Here I am going to provide you CBSE Notes for Class 10 Economics Chapter 4 Globalisation and Indian Economy. This chapter deals with globalisation. Here you will get to know the integration between countries through foreign trade and foreign investments by multinational corporations (MNCs). You will further get to know the role that MNCs plays in the globalisation process. The final section of the chapter covers the impact of globalisation and the extent to which globalisation contributed to the development process. I have tried to cover all important topics from this chapter in this notes. By going through Globalisation and Indian Economy Class 10 Notes you will acquire a better command on this chapter. So,use these notes and do your best!!
Production Across Countries
- Companies crossed the native country boundary in search of raw material, cheap labour and other resources in order to reduce the production cost and earn maximum profits.
- Sometimes such businesses will look for government policies that look after their interests.
- An MNC is a company that owns or controls the production in more than one nation.
- These companies produce and market goods and services all over the world. e.g. Coca-Cola, Pepsi, Honda, Nokia.
- The production process is divided into parts and spread out across the globe as per resource availability.
- E.g. India – raw material, china – cheap labour, India-highly qualified peoples to handle customers technical queries.
Interlinking Production Across Countries
- The money that is spent to buy assets such as land, building, machines and other equipment is called investment.
- An investment made by MNCs is called foreign investment. MNCs are exerting a strong influence on production at these distant locations.
- As a result, production in these widely dispersed locations is getting interlinked.
- There are a variety of ways as mentioned below, in which MNCs are spreading their production and interacting with local producers in various countries across the globe.
- By setting up partnerships with local companies
- By using the local companies for supplies
- By closely competing with the local companies or buying them up
MNCs set up production jointly with local companies which benefits local companies in the following ways:
- First, MNCs can provide money for additional investments, like buying new machines for faster production.
- Second, MNCs might bring with them the latest technology for production.
Foreign Trade and Integration of Markets
- Foreign trade creates an opportunity for the producers to reach beyond the domestic markets.
- Producers can sell their products not only in markets located within the country but can also compete in markets located in other countries of the world.
- Similarly, buyers have the options to choose among various goods beyond domestically produced goods.
- Thus, foreign trade results in connecting the markets or integration of markets in different countries.
What is Globalisation?
- Globalisation is the process of rapid integration or interconnection of countries.
- MNCs are playing a major role in the globalisation process.
- For example : Microsoft is having its headquarters in the USA. This company is getting part of its software developed in India and several other countries. And Microsoft’s software is being used across the world.
- More and more goods and services, investments and technology are moving between countries.
- There is one more way in which the countries can be connected. This is through the movement of people between countries.
Factors that have Enabled Globalisation
Technology
- Rapid improvement in technology has been one major factor that has stimulated the globalisation process.
- This has made possible much faster delivery of goods across long distances at lower costs.
- The developments in information and communication technology have made information instantly accessible.
Liberalisation of Foreign Trade and Foreign Investment Policy
- Trade barriers are some restrictions that have been set up by governments.
- The government can use trade barriers to increase or decrease (regulate) foreign trade and to decide what kinds of goods and how much of each, should come into the country.
- Tax on imports is an example of trade barrier.
- Removing barriers or restrictions set by the government on trade is known as liberalisation.
- When the government imposes less restrictions than before, it is said to be more liberal.
World Trade Organisation
- World Trade Organisation (WTO) is an organisation whose aim is to liberalise international trade.
- At present, 164 countries of the world are currently members of the WTO.
- It has established rules for developed countries regarding international trade so that these countries can allow free trade for all.
- The rules are supposed to be obeyed by all countries but currently developed countries have unfairly retained trade barriers.
- On the other hand, WTO rules forced the developing countries to remove the trade barriers.
- As an example, the US government provide a huge amount of money to their farmers for production and export of to other countries.
- US farmers now can sell farm products in other country markets at abnormally low prices adversely affecting the farmers in these countries.
Impact of Globalisation in India
Globalisation has impacted the lives of people in India in the following manner:
- It has provided greater choices to consumers who now enjoy improved quality of and lower prices on several products.
- It has resulted in higher standards of living.
- Globalisation has also created new opportunities for companies providing services, particularly in the IT sector.
Steps to attract foreign Investment
- The government of India set up Special Economic Zones to attract foreign Investors.
- SEZ’s are the Industrial zones where Industries get world-class facilities such as electricity, water, roads, transport, storage, recreational and educational facilities.
- Companies that are set up in SEZ area will do not have to pay taxes for an initial period of five years.
- The government also allows these companies to ignore some of the labour laws such as instead of hiring on a regular basis these companies are allowed to hire workers for short periods i.e. whenever required.
The Struggle for a Fair Globalisation
Fair globalisation creates opportunities for all and also ensures that the benefits of globalisation are shared better.
The government can play a major role in making this possible.
Some of the steps that the government take are:
- It can ensure that labour laws are properly implemented and the workers get their rights.
- It can support small producers to improve their performance.
- 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.