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Globalization

Globalization refers to the process of integrating a country's economy with the global economy, facilitating the unrestricted movement of goods, capital, and people across international borders. 
Key Concepts: Globalisation & the Indian Economy | Social Studies (SST) Class 10

Production Across Countries

Trade has historically been the key link between distant countries, and it is primarily driven by large firms known as Multinational Corporations (MNCs)
Key Concepts: Globalisation & the Indian Economy | Social Studies (SST) Class 10

  • MNCs are businesses that own or manage production facilities in multiple countries.
  • These corporations establish offices and factories in regions where they can access cost-effective labor and resources, aiming to maximize their profits.

Interlinking Production Across Countries 
Key Concepts: Globalisation & the Indian Economy | Social Studies (SST) Class 10

In some cases, MNCs collaborate with local companies in foreign countries to produce goods. This joint production offers several benefits to the local company:

  • Funding for Investment: MNCs can provide financial support for investments, such as acquiring new machinery to enhance production efficiency.
  • Introduction of Technology: MNCs may bring in advanced production technology, improving the overall quality and speed of manufacturing.

Investment and Foreign Investment

Investment refers to the expenditure on acquiring assets like land, buildings, machinery, and equipment. Foreign investment, on the other hand, pertains to funds from MNCs or foreign entities directed towards local assets.

By partnering with local companies, sourcing supplies from them, competing with them, or even acquiring them, MNCs significantly impact production processes in various regions around the world.

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Foreign Trade and Market Integration

Foreign trade enables producers to reach customers beyond their local areas.

Effects of Foreign Trade

  • Producers can sell their goods in local markets and also compete in international markets.
  • Buyers have the chance to select from a wider range of products that are not just limited to local production.
  • This results in the integration of markets across different countries.

Small traders of readymade garments facing stiff competition from both the MNC brands and imports. Small traders of readymade garments facing stiff competition from both the MNC brands and imports. 

Understanding Globalisation

Globalisation is about how countries are being rapidly integrated and connected, mainly due to the activities of multinational corporations (MNCs). There is a growing exchange of goods, services, investments, and technology between nations.

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Factors Driving Globalisation

Several key factors have enabled globalisation:

  • Transportation Technology: Improvements in how we transport goods have made it easier and faster to move products across borders.
  • Information and Communication Technology: Advances in technology related to information and communication have facilitated better and quicker interactions between countries, supporting global trade and investment.
  • Liberalisation of Trade and Investment Policies: Many countries have relaxed their rules regarding foreign trade and investment, making it easier for businesses to operate across borders.
  • Influence of the World Trade Organisation (WTO): The WTO has played a significant role in promoting and regulating international trade, encouraging countries to engage more openly in global commerce.

Key Concepts: Globalisation & the Indian Economy | Social Studies (SST) Class 10

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World Trade Organization (WTO)

  • The World Trade Organization (WTO) aims to facilitate and simplify international trade.
  • As of now, there are 164 member countries in the WTO. The organization has established rules to promote free trade among all its member nations.

Key Concepts: Globalisation & the Indian Economy | Social Studies (SST) Class 10

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Impact of Globalization in India

Key Concepts: Globalisation & the Indian Economy | Social Studies (SST) Class 10

Globalization has enhanced consumer options, resulting in superior product quality at reduced prices, thereby elevating living standards.

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The Struggle for Fair Globalization

Key Considerations

  • Ensuring proper implementation of labor laws to safeguard workers' rights.
  • Supporting small producers to improve their performance and competitiveness.
  • Utilizing trade and investment barriers when necessary to protect local interests.
  • Negotiating at the World Trade Organization (WTO) for fairer trade rules and practices.
  • Aligning with other developing countries to counterbalance the influence of developed nations in WTO discussions.
  • Considering both the positive and negative impacts of globalization on various sectors, such as agriculture and industry, for a balanced perspective.

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FAQs on Key Concepts: Globalisation & the Indian Economy - Social Studies (SST) Class 10

1. What is globalisation and how does it affect economies?
Ans.Globalisation refers to the process of increasing interconnectedness and interdependence among countries, primarily through trade, investment, and the exchange of information and culture. It affects economies by opening up markets, enhancing competition, and allowing for the flow of goods, services, and capital across borders, which can lead to economic growth and development.
2. What are the main factors that have enabled globalisation?
Ans.The main factors that have enabled globalisation include advancements in technology, particularly in communication and transportation, reduction of trade barriers, liberalisation of markets, and the role of multinational corporations that operate across multiple countries, facilitating cross-border trade and investment.
3. What is the role of the World Trade Organisation (WTO) in global trade?
Ans.The World Trade Organisation (WTO) plays a crucial role in facilitating global trade by providing a framework for negotiating trade agreements, resolving trade disputes, and promoting fair trade practices among member countries. It aims to ensure that trade flows as smoothly, predictably, and freely as possible.
4. How has globalisation impacted India’s economy?
Ans.Globalisation has significantly impacted India’s economy by fostering economic growth, increasing foreign investments, and expanding export markets. It has led to the emergence of a vibrant services sector, improved access to technology, and created job opportunities. However, it has also resulted in challenges such as economic disparity and the displacement of local industries.
5. What are the challenges in achieving fair globalisation?
Ans.The challenges in achieving fair globalisation include addressing income inequality, protecting workers' rights, ensuring environmental sustainability, and providing equitable access to resources and opportunities for all countries, particularly developing nations. There is a need for policies that promote inclusive growth and ensure that the benefits of globalisation are shared more broadly.
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