NCERT Solutions for Ch 4 Social Science (Economics) Globalisation and The Indian Economy
Exercises, Page - 72
1. What do you understand by globalisation ? Explain in your own words.
Answer:
The integration of domestic economy with the world economy is known as globalisation. In this process the goods and services are produced and marketed globally. It is a process of rapid integration between countries. Multinational corporations are playing a vital role in the globalisation process. Now more and more goods and services, investments and technology are moving between countries. Most regions of the world are in closer contact with each other than a few decades back. In globalisation process countries can be connected through the movement of people.
2. What was the reason for putting barriers to foreign trade and foreign investment by the Indian government ? Why did it wish to remove these barriers ?
Answer:
The Indian government, after independence, had put barriers to foreign trade and foreign investment. This was considered necessary to protect the producers within the country from foreign competition. India allowed imports of only essential items such as machinery, fertilisers, petroleum etc. In 1991 the government decided that the time had come for Indian producers to compete with producers around the globe. It felt that competition would improve the performance of producers within the country since they would have to improve their quality. Thus barriers on foreign trade and foreign investment were removed to a large extent.
3. How would flexibility in labour laws help companies ?
Answer:
Globalisation and the pressure of competition have substantially changed the lives of workers. Companies have looked for the cheapest goods in order to maximise their profits. For this cost of raw materials cannot be reduced, employers try to cut labour costs. They do not have to pay workers for the whole year. Wages are low and workers are forced to work overtime to make both ends meet. In this way companies have to make large profits, workers are denied their fair share of benefits brought by companies.
4. What are the various ways in which MNCs set up, or control, production in other countries ?
Answer:
The most common way for MNCs investments is to buy up local companies and then to expand production. MNCs with huge wealth can quite easily to do so. There is another way in which MNCs control production. Large MNCs in developed countries place orders for production with small producers. Garments, footwear, sports items are examples of industries where production is carried out by a large number of small products around the world. MNCs have tremendous power to determone price, quality, delivery and labour conditions for these distant producers. In this way MNCs are spreading their production in various countries across the globe.
5. Why do developed countries want developing countries to liberalise their trade and investment ? What do you think should the developing countries demand in return ?
Answer:
WTO is supposed to allow free trade for all, in practice, 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. That is why developing countries are therefore asking the developed country governments. "We have reduced trade barriers as per WTO rules. But you have ignored the rules of WTO and have continued the trade barriers. It is not a fair trade." I think developing countries should demand in return the free and fair flow of their labour and reduction in the subsidies in agriculture sector of developed countries.
6. "The impact of globalisation has not been uniform." Explain this statement.
Answer:
In the past fifteen years, globalisation of the Indian economy has come a long way. Globalisation and greater competition among producers-both local and foreign producers-has been of advantage to consumers particulary the well off sections in the urban areas. There is greater choice before these consumers who now enjoy improved quality and lower prices for several products. As a result, these people today enjoy much higher standards of living than was possible earlier. In this way globalisation has benefited well off consumers and also produces with skill, education and wealth. Many small producers and workers have suffered as a result of the globalisation.
7. How has liberalization of trade and investment policies helped the globalization process ?
Answer:
Liberalization of trade and investment policies has facilitated globalisation by removing barriers to trade and investment. At the international level, WTO has put pressure on developing countries to liberalise trade and investment policies. The result of liberalisation has been greater integration of prodution and markets across countries. Besides MNCs are playing major role in the globalisation process. With liberalisation of trade, businessmen are allowed to make decisions freely about what they wish to import or export.
8. How does foreign trade lead to integration of markets across countries ? Explain with an example other than those given here.
Answer:
Foreign trade leads to integration of markets across countries. For example Chinese toys in India and Indian readymade garments in other countries result in connecting the markets or integration of markets in different countries. Due to foreign trade goods travel from one market to another. Choice of goods in the markets rises. Prices of similar goods in the two markets tend to become equal. The producer of readymade garments of India 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. Thus foreign trade leads to integration of markets across countries.
9. Globalisation will continue in the future. Can you imagine what the world would be like twenty years from now ? Give reasons for your answer.
Answer:
If the globalisation will continue in the future, the world would be like a one market twenty years from now. People will be in a position to buy quality goods at cheapest rates. Globalisation will increase the competition among the producers and it will benefit the consumers most after twenty years from now.
10. Supposing you find two people arguing : One is saying globalisation has hurt our country's development. The other is telling globalisation is helping India to develop. How would you respond to these arguments ?
Answer:
In this case, I should respond to these arguments that globalisation has both the effect to some extent. It has hurt our country's development as in the case of agriculture sector. But in the case of manufacturing and services, it is helping India to develop.
11. Fill in the blanks.
Indian buyers have a greater choice of goods than they did two decades back. This is closely associated with the process of_____________ . Markets in India are selling goods produced in many other countries. This means there is increasing ___________ with other countries. Moreover, the rising number of brands that we see in the markets might be produced by MNCs in India. MNCs are investing in India because ___________. While consumers have more choices in the market, the effect of rising _________ and _________________ has meant greater __________________ among the producers.
Answers:
globalisation, Foreign trade, they can get cheap labour and other reources, Foreign trade, Foreign investment, competition
12. Match the following.
| (i) | MNCs buy at cheap rates from small producers | (a) | Automobiles |
| (ii) | Quotas ans taxes on imports are used to regulate trade | (b) | Garments, footwear, sports items |
| (iii) | Indian companies who have invested abroad | (c) | call centres |
| (iv) | IT has helped in spreading of production of services | (d) | Tata motors, Infosys, Ranbaxy |
| (v) | Several MNCs have invested in setting up factories in India for production | (e) | Trade barriers |
(i) MNCs buy at cheap rates from small producers - (b) Garments, footwear, sports items
(ii) Quotas and taxes on imports are used to regulate trade - (e) Trade barriers
(iii) Indian companies who have invested abroad - (d) Tata Motors, Infosys, Ranbaxy
(iv) IT has helped in spreading of production of services - (c) Call centres
(v) Several MNCs have invested in setting up factories in Indian production - (a) Automobiles
13. Choose the most appropriate option.
(i) The past two decades of globalisation has seen rapid movements in :
(a) goods, services and people between countries.
(b) goods, services and investments between countries
(c) goods, investments and people between countries
Answer:
(b) goods, services and investments between countries
(ii) 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.
(c) form partnerships with local companies.
Answer:
(c) form partnerships with local companies.
(iii) Globalisation has led to improvement in living conditions :
(a) of all the people.
(b) of people in developed countries
(c) of workers in the developing countries
(d) none of these
Answer:
of people in developed countries