite the distance between their locations. (il) Foreign trade thus results in connecting the markets or integration of markets in different countries. (iv) The quality of the product is always good. (€8SE50P 2023-24) a. Statements (I) and (i) are appropriate b. Statements (i). (i) and (i) are appropriate € All the statements are appropriate. 4d. Only statement (i) is appropriate Q46. Read the following statements carefully and choose the correct answer: Statement (I): Globalisation leads to increased competition in international and domestic market. Statement (Il): Globalisation also makes the consumer better off as they have a wider variety of ‘goods to choose at lower prices. Options: a. Statement (i) s correct and (I) is Incorrect b, Statement (I) Is Incorrect and (I) Is correct Both statements are incorrect d. Bath statements are correct Q47. Read the following statements carefully and choose the correct answer: ‘Statement (I): A tax on imports makes the market for imported goods lucrative in terms of earning hhigher profits. ‘Statement (I): Taxes are imposed to ensure smooth trade between natlons and higher tax revenues for ‘the governments of the countries. a. Statement (I) is correct and (I) is Incorrect ». Statement (I) is incorrect and Bath statements are incorrect d. Both statements are correct -© Assertion & Reason type Questions W Directions (Q.Nos. 48-51): In the folloning questions given below, there ose two statements marked as Assertion (A) and Reason (R). Read the statements and choose the correct option: a. Both Assertion (A) and Reason (R) are true and Reason (R) isthe correct explanation of Assertion a b. Both Assertion (A) and Reason (R) are true. but Reason (R) 15 not the correct explanation of Assertion (A). Assertion (A) true, but Reason (R) Is false 4. Assertion (A) i false. but Reason (R) is true. 948. Assertion (A): Global production has 2 complex structure. Reason (R): Production of one good may take place in different parts of the world. For instance, ‘an equipment may be formed by combining components produced in different countries. TiP Giobatisation leads to connectivity of diferent countries ‘and goods and services can be transported across the world. Goods and components produced in offerene ports ofthe world can be used for production in any counts 049. Assertion (A): Local businesses may set up joint production process with MNCs and earn higher profits. Reason (R): MNCs can provide money for additional investments, like buying new machines for faster production, y TiP At times, MNCS set up production jointly with some of the local companies ofthe host countries, The benefit to the local company fiom such joint production is two-fold es MNCS con provide or additional Investments ‘and can bring in newer technology of production that result In fost paced production. (QS0. Assertion (A):Foreign trade and foreign investment result in disintegration of production across counties. Reason (R): MNCs boost up the production processes in domestic country. ye TiP The result of greater foreign investment and greater foreign trade has been greater integration of production ‘ond markets across countries. When MNCS conduct joint business processes with (acl companies, the benefit to local companies is massive os they receive investment, funds and exposure to diferent production techniques. QSL. Assertion (A): Rapld improvement in technology has been one major factor that has stimulated the globalisation process. Reason (R): Developing countries are likely to become at par with developed countries in terms of technological development due to slobatisation TiP Since globalisation ads to novementof goods services, people and technology across nations, dveloging countries ore Ukely to become ot par with developed countries in terms of technological development.v Answers v 10 2@ 26) 40) 50) 6) 72( & fd) 9 (b) 1 (d) Lt) 2@) BW) w () 1B i) 16. (6) 7 (c) 1B (c) 18 (b) 20 (c) 21. (b) 22 (a) 23. (d) 24 (a) 25. (c) 26. (a) 27 (d) 28 (d) 29 (c) 30. (b) 3 (a) 32. (b) 33. (b) 34 (6) 35. (a) 36. (37 (2) 38 () 33. (2) 40 Ai () AD (a) 43 (0) 4K (b) 45. (b) 46. (6) 47 (c) 48. (a) 49. (a) 50. (A) 51. (b) Source Based Questions y Source 1 a a2. Read the source given below and answer the questions that follow by choosing the mast appropriate option: Ford Motors, an American company, is ane of the world’s largest automobile manufacturers. with production spread over 26 countries of the world Ford Motors came to India in 1995 and spent % 1700 crore to set up a large plant near Chennai This was done in collaboration with Mahindra and Mahindra, a major Indian manufacturer of jecps and trucks. By the year 2004, Ford Motors was selling 27,000 cars in the Indian markets, while 24,000 cars were exported from India to South Aftica, Mexico and Brazil. The company wanted to develop Ford India as a component supplying base for its other plants across the globe. (cosesqp2020) ‘The passage given above relates to which of the following options? 2, Increased employment b. Foreign investment Foreign collaboration 4. International competition ‘According to the given passage, Ford Motors can be termed as a Multinational Company based on which of the following options? 2. Production of different types of automobiles b. Largest automobile manufacturer in the world c Because of large scale exports of cars across lobe d, Industrial and commercial ventures across tobe 3. Bysetting up their production plants in india, Ford Motors wanted to: a. collaborate with a leading inclan Automobile company b satisly the demands of American, African and Inglan markets © tap the benefits of low-cost production and a large market 4. take over small automobile manufacturing units in Inca ‘Ford Motors! wish to develop Ford India as a component supplying base for its other plants across the globe is an evidence of: 2. promoting local Industries of India b. merging trade from diferent counties supplying jobs to factory workers in India 4. Interinking of production across countries a4. Answers 3() 4) 1 (bo) 2) Source 2 Read the source given below and answer the questions that follow by choosing the most “appropriate option: In general, MNCs set up production where it is close to the markets; where there is skilled and unskilled labour available at low costs and where the availability of other factors of production is assured. In addition, MNCs might look for government policies that look after their interests A large MNC, producing industrial equipment, designs its products in researeh centres in the United States and then has the components manufactured in China. These are then shipped to Mexico and Eastern Europe where the products are assembled and the finished products are sold all over the world. Meanwhile, the company’s customer care is carried out through call centres located in India ‘According to the passage, what is an MNC? {a A company that owns or controls production In more than one nation b. A company that owns or controls production In China © A company that owns or controls production In Ina 4. Allof the above What was the main channel connecting distant countries? Choose the correct option: 2. Food stuff ». Imported finshed goods c Trade . Raw materials ‘According to the given passage, which of the following countries provide the advantage of being ‘cheap manufacturing location? a. china b. Mexico USA India qn a2 Qa.Q4. Which of the following statements is not a feature of an MNC? ‘a. MNCs set up production jointly with some of the International companies of other countries BL MNCs can provide money for additional investments. Uke buying new machines for faster production MNCs might bring with them the latest technology for praduction d. All of the above QS. Which condition is required to set up a factory by an MNC in a country? 1. Closeness af market bb Availabilty of skilled and unskilled labour Favourable government policies d. All of the above 6. The money that is spent to buy assets such as land, building, machines and equipment is known as: a. Cost of production bb Investment . Cost of final goods and services d. None af the above Answers, 362) 4 (a) 1 @) Source 3 Read the source given below and answer the questions that fallow 2@ 5d) 6.(b) For a long time, foreign trade has been the main channel connecting counties. In history, you would have read about the trade routes connecting India and South Asia to markets both in the East and ‘West and the extensive trade that took place along, these routes. Also, you would remember that it was trading interests Which attracted various trading companies such as the East India Company to India, ‘What then isthe basic function of forcign trade? To put it simply, foreign trade creates an ‘opportunity for the producers to reach beyond the domestic markets, ée., markets of their own countries. 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. Similarly, for the buyers, import of goods produced in another country is ‘one way of expanding the choice of goods beyond ‘what is domestically produced. QL Why had the foreign trade been the main channel connecting countries? ‘ans. The forelgn trade had been the maln channel connecting countries due to the following reasons: ()) There were trade routes connecting india and South Asia to markets both in the East and West (i) There was extensive trade that took place along these routes and it was trading interests which attracted the trading companies such a5 the act incin Company to India 2. What are the basic functions of foreign trade? Explain any two. ‘Ans. The basic functions of forelgn trade areas Follows: (i) Foreign trade creates an opportunity for the producers to reath beyond the domestic markets (i) Producers can sell their products not only in markets located within the country but th an also-compete in markets located in other countries ofthe world (i) For the buyers, import of goods produced in another country is one way of expanding the ‘choice of goods beyond wihat is domestically produced (Any two) Very Short Answer Type Questions y . What, according to you, can be the negative aspect. of globalisation? ‘Ans. Globalisation affects the environment of the developed countries adversely which is its negative ‘spect Q2. Which companies are referred to as multinational companies? ‘Ans. Companies that own and control productian in many countries of the world are called multinational ‘companies. Q3. Differentiate between multinational corporations ‘and domestic companies. (case2019) ‘Ans. (Multinational corporations operate in two or more countries while domestic companies restrict thelr ‘operations to a single country Q4. Why are MNCs setting up their customer care ‘centers in India? ‘Ans. MNCs are setting up their customer care centers in India due to the availabilty of cheap skilled labour and to earn profits by lowering the operational cost Q5. The MNCs of a country set up a production jointly with the local company of other country. Give your ‘answer with any two reasons. ‘Ans. The benefits of this joint production to the tocal ‘company are () MNCs can_provide_money for additional Investment (@) MNC might _bring Latest _technology _for production, 6. Where do MNCs prefer to set up their offices and factories? ‘Ans, MNCs set up offices and factories for praductian in regions where they can get cheap labour and other resources so as to attaln maximum profit from thelr businessQ7. “Globalisation enabled the national companies to emerge as Multinational Companies (MNCs) ‘Substantiate your answer with any two reasons. Globalisation has enabled the national companies to ‘emerge as Mlultinational Campanies (MNCS) in the following ways: () New opportunities have been provided to the ‘companies, (i) It helped in collaboration with foreign companies. Name some Indian companies which are now ‘emerging as multinational corporations. Tata Motors, Infosys. Ranbaxy. Asian Paints and Ans. ae Ans. Qus, Ans. What is the main aim of World Trade Organisation? World Trade Organisation aims to _Uberalise International trade through the removal of tariff ‘and non-tariff barriers and providing greater market ‘access to all member countries. Sundaram Fasteners are some Indian companies \which are spreading thelr operations worldwide and thus are emerging as multinational corporations. What Is the basic function of foreign trade? (case 2017) Foreign trade helps In the Integration of markets In different countries which ists basic Function Qo. Ans. Foreign trade creates an opportunity forthe producers to reach beyand their domestic markets and they are| able to export their products os welt as sell them in different countries. Define the term ‘investment. Investment refers to the money that Is spent to buy assets such as land. building, machines and other equipments and is made with the hope that these ‘assets will earn profits Distinguish between investment and foreign investment. (case 2019) When land. assets or buildings are purchased and kept hold of, they are considered as investments whereas when MNCs invest money or finances in a project of another company in another country. its considered as foreign investment. Which is the most common route for investment by MNCs in countries around the world? The most camman route for investment by MNCS In countries around the world is to buy up local ‘companies and to expand production by controlling the means Why had the Indian Government put barriers to foreign trade and foreign investment after independence? Indian Government had put barriers to foreign trade and foreign investment after independence to protect the producers within the country from foreign Investment Define the term liberalisation: (case 2017) Uberalisation refers to the removal of partial or complete loosening of the restrictions set by the government on foreign investment and trade qu. Ans. gz. Ans, qus. Ans. qua Ans. Q16. Differentiate between fixed and floating exchange rate. (c8se 2023) ‘Ans. Difference between fixed and floating exchange rate 5. Basis of | Fixed Exchange Floating No.|bitference Rate Exchange Rate () Joeciding [Fixed rate is Flexible rate is Jauthority determined by the |determrined by Jcentrat Government. demand and supply Forces (W impact on [Currency is devatued [Currency currency and if any changes appreciates and jake place inthe Jdepreciates Ina Jcurrency itis exile change ate revalued D Short Answer Tupe Questions w QL. What is globalisation? Describe the role of MNCs in promoting globalisation process. (CBSE 2016) Globalisation means opening up the economy to facltate its integration with the world economy MNCS are playing an important role in the ‘globalisation process in the following manner: ()) They help In production of goods and services investment and advancement in technology at a lower cost (i) Tey also bring goad management practices to achieve efficiency in managing big companies (li) Most regions of the world are now in close contact with each other than they were a fow ‘decades back. Ans a2 Ans. Mention the features of Multinational Corporation. The features of a Mulinatianal Corporation are as follows () Production is organised In Increasingly complex wavs (8) These companies awn or control production In ‘more than ane nation, (i) These companies have a large infrastructure (lv) The production process fs dlvided into small parts and spread out across the plobe Explain by giving examples that MNCS are spreading thelr production in different ways. (cese2016) MNCs are spreading thelr production inthe following cifferent ways: a3. Ans,a4. Ans. Qs. Ans. (i) By setting up factories and offices for production in the domestic company. The money that the MNCS spent on their establishment Is referred Q6. How can the Government of India play a major role to make globalisation more fair? Explain examples. (case 2019) (ii) Better quality products from various countries ‘around the world are available at affordable prices for Indians to purchase from their own local_markets within the country. This has affected the demands for ather services as well 1035 Foreign Dect investment Ans. Goverament fina can pay a malo ole to make (0 By seting up production jonty with tocal _globaleaton mare farn te ellowing ways companies. (i) Government policies must protect the interests (ii) By buying the local_companies_and_then not only of the rich and powerful. but of all the expanding prodion Far example. the Cargit people the county Foods. a very large American MNC has bought (ii) Government can ensure that labour laws are ‘over small indian companies such as Parakh (properly implemented” and the workers get Foods, Parakh Foods had built a large marketing their rights. ‘network in various parts of India where its brand (ii) Government can support small_producers_ to was wel-reputed inprove thr petra WI Bey bee (iv) ing orders for production with smé = (©) 8y lacing overs for production wits sina (sf necesary the goverment can use trade and producers ofthe domestic_counties: lavesurent borers ond con negotiate at the ample. greens Footwear. sports ams. ee ferro tas TiP (0) Governmentcanalso align wth other developing Seales Should wenden dbooe ce porcarhlp wh ounves with sini tress to Fig against Bela the domination of developed counties inthe wro. Describe the impact of flexibiltyinthe labourlaws q7. Why had the Indian Government put barriers onthe workers in inl. (cose2023) "to foreign trade and foreign investments after Fledblty In labour laws has badly affected the Independence? Analyse the reasons, (362016) workers. MNCs emplay them on a temporary basis Ang, Trade barriers were put up by the Indien Government inorder to cut costs Tey do not pay throughout afer Independence due tothe faliowing reasons the year During peak season. workers are made to 1H Ta protect domestic. grucers fom kad workForlnghours ann ight shifts. Tey are also competion given far woges. Ts forces them to lead avery (i) To make the country self-reant in all the hard and neh insecure fe seciors ‘In a matter of years, Indian markets have been (ii) To safeguard the freedom of the country ‘transformed with wide ranging choice of goods! gg. Why did the Government of India remove trade Support the statement with examples. (C0S°2017) *arere? Explain the reasons on Ans. Due to the folowing reasons. the Government of How are ou markets transarmed in recent year? ila emoved ale Dares scwive idistlimanie = nda was facing 2 serious economic ess In Explain with eamplas fnse2024 Twn) TBB0-ST because OT Slow econaric_growih rue nt gatows Kearse salable ine public enterprises, high ation and the inlan markets 25a resut of globlsaton This eed ites Statement can be supported using the following (il) The Government af india had decided that the examples: time had come for Indian producers ta compete ()) Globalisation has ted to Large scale integration of ‘with producers araund the glabe- adiete oralind Walon Soowts Sd Rapvices; (i) The decision to remove trade barriers was provided by aferent countries are avaiable in deel penuh bapretonal ores Indlon mare's thus proving various choles ihe MF WTO. et noeciiauenerein [nest Q9. Describe any three steps taken by the Central and WW Investments _by MNCs in industries such_as ‘State Governments to attract foreign investment in. cell_phones. automobiles. electronics. ete. India. (esse 2018) have made th atest varity of varous goods Ans. The steps tafen by the Central_and State alata very aah Governments f0 atact foreign investment in ra (J The government has set up industrial zones called Special Ecanamic Zones (SEZs) which [provide world class facilities such as electricity, water, roads, transport. storage, recreational and educational facilities.Gil) The government has also allowed flexibility in labour laws to attract foreign investment (iil) Companies setting up production units in SEZs do not have to pay taxes for an initial period of five years, (iv) Companies can employ workers flexibly for short periads in case of intense work pressure hich helps to reduce the cost of labour for the companies. Q10. Differentiate between foreign trade and foreign investment. ‘Ans. Difference between foreign trade and forelgn Investment are 5. | Basis of Forelgn No. Difference| Foreign Trade Investment () [concept [Foreign trade means|Fareign investment the buying _and| means ‘rect selling of goods and] investment by Services between two| foreign companies Jor more countries. [in other countries, (Wo Jerfect —fieresutts in it promotes connecting the _|the process of markets or integration of markets in different [countries QL What are Special Economic Zones? Why have they been set up? ‘Ans. Special Economic Zones or SEZs are industrial zones which possess world class faciltles like water. electricity. roads and transport. recreatlon etc. ‘SEZs have been set up for the following reasons: () They have been set up to attract foreign companies to invest mare in india (i) Companies with production units in the SEZs enjoy tax holidays for a specified Initial period of time. 12. Assess any three advantages of globalisation. (c8s€2019) Ans. The policy of globalisation has provided a big boost to foreign direct investment in developing countries. in the following manner () Due to the poly of globalisation and privatisation, the condition of infrastructure has improved considerably. At present. many private companies are providing better services to the consumers, (il) The private_sector_is_free_to_import_raw. ‘material and technology from other countries Globalisation has enabled some large Indian companies to emerge as multinationals themselves eg. Tata Motors (automobiles). Infosys (IT), ete. ) Glabalisationhas alsocreated new opportunities for companies providing, services. particular those involving information and communication technologies. Q13. How has improvement in technology stimulated the globalisation process? Explain with three examples. oR “Technology has stimulated the globalisation process’ Support the statement with examples. (case 2015) oR “Technology is the vital force in the modern form of globalisation: Explain the statement with suitable examples. (C0SE 2022 Term2) or How is information technology connected with globalisation? Explain. (case 2023) ‘Ans. Rapid improvement in technology has been playing 2 key role in encouraging the globalisation process. This can be supported with the help of the following examples: {) Improvement in transportation technology eg. using containers for storing goods has made possible faster delivery of goods across long lstances at lower costs (W) There have been rapid developments _in information and_communication technology ‘eg. computer. Internet etc. They have made easy ‘access to any person or place around the world. (i) Technology has helped to communicate from remate areas. One can obtain and share Information through internet. (iv) Telecommunication facilities (telegraph, telephone including mobile phones. fax. etc) ‘are used to contact and access. Information. Etectranic malt (e-mail) and tak (voice mall) can bbe done across the world at negligible costs. (v) Information technology has played a major role in spreading out production of services across countries Thus. it can be sald that technology has stimulated the globalsation process and serves as the vital farce in the madern farm of globalsatlon. QU. Assess the of multinational corporations. (case 2019) ‘Ans. The advantages of multinationalcorporations are as follows: advantages() The Multinational Corporations or the MNCS help to solve the prablem of capital and foreign Investments _of the underdeveloped and the developing countries (i) MNCS can be helpful in solving the problem ‘of foreign exchange of the underdevelaped ii) It has created _new opportunities for_Indian companies particularly by providing services Uke rr (uw) Te has increased the competition among companies which has led to improvement of ‘quality and reduction in prices of the products ‘and the developing cauntries. In 90s, India had Taced a huge shortage of foreign exchange. but with the entry of MNCs, today thas got surplus foreign exchange reserves. (li) The MNCS help in the integration of world markets. With the entry of MNCS, even the ‘small countries have opened up their damestic ‘markets for other countries. Q1S. Examine any three conditions which should be taken care of by Multinational Companies to set up thelr production units. (case 2017) The conditions which should be taken care of by Multinational Companies before setting up their production units areas follows: (0 Availabilty of cheap and abundant labour (i) Availablity of raw material (i) Closeness to markets (iv) Favourable government polices (¥) Assurance to other Factors of production. 916. How do Multinational Companies (MNCs) manage to keep the cost of production of their goods low? Explain with examples. ‘Ans. MNCs manage to keep the cost of production oftheir .B00ds low in the following ways () By setting up their offices and factories in countries where they can get cheap labour, land and other resources. For example. indla Fras Fighly skied engineers who are willing to work at very competitive wages. This is one of the reason why IT sector of India Is attracting INC. (i) By buying the _tocal_companies_and_then expand its production with the help of modern Technology (ii) By placing orders for small producers and sell these products under their own brand name to the customers worldwide, Q17. How has globalisation affected the life of Indians? Explain with examples. (case 2019) ‘Ans. Globalisation has affected the life of indians in the Ans. For example. Tata Motors, Infosys, etc (iv) It has resulted in greater cultural exchange because of greater movement of the people which further has helped the tourism sector In india, TiP Write onswers by quoting exomples of top Indion companies. {COMMON ERROR Sometimes, students write the feature ‘MNCS Instead y SFoatine ticcronmese eames oAMNGSIstod | @Y Long Answer Type Questions \ QL. Whats globalisation? Howcan government ensure fair globalisation to its people? Give two points. ‘Ans. Globalisation Is the unification or integration of the domestic economy with the world economy through ‘rade, capital and technology flow: “The government can ensure fair globalisation to its people by the following ways: (i) Ensuring that the Labour Laws of the country are followed so that workers are not exploited, (i) Supporting small producers to improve thelr performance so that they remain viable in the face af competition from MNCS. (ii) Negotiating with WTO for fairer rules aligning vith other developing countries for better trade terms, (lv) Protecting the Interests, not only of the rich ‘and powerful but all the people in the country ‘through its polices, 2. How has liberalisation of trade and investment policies helped the globalisation process? ‘Ans. Liberalisation of trade and investment has helped the globalisation process in the following ‘manner (i) Liberalisation gives industries the freedom to expand themselves according to the market. I ‘Supports the process of globalisation. (i) Uberalisation of investment helps to start new, businesses all over the world wich Is @ part of ‘globalisation. (li) Under the policy of Uberalisation, the Indian government has removed various restrictions from the import and export _of goods and following ways: (lv) The process of Uberalisation has brought (i) thas ted to an increase in foreign investment in new technology In India which has promoted India ‘lobalisation.(¥) Information and communication technology has played a major ole in spreading out production ond serves across countries Q3. ‘Globalisation has been advantageous to consumers: as well as to producers. Support the statement ‘with suitable examples. OR How can consumers and producers be benefited by foreign trade? Explain with examples. (c85¢2010) Ans. The given statement can be supported with the help of the following examples: () The policy of liberalisation and globalisation has provided a big boost to foreign direct investment in developing counties (i) Ove to the polly of globalisation and privatisation, the condition of infrastructure has improved considerably. At present. many private companies are proving better services to the consumers. (ai) The private sector i free to import raw material and technology from other countries. (Wo) Globalsationhas alco ereatedinew opportunities for companies providing services. particularly thoseinvelvinginformation and communication technologies (0) The Indian consumers are geting a variety of quality products at cheaper rates. BOOSTER Globalisation hos enabled some large Re componies to emerge as multinationals themselves, © eg Tata Motors (outomobits), infosys (1, et 4, Describe the major problems created by the Globalisation fora large number of small producers and workers. Ans. The maar problems created by the globalisation for 2 large number of small producers ang nerkers are as fllows () It may lead to widening of income inequalities among various countries (i) Workers, obs are no longer secure as imports from eutsde country can take over thele work (ii) Smalt manufacturers have been hit hard due {To severe competition as they cant afford huge ‘machines and advanced technology (Ws) Several units have been shut down making the ‘most ofthe workers jobless (v) Workers are denied from their falr share of benefits due fo strong market competition — (w) Globalisation leads to expansion _of the organised seco. 5. Why do Muttinational Corporations (MNCs) set up their offices and factories in certain areas only? Explain any five reasons. (cose 2019) Ans. MNCs set up their offices and factories in certaln areas only due tothe following reasons: Indian (0) MNCs get cheap labour when they set up their affices and factories in hese areas. (i) In order to set up a large industry or a campany to have far more productivity, MNCs need more labour and ie wil be just their benefit fo get cheap labour. (i) MNCs can cut-off the rate of transportation to ‘an extent when they selectareas with high level oF resources. (iv) MINCs can easily set up plants by selecting an area whlch fs full of natural resources. (W) HINCS can provide their products to_ thelr sonsumers_more_efficently_and_with_more profi by cutting the costs involved while setting Up thelr plants, TiP Discuss about the ovolablty of ow materi, siled and unsltedtbour eto gon marks Q6. How are MNCs controlling and spreading their production across the world? (case 2015) OR How do MNCs interlink production across countries? Explain with examples. (C0SE2017, 2022 Term2) ‘Ans. MNCs are controlling and spreading thelr praductian across the word in the following ways: () MNCS set_up thelr production units in those areas where skilled and unskilled Tabaur Is easly available at low cost which increases the rate of production. (i) MNCs set up their units near to the market to (iil) MINCs set up production [ointty with some of the local companies Sometimes they Buy local companies and expand thelr production. (iv) MNCs choose such areas to set_up their production uns where ere Svalabity of feud faces (V) MINCS place orders for production with small producers and provide them money for their requirements. They pravide te local companies with their [atest technology to achieve better and speedy production Q7. ‘Foreign trade integrates the markets in different countries: Support the statement with arguments. oR How has foreign trade been integrating markets of diferent countries? Explain with examples. (c0se2016) fans. Foreign trade has been integrating markets of different countries in the following ways: (i) The import and export between the countries takes place on the basis ofthe fact that which commodity Is in shortage in elther of the countries.(i) in general with the opening of trade. goods travel from ane market to another. Cholce of goods In the market rises. Prices of simlar {200d in the two markets tend ta become equal (ii) Through foreign trade. producers in the two countries now closely compete against each ‘other, even though they are separated by thousands of miles. (Ww) Foreign trade creates an opportunity for the producers to reach beyond the domestic markets, (v) More and more goods and _ services. investments and technology are_moving between countries Hence. farelgn lnterdependent trade makes the countries fon each other and helps in integration of markets across the countries. (COMMON) ERROR Students write only about Indian producers. Here, itis essential to explain the producers’ point of view. Q8. What Is WTO? Mention its major aims and its Limitations. or Write a note on World Trade Organisation. ‘Ans, The WTO is an organisation which deals with the rules of trade among the nations. ‘Aims of the WTO are as follows: () The major aim of the WTO is to conduct International trade among countries of the world in_an_open. uniform and_non-discriminatory (i) Iealso handles trade disputes. (li) It provides technical assistance and training to the developing and the underdeveloped economies. (lv) It forms rules and regulations which all the members have to adopt for the smooth running of trade, Umitations of the WTO are as follows () Developed countries have unfairly retained trade barriers whereas WTO has forced the developing countries to remove trade barriers (i) The trade reform process is_incomplete in various countries 9. How does World Trade Organisation facilitate free trade fr all countries? Analyse with examples, Ans. World Trade Organisation facitates free trade for all countries in the following ways: (Through the cemoval of tariff and_non-tait barriers. international trade is focitated (i) WTO provides greater market access to all the ‘member countries and not ust the powerfulones. (u) it promotes free and fair trade through multitateral tales and negotiations. (iv) Countries can set up a free trade agreement that applies only to goods traded within the group fe. discriminating against goods from outside (9) Era Sree ts PAUSES PBA: Sree signed by most of the world’s trading nations 10. Explain any five facilities available in the special economic zones developed by the Central and State Governments to attract foreign investment. (cose2019) fans. The five facies available in the special economic zones developed by the Central and State Governments to attract foreign investment are: (Special Economic Zones are to have world les facts such SlCCTTy, water roads, wansport. ete (i) Recreational and educational facilities are provided by the government W) Government has allowed fleviblty in labour Laws to atvact foreign investment () Companies seting up production units inthe SEZs donot have to pay taxes for an intial period (0) instead of hiring workers on a regular basis. companies hire workers fledbly for_short period in case there is intense pressure of work QL. ‘The impact of globalisation has not been uniform: Explain with examples, (c#S£2020, 2022 ren-2) Ans. The glven statement can be understood through the fallowing examples: () MNCS have been benefited by industries Uke Sutomobiles. electronics_s6ft_drinks communication, wansportatlon and hospitabty in which employment has increased. (0) Local companies that supply things such as raw materials, otc, 10 the Industries have become prosperous (i) Globalisation has increased competition and destroyed Income Sources for other Industries ‘and_individual_craftsmenas their products are unable to compete with goods made by ‘machines in terms of quality and prices. (iv) Consumers have benefited with availability of better qualty of goods at lesser prices. (v) Most of the indian industries and companies have_benefited immensely and have been emerged as MNCs themselves, 2. Assess the impact of globalisation on India and its people. (case sop 2022 Torm-2) ‘Ans. Globalisation has the following Impact on India and its people (i) Globalisation has resulted in more choices for the consumers and has improved the standard of living of the people NINCS have increased their investments in industries such as cellphones, automobiles, electronics, soft drinks, etc. due to which new [pbs have been created (ii) Some tocal_companies_that_supply raw, materials to MNCs have benefited while somehave been able to invest in newer technology and production methods (iv) Globatisation has enabled some large companies such as Tata Motors. Infosys to (V) There is stiff competition for local producers and manufacturers (wi) Globatisation has led to expansion _of unorganised sector. new opportunities for MT emerge as multi national companies sector and flexibility in labour laws RB Chapter Test Multiple Choice Questions (Qi. The most common route for investments by MNCs in countries around the world is to: a. Set up new factories b. buy existing local companies form partnerships with local companies 4. None of the above 2. Which one of the following is a major benefit of joint production between a local company and a multinational company? 3. MNC can bringlatest technology in the production b. MNC can control the Increase inthe price © MNC can buy the local company 4 MNC can sel the products under thelr brand name 3. What is the idea behind the development of Special Economic Zones (SEZs) in India? 2. To boost indian industries b To salve the prablem of unemployment To produce handicrafts 4. To attract foreign investment 4. Why did the government decide to remove barriers on foreign trade and foreign competitors? a. Because the government wanted to earn the foreign exchange b. Because the government felt that the time had come for Indian producers to compete with producers in the wortd market Because the government wanted to maintain ‘00d relations with other countries 4. Allof the above QS. Choose the correct statement about factors of globalisation in india, () Improvement in transportation technology. (i) Liberalisation of foreign trade and foreign investment. (ii) Favourable rules of WTO towards India in comparison to developed countries. Choose the correct options from the codes given below: a. (iJand (i) b. (and (ii) © (i) and (ai) Only (i) Source Based Q 99. Read the sources given below and answer the b. Both Assertion (A) and Reason (R) are true. but Reason (R) is not the correct explanation of Assertion (A) «Assertion (A) is true, but Reason (R) is false 4. Assertion (A) is false. but Reason (R) is true. 6. Assertion (A): MNCs can exert a strong influence on production at distant locations. Reason (R): MNCS set up partnerships with local companies, use local companies for supplies, compete with the Local companies or buy them up. Q7. Assertion (A): Foreign trade creates an opportunity for the producers to reach beyond the domestic market. Reason (R): Foreign trade expands the choice of goods beyond what is domestically produced. 8. Assertion (A): A tax on imports makes the market for imported goods lucrative in terms of earning higher profits. Reason (R): Governments impose taxes to regulate the amount and quality of oods that enter a nation and to protect the domestic industry from foreign competition. stions ‘questions that follow Source Az Several ofthe 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. Moreover, globalisation has enabled some large Indian companies to emerge as _multinationals themselves! Tata Motors (automobiles), Infosys (TT), Ranbaxy (medicines), Asian Paints (paints), Sundaram Fasteners (nuts and bolts) are some Indian companies which are spreading their operations worldwide Globalisation has also created new opportunities Assertion and Reason Type Questions Directions (QNos. 6-8): In the following questions given below, there are two statements marked as Assertion (A) ‘and Reason (R). Read the statements and choose the correct. ‘option for companies providing services, particularly those involving IT. The Indian company producing a magazine for the London based company and call centres are some examples. Besides, a host of services such as data entry, accounting, administrative tasks, engineering are now being done cheaply in countries such as India and are exported to the developed counties. ‘2. Both Assertion (A) and Reason (R) are true and Reason (R) Is the correct explanation of Assertion (A),Source B: Since globalisation is now a reality, the question is how to make globalisation more “fair”? Fair alobalisation would create opportunities for all and also ensure that the benefits of globalisation are shared better. ‘The government can play a major role in making this possible. Its policies must protect the interests, not only of the rich and the powerful, but all the people in the country. You have read about some Of the possible steps that the government can take. For instance, the government can ensure that labour laws are properly implemented and the workers get their rights. It can support small producers to improve their performance till the time they become strong enough to compete. If necessary, the government can use trade and investment barriers. It can negotiate at the WTO for “fairer rules’. It can also align with other developing countries with similar interests to fight against the domination of developed countries in the WTO. In the past few years, massive campaigns and representation by people's organisations have influenced important decisions relating to trade and investments at the WTO. This has demonstrated that people also can play an important role in the sirugele for fair globalisation. Source C: Ravi did not expect that he would have to face a crisis in such a short period of his life as industrialist. Ravi took a loan from the bank to start his own company producing capacitors in 1992 in Hosut, an industrial town in Tamil Nadu. Capacitors are used in many electronic home appliances including tube lights, television, etc. Within three years, he was able to expand production and had 20 workers working under him. His struggle to run his company started when the government removed restrictions on imports of capacitors as per its agreement at WTO in 2001. His main clients, the television companies, used to buy different components including capacitors in bulk for the manufacture of television sets. However, competition from the MNC brands forced the Indian television companies to move into assembling activities for MNCs. Even when some of them bought capacitors they would prefer to import as the price of the imported item was half the price charged by people like Ravi. Ravi now produces less than half the capacitors that he produced in the year 2000 and has only 0 ) seven workers working for him. Many of Ravi's friends in the same business in Hyderabad and Chennai have closed their units Batteries, capacitors, plastics, toys, tyres, dairy products and vegetable oil are some example of industries where the small manufucturers have been hit hard due to competition, Several of the units have shut down rendering many workers jobless. The small industries in India employ the largest number of workers (20 million) in the country, next only to agriculture Source A: Which large Indian companies have emerged as ‘multinationals themselves? Source 8: How can people play an important role in the struggle for fair globalisation? Source C: Which small manufacturers have been hit hard due to competition? Very Short Answer Type Questions quo. on. gu Why had the Indian government after independence put barriers to foreign trade and foreign investment? How can the globalisation be made more fair? What willbe its effects? ‘What Is the benefit of joint production between a local company and an MNC? Short Answer Type Questions as. Qu. aus. 16, What steps have been taken by the government to attract foreign investment? How have our markets been transformed in recent years? “Technology has stimulated the globalisation process. Support the statement with examples. ‘Globalisation has been advantageous to consumers. as well as to producers? Support the statement with suitable examples. Long Answer Type Questions Qu. gus. Explain the ways in which competition has affected ‘workers, Indian exporters and foreign MNCs in the garments industry. Define the term liberalisation. Explain the reasons why the Indian Government started the policy of Liberalisation in 19917