Class 10 Economics Chapter 4 Extra Question Answers - Globalisation and the Indian Economy

Short Answer Questions

Q1: Explain any three ways in which MNCs set up or control production in other countries. 
Ans: Multinational Corporations (MNCs) set up their factories or production units close to markets where they can get the desired type of skilled or unskilled labour at low costs along with other factors of production. After ensuring these conditions MNCs set up production units in the following ways :
(a) Jointly with some local companies of the existing country.
(b) Buy the local companies and then expand their production with the help of modern technology.
(c) They place orders for small producers and sell these products under their own brand name to customers worldwide.

Q2: How does foreign trade lead to the integration of markets across countries? Give any three examples.
Ans: Foreign trade is the main channel which connects the markets of various countries. Foreign trade led to the integration of markets across the countries as follows :
(a) Creates opportunities for the producers to reach beyond the domestic markets or the markets of their own countries.
(b) Import of goods from various countries provides a choice of goods for consumers beyond the goods that are produced domestically.
(c) Producers of different countries compete with each other although they are thousands of miles away.

Q3: Enumerate any three features of Multinational Corporations. 
Ans: Multinational Companies (MNCs) are the companies that own or control the production of their goods in more than one country. The main features of MNCs are :
(a) They set up their factories and offices in more than one country.
(b) They set up their units where the cost of production is low and higher profits can be earned.
(c) They produce and sell their finished products globally.
Features of MNCs

Q4: Why did India put barriers on foreign trade and investment after independence? Why was the policy changed in 1991? Mention any two reasons. 
Ans: Soon after independence India put barriers on foreign trade and independence to create a large industrial base which helped in increasing the industrial production. Policies were changed in 1991 because :
(a) Global competition of Indian producers will improve the quality of Indian goods.
(b) Reduce problems like unemployment, poverty, inflation etc. and support industrialisation.

Q5: What is globalization? How can the government ensure fair globalization to its people? Give two points. 
Ans: Globalisation means unification or integration of the domestic economy with the world economy through trade, capital and technology flows.
The government can ensure fair globalization to its people in the following ways :
(a) The government needs to care about the labour laws so that workers get their rights and support small producers to improve their performance.
(b) The government can negotiate with the world trade organisation for fairer rules and can align with developing countries to stand against the domination of developed countries.
Features of Globalisation

Q6: Should more Indian companies emerge as MNCs? How would it benefit the people in the country?
Ans. Yes, more Indian companies should emerge as MNCs. It would benefit the people in the country in the following ways :
(a) New job opportunities have been created by the emergence of Indian companies as MNCs.
(b) Local companies that provide raw materials and other services to these companies have prospered.
(c) Rise in production standards, improved the standard of living of the people.

Q7: Analyse any three impacts of globalization in India.
Ans: The impacts of globalization in India are as follows :
(a) It improves the productivity and efficiency in the use of resources through the process of competition.
(b) The growth rate of the economy has gone up with the increase in foreign investment and foreign technology in India.
(c) It allows the consumers to enjoy a wider range of goods and services at a lower cost.

Q8: Suggest any three measures to make globalisation just and fair.
Ans: Globalisation means unification or integration of the domestic economy with the world economy through trade, capital and technology flows.
Government can ensure fair globalization to its people in the following ways :
(a) Government needs to care about the labour laws so that workers get their trade union rights and support small producers to improve their performance.
(b) Government can negotiate with the World Trade Organisation for fairer rules and can align with developing countries to stand against the domination of developed countries.

Q9: How has the liberalisation of trade and investment policies helped the globalisation process? Explain. 
Ans: Economic liberalisation means reducing government interference in economic activities and
removing trade and business barriers. Liberalisation of trade and investment policies helped the globalisation process in the following ways :
(a) Businesses are free to make decisions for foreign import and export.
(b) Foreign companies could easily set up factories and industries in a country after liberalisation.

Q10: Describe any three factors which have enabled globalisation in India. 
Ans: Globalisation means unification or integration of the domestic economy with the world economy through trade, capital and technological flows. Factors that supported globalisation in India are as follows :
(a) Reduction of trade barriers with a view to allowing free flow of goods to and from other countries.
(b) Involvement of various local producers with MNCs in various ways.
(c) Some of the large Indian companies like Tata Motors, Infosys (IT), Ranbaxy, Asian Paints etc. emerged as MNCs and start working globally.

Q11: Describe any three ways in which Multinational Corporations (MNCs) have spread their production and interaction with local producers in other countries. 
Ans: Multinational Corporations (MNCs) set up their factories or production units close to markets where they can get desired type of skilled or unskilled labour at low costs along with other factors of production. After ensuring these conditions, MNCs set up production units in the following ways :
(a) Set up jointly with some local companies of the country.
(b) Buy the local companies and then expand its production with the help of modern technology.
(c) They place orders for small producers and sell their products under their own brand name to the customers worldwide.

Q12: ‘‘The impact of globalization has not been uniform’’. Explain this statement. 
Ans: It is true that the impact of globalisation has not been uniform. This can be explained through following points :
(a) It has some negative impacts on employment and real wages. Ushering in of new technology, output is increasing but the employment opportunities are not much especially in rural areas where 75% of the population lives.
(b) It is mainly beneficial to large capitalists, industries and large companies. Consequently it increases the concentration of economic power and lead to inequality.
(c) In India, during 1990-91 more than 1/3rd of national product originated in agricultural sector, this share has come down to 23% in 2004-05.

Q13: What is the meaning of liberalization of foreign trade? What does it mean in the Indian context? 
Ans: Liberalisation of foreign trade means removing barriers or restrictions put by the government on the import and export of goods. Indian government had put barriers to foreign trade and investment after independence so that Indian small-scale and cottage industries could come up. After 1991, process of liberalisation started in India. This was done for the following reasons :
(a) To improve the quality of Indian products our products are put in competition with international products.
(b) To enhance industrialisation and foreign exchange.

Q14: What is meant by trade barriers? Why do governments use it? Explain. 
Ans: Barriers or restrictions that are imposed by government on free import and export activities are called trade barrier. Tax on imports is a vital trade barrier. Government can use the trade barriers in the following ways :
(a) Increase or decrease of foreign trade of the country.
(b) With the help of trade barriers government can decide what kinds of goods and how much of each, should be traded in the country.

Q15: Mention any three steps which have been taken by the government of India to attract foreign investment in recent years?
Ans: Investment made by MNCs is known as foreign investment. In order to attract foreign investment following steps are taken by the Indian government :
(i) Restrictions on trade and investment, have been removed to a large extent.
(ii) India has allowed the Indian producers to compete with the producers of the world.
(iii) Allowing privatization of many public sector industries by the government.

Q16: ‘‘In spite of numerous advantages, there are many problems that globalisation still faces’’. Support the statement with three problems.
Ans: The problems with globalisation are as follows :
(a) It has sometimes negative impacts on employment and real wages. With the introduction of new technology, output is increasing but employment opportunities are not.
(b) Because of foreign technology, the problems of energy crisis, water shortage and pollution are increasing very fast.
(c) It is more beneficial to large-scale producers and consequently increasing concentration of economic power.

Q17: What is WTO? What are its main aims? Mention any one of its limitations.
Ans: World Trade Organisation (WTO) : It is an international organisation which was established on 1st January 1995 by the members of the UN to promote trade among countries.
The main aims of WTO are :
(a) To act as a forum for multilateral trade negotiations.
(b) Resolve trade disputes.
(c) Liberalize international trade and follow free trade for all.
One limitation of WTO is :
Developed countries unfairly impose trade barriers whereas WTO forces the developing countries to follow completely free trade.

Q18: Why is ‘tax’ on imports known as a trade barrier? Why did the Indian Government impose barriers to foreign trade and foreign investments after independence? Give three reasons. 
Ans: Tax on imports imposed by the government to regulate foreign trade and investment is known as a trade barrier.
Government imposed barriers on foreign trade and investment for the following reasons :
(i) The competition from importers would have crippled the new-born industries of India.
(ii) To protect the producers within the country from foreign competition.
(iii) Imports of only such commodities were allowed which were quite necessary, for example, machinery and petroleum.

Q19: How have transportation technology and information and communication technology stimulated the globalisation process? Explain with suitable examples. 
Ans: Transportation technology: Rapid improvement in transportation technology has been one major factors that has stimulated the globalisation process. There are fast trains connecting every nook and corner of a country and faster planes that cover the distance within a few hours between one country to another. Similarly, the cost of air transport has fallen. Information and Communication Technology : In recent times communication and information technology got a boost from the invention of computers and internet etc.
Information Technology (IT) has played a major role in spreading out production of services. For example, a news magazine published for London readers is to be designed and printed in Delhi.

Q20: Explain visible imports of globalisation on the Indian Economy, with two examples.
Ans:
(i) Greater Competition among producers : Greater competition among producers both local and foreign, has been of advantage to consumers, particularly the well-off section of the society. Consumers of now have greater choice. For example : Shoes produced by Indian companies and shoes produced by MNCs like Bata, TSF, Woodland etc. Consumers have more choice. They can compare in terms of quality, price etc.
(ii) Phenomenal growth of the service sector: The present share of the service sector in the country’s GDP is more than 50%, which was about 40% in 1990 at the time of the start of globalisation. Information and communication technology also grew by an average of 20%.

Q21: Should more Indian companies emerge as MNCs? [HOTS]
Ans: There is much scope for Indian companies to emerge as MNCs. These are the companies mainly related to Information Technology (IT sector), accounting and administrative sector. It will benefit the people in the country by providing them with gainful employment and further enhancing their quality of life.
MNCs have enormous wealth with them. They have a strong influence on production in different countries.

Long Answer Questions

Q1: Write a short essay on WTO in your own words.
Ans: WTO stands for the World Trade Organisation. It was set up in 1995 by the member countries of the United Nations. The foundation aim of the WTO was to promote trade among the member countries. The headquarters of WTO is located in Geneva. It has significantly influenced the liberalisation as well as globalization process in most of the developing countries. WTO aims at conducting international trade among countries of the world in an open, uniform and nondiscriminatory manner, while facilitating trade among countries, WTO expects countries to follow what it wants.

WTO deals with three issues:

• Bilateral agreements
• Import quotas
• Export quotas

All of these three issues are very significant for India as well as for all other developing countries. Bilateral agreements play crucial role in the trade relations among countries. In order to prevent competition from the producers of other countries with local manufacturers, it is common for countries to impose taxes on the imported goods.
WTO is in fact not only regulating the international trade of goods but also the services. All the members of WTO have to adopt laws and policies in order to comply with the WTO rules.

Q2: Which factors have stimulated the globalisation process?
Ans: The following factors have stimulated the globalisation process.

• Transportation improvement: In the last fifty years, there have been a lot of improvements in transportation technology. This has made faster delivery of goods across long distances possible, at lower costs.
• Development in information and communication technology: Technology in the areas of telecommunication and computers has been advancing rapidly.
• Telecommunication: Telecommunication facilities like telephone, telegraph, mobiles, fax are used to connect people in the world. This has been made possible due to satellite communication devices.
• Computers: They have now entered almost in every field of activity. In the amazing world of internet, we can obtain and share information on almost anything.
• Internet: Internet also allows us to send instant electronic mail (e-mail) and talk (voice mail) across the world at negligible cost. Even the payment of money from one bank to another can be made through e-banking.

Q3: How did Ford Motors, an MNC, set its foot in India?
Ans: Ford Motors, an American company, is one of the world’s largest automobile manufacturers with production spread over twenty-six countries of the world.
It came to India in 1995 and spent 1,700 crore to set up a large plant near Chennai. This was done in collaboration with Mahindra and Mahindra, a major Indian manufacturer of jeeps and trucks.By the year 2014, Ford Motors was selling 77,000 cars in the Indian markets, while another 77,000 cars were exported from India to South Africa, Mexico and Brazil.The company wanted to develop Ford India as a component supplying base for its other plants across the globe.

Q4: Analyze the Impact of globalization.
Ans:
Positive impact:

• Wide variety of good is now available to the consumers.
• New jobs are created in industries.
• Local companies have prospered through supplying raw materials to the industries.
• Top Indian companies have benefitted for successful collaborations with foreign companies.

Negative impact:

• Globalization has led to the annihilation of small producers who face stiff competition from cheaper imports.
• Workers no longer have job security as they are employed ‘flexibly’.
• It may lead to greater dependence of underdeveloped countries on advanced countries.

Q5: Point out the impact of the World Trade Organisation on the Indian Economy?
Ans: The main impact of the World Trade Organisation on the Indian economy can be described in the following points:

• It has provided an opportunity to India for trading with other member countries.
• India is now able to export its goods and services to other countries with less restriction from those countries.
• Thanks to the WTO that it is expected that the technology from developed countries will be available to India at a reduced cost.
• Since a major share of world trade is taking places among the developed countries themselves, the benefit of being a member of WTO to the developing countries, especially to India, is very limited.
• It is feared that once India abides by the rules and regulations of WTO, the prices of many essential and life-saving drugs may go up.
• It is alleged that WTO is being used by the developed countries to support globalisation in areas that are not directly related to trade. These rules often interfere in the management of the domestic economy of a country.

Q6: Chinese toys have taken over the Indian toy market due to globalization and promotion of international trade leading to huge losses to Indian toy manufacturers. Do you think the mantra of “Boycott and Swadeshi” would be of any help today? Why or why not?
Ans: 

• We cannot deny the fact that Chinese toys have taken over the Indian toy market due to promotion of international trade and globalisation leading to huge losses to the Indian toy manufactures. In spite of this, ‘Boycott and Swadeshi’ mantra won’t help because
• With lifting of trade barriers, import and export of foreign goods have become easier and markets of native countries are flooded with foreign products.
• Prices of foreign products especially the Chinese items like toys are cheap and have a great variety to attract customers.
• Swadeshi and Boycott movements were relevant and worked because of the movement for Independence of our country. Today, the circumstances are different. Technology has made its mark. Foreign goods increase the revenue for the native countries. Moreover, free trade and marketing needs to be accepted for country’s economic growth.