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

Globalisation means integrating the economy of a country with the economies of other countries under conditions of free flow of trade and capital and movement of persons across borders.

Production Across Countries

Trade was the main channel connecting distant countries. Large companies, which are now called Multinational Corporations (MNCs) play a major role in trade.

• An MNC is a company that owns or controls production in more than one nation.
• MNCs set up offices and factories for production in regions where they can get cheap labour and other resources so that the company can earn greater profits. 

Interlinking Production Across Countries 

At times, MNCs set up production jointly with some of the local companies of these countries. The benefit to the local company of such joint production is two-fold.

• 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.
• Investment and Foreign Investment: The money that is spent to buy assets such as land, building, machines and other equipment is called investment. The investment made by MNCs is called foreign investment.
• By setting up partnerships with local companies, using local companies for supplies, by closely competing with local companies or buying them up, MNCs are exerting a strong influence on production at these distant locations.

As a result, production in these widely dispersed locations is getting interlinked.

Foreign Trade and Integration of Markets  

Foreign trade creates an opportunity for the producers to reach beyond the domestic markets. 

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

• 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. 
• More and more goods and services, investments and technology are moving between countries.

Factors that have Enabled Globalisation

• Improvement in Transportation Technology 
• Improvement in Information and communication technology 
• Liberalisation of foreign trade and foreign investment policy 
• Pressures From World Trade Organisation 

World Trade Organisation (WTO)  

• 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.

Impact of Globalisation in India 

It has provided greater choices to consumers who now enjoy improved quality and lower prices on several products. It has resulted in higher standards of living.

The struggle for a fair globalisation 

• 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.