Class 10 Exam  >  Class 10 Notes  >  Social Studies (SST) Class 10  >  Chapter Notes: Globalisation & the Indian Economy

Class 10 Economics Chapter 4 Notes - Globalisation and the Indian Economy

As consumers today, many of us have a diverse range of goods and services available. The latest models of digital cameras, mobile phones, and televisions from leading global manufacturers are easily accessible. Indian roads now feature a variety of car models each season, a departure from the past when Ambassador and Fiat were the dominant choices. This choice of brands extends to various products, from shirts to televisions to processed fruit juices. 

Consumer ChoicesConsumer Choices

This abundance of choices is a relatively recent development in our markets, transforming rapidly within a matter of years. 

The chapter explores the factors behind these changes and their impact on people's lives.

Production Across Countries

  • Trade has historically been the primary means of communication between distant nations, and Multinational Corporations (MNCs) now play a crucial role in this process. 
  • An MNC, which oversees production in multiple countries, strategically establishes production headquarters and factories in regions with affordable labor and resources. This strategy aims to minimize production costs, enabling MNCs to maximize profits.
  • MNCs choose locations close to markets where skilled and unskilled labor is available at economical rates, ensuring the availability of essential production elements. 
  • Additionally, MNCs may advocate for government measures that safeguard their interests in the regions where they operate.Factors on which location Selection Depends
    Factors on which location Selection Depends

Interlinking Production Across Countries

Investment involves spending money on assets like land, buildings, machinery, and equipment. In the context of Multinational Corporations (MNCs), this investment is termed foreign investment, with the expectation of earning profits from these assets.

MNCs engage in global production through various methods of interaction with local producers:

  1. Joint Production: MNCs form partnerships with existing local companies for joint production, allowing local producers to access new assets and advanced technologies.

  2. Acquisition of Local Companies: MNCs acquire well-established local enterprises with extensive networks to expand their production capabilities.

  3. Controlled Production: MNCs collaborate with local companies, sourcing materials and placing orders to achieve controlled production. The MNC's brand is utilized for marketing these products.

Interlinking Production Across CountriesInterlinking Production Across Countries

The collaboration between MNCs and local businesses in establishing production benefits the latter in several ways:

  1. MNCs can provide funds for additional investments, such as acquiring new machinery to enhance production efficiency.

  2. Multinational corporations bring advanced manufacturing technology, contributing to the modernization of local businesses.

Question for Chapter Notes: Globalisation & the Indian Economy
Try yourself:
What is the main reason behind multinational corporations (MNCs) strategically establishing production headquarters and factories in regions with affordable labor and resources?
View Solution

Foreign Trade and Integration of Markets 

  • Foreign trade enables producers to extend their market presence beyond their domestic boundaries. This means they can sell their products not just in their home markets but also in global marketplaces. 
  • Likewise, importing goods from other countries provides buyers with a broader range of choices compared to what is available domestically. In essence, foreign trade fosters the connection and integration of markets across different countries. 

What is Globalisation?

The way in which the world economy is integrated with the modern world is globalisation.

The process of rapid Integration or interconnection between countries is called Globalisation

Class 10 Economics Chapter 4 Notes - Globalisation and the Indian Economy

Let us see Examples
  1. Microsoft :

    •  Microsoft is having its headquarters in the USA
    • This company is getting part of its software developed in India and several other countries.
    • Microsoft’s software is being used across the world
  2. Ford Motors: 

    • Ford Motors based in the USA.
    • Ford is having manufacturing plants in Chennai and cars manufactured in Chennai go for sale in other countries
    • Moreover, the company may be getting gearboxes produced in some other country, seat belts from a different country, and lights, and rearview mirrors from some other nation by some other company. 
    • Almost all the components get supplied by various vendors to the Ford motor, which assembles them to make the car.

All these activities help in generating employment opportunities across the world. This in turn affects the world economy

You can think of various activities in the step of final production of a product or a service that take place around the world at different locations. This results in the interdependence of national economies around the world.

Question for Chapter Notes: Globalisation & the Indian Economy
Try yourself:
What is the purpose of foreign trade?
View Solution

Factors that have Enabled Globalisation

Globalisation, the process of increasing interconnectedness and integration of economies, societies, and cultures on a global scale, has been facilitated by several key factors. These factors have played a significant role in enabling globalisation and shaping its trajectory. Here are some of the most important factors:

Factors Affecting GlobalisationFactors Affecting Globalisation

1. Technology:

  • Rapid technological progress has significantly expedited the process of globalisation. This progress facilitates faster and more cost-effective distribution of goods across long distances. 
  • Information and communication technologies have made information easily accessible, leading to India's IT revolution, where workers can be situated in different regions yet seamlessly integrated into a virtual workspace. 
  • Advanced computing facilities enable automation, precise production control, and product homogeneity.

2. Trade Liberalisation:

  • Trade barriers imposed by governments, known as trade restrictions, can regulate or enhance international trade by deciding the types and quantities of goods to be imported. 
  • Import taxes serve as an example of a trade barrier. Liberalisation involves removing government-imposed trade obstacles, signifying a more open approach. While trade restrictions can aid growth and productivity in developing economies, they may become detrimental after a certain level of development. 
  • India embraced trade liberalisation in 1991, allowing companies to freely import and export materials, supported by organizations like the World Bank.

3. Foreign Investment Policy:

  • Significant investments made by a company in a foreign enterprise are termed foreign direct investments (FDI). 
  • Such investments may be utilized to acquire tangible assets, expand a company's reach, or establish a global presence.

World Trade Organisation (WTO) 

This organisation aims to liberalise international trade. This organisation says that all countries in the world should liberalise their policies.

WTO SymbolWTO Symbol

  • This organisation established the rules regarding international trade and sees that these rules are obeyed.
  • Currently, 161 countries are members of the WTO. India joined WTO on 1 January 1995.
  • 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 developing countries to remove trade barriers
  • As an example, the US government provide a huge amount of money to their farmers for production and export 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.

Question for Chapter Notes: Globalisation & the Indian Economy
Try yourself:
Which factor has played a significant role in facilitating the process of globalisation?
View Solution

Impact of Globalisation in India

Globalisation has had a significant impact on India across various sectors, transforming its economy, society, and culture. Here are some of the key impacts of globalization in India:

Impact of GlobalisationImpact of Globalisation

1. For Consumers

  • Globalisation enabled greater competition among producers forcing them to produce a quality product at a lower price
  • Consumers today can take advantage of this competition to get a quality product at a reasonable price. 
  • This leads to higher standards of living
  • These products are easily available in urban areas and not in rural areas hence reach of these products is limited thus the rural people do not have the same lifestyle as urban people.

2. For MNCs

Large MNCs order their products from Indian exporters.Large MNCs order their products from Indian exporters.

  • With globalisation, MNCs have prospered a lot. 
  • Large MNCs order their products from Indian exporters.
  • They have increased their investment in India indicating that they are benefitting from the investment
  • Recognising the opportunities in an urban area MNCs are now interested in industries such as cell phones, automobiles, electronics, soft drinks, fast food and banking services.
  • MNCs can now shift to another country to lower production costs and gain higher profits. 
  • But this shift creates adverse effects on the workers of the companies. They will get cheap qualified labour at low wages.
  • Producers will have the choice to outsource the work from a different country where there is cheap labour and production cost.

3. For Workers

  • No Job Security – With growing market competition among industries employers prefers to hire a worker as per need. 
  • Thus they can fire the worker at any time. 
  • Thus there is no job security for the workers. very long working hours – Worker has to work for long hours to meet the demands. They will have no choice but to listen to their employer.
  • Low wages – Job opportunities are limited and the number of workers is far more than the opportunities. Thus producers easily get cheap labour and workers are ready to work at less wages.

4. For Small Producers

  • Small producers face close competition with such well-established firms
  • They can bear small losses but small producers can not bear such losses and ultimately end up selling their companies to MNCs. Example: Batteries, capacitors, plastics, toys, tyres, dairy products and vegetable oil are some examples of industries where small manufacturers are hit hard due to competition.
  • Some of the Indian multinational companies such as Tata Motors, Infosys, Ranbaxy, Asian Paints, and Sundram Fasteners benefited from globalisation as they have spread their operations worldwide.
  • There are enough opportunities for skilled workers but unskilled workers remained poor.

 Steps to Attract Foreign Investment

  • The government of India set up Special Economic Zones to attract foreign Investors.
  • SEZs 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 areas 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 regularly these companies are allowed to hire workers for short periods i.e. whenever required.
    Class 10 Economics Chapter 4 Notes - Globalisation and the Indian Economy

The Struggle for a Fair Globalisation 

Ensuring equitable globalisation offers opportunities to everyone, with the government playing a crucial role in achieving this goal. Some measures the government can take include:

  1. Supporting small producers to enhance their productivity.
  2. Enforcing labour regulations and safeguarding workers' rights.
  3. Implementing trade and investment barriers when necessary.
  4. Advocating for more equitable rules within the WTO.
  5. Collaborating with other developing nations that share common interests to counter the dominance of developed countries in the WTO.
The document Class 10 Economics Chapter 4 Notes - Globalisation and the Indian Economy is a part of the Class 10 Course Social Studies (SST) Class 10.
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FAQs on Class 10 Economics Chapter 4 Notes - Globalisation and the Indian Economy

1. What is globalisation?
Ans. Globalisation refers to the process of increased interconnectedness and integration of economies, societies, and cultures on a global scale. It involves the exchange of goods, services, information, and ideas between countries, leading to the creation of a global network of economic and cultural relationships.
2. What factors have enabled globalisation?
Ans. Several factors have enabled globalisation. These include advancements in technology, particularly in the field of communication and transportation, which have made it easier for people and goods to move across borders. The liberalization of trade policies and the reduction of barriers to international trade have also played a significant role in facilitating globalisation. Additionally, the emergence of multinational corporations and the increasing interconnectedness of financial markets have contributed to the expansion of globalisation.
3. What is the World Trade Organisation (WTO)?
Ans. The World Trade Organisation (WTO) is an international organization that deals with the global rules of trade between nations. It provides a framework for negotiating and implementing trade agreements, as well as resolving trade disputes between member countries. The WTO aims to promote free and fair trade by ensuring that trade barriers are reduced and trade policies are transparent.
4. What is the impact of globalisation in India?
Ans. Globalisation has had a significant impact on India's economy. It has led to an increase in foreign trade and investment, which has contributed to economic growth and the creation of jobs. Globalisation has also facilitated the transfer of technology and knowledge, allowing Indian industries to become more competitive in the global market. However, it has also resulted in increased competition for domestic industries and has led to concerns about the widening income inequality and environmental degradation.
5. What is the struggle for a fair globalisation?
Ans. The struggle for a fair globalisation refers to the ongoing efforts to ensure that the benefits of globalisation are distributed more equitably and that the negative impacts are minimized. This includes advocating for fair trade practices, protecting workers' rights, promoting sustainable development, and addressing issues such as income inequality and environmental degradation that have arisen as a result of globalisation. It involves the collaboration of governments, international organizations, civil society, and the private sector to create a more inclusive and sustainable global economy.
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