Globalization

Globalization

• Globalisation means integrating Indian economic with the world economic so that there can be free flow of goods, services and investment from the rest of the World.
• Foreign investment by MNCs in Asia and Africa has been increasing at the same time foreign trade between countries has been rising.
• A large part of the foreign trade is also controlled by MNCs.
• For instance, the car manufacturing plant of Ford Motors in India not only produces cars for the Indian markets, it also exports cars to other developing countries and exports car components for its many factories around the world.
• The result of greater foreign investment and greater foreign trade has been greater integration of production and markets across countries.
• Globalisation is this process of rapid integration or interconnection between countries.
• More and more goods and services, investments and technology are moving between countries.
• People usually move from one country to another in search of better income, better jobs or better education.
• In the past few years, however, there has not been much increase in the movement of people between countries due to various restrictions.

FACTORS THAT HAVE ENABLED GLOBALIZATION:

• Rapid improvement in technology has been one major factor that has stimulated the globalisation process. Several improvements in transportation technology have made much faster delivery of goods across long distances possible at lower costs.
• Information and communication technology has played a major role in spreading out production of services across countries.
• Starting around 1991, some far-reaching changes in policy were made in India. The government decided that the time had come for Indian producers to compete with producers around the globe. Barriers on foreign trade and foreign investment were removed to a large extent. This meant that goods could be imported and exported easily and also foreign companies could set up factories and offices here.

IMPACT OF GLOBALISATION IN INDIA:

Globalisation and greater competition among producers- both local and foreign producers- has been of advantage to consumers, particularly 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. These people today, enjoy much higher standards of living than was possible earlier. Among producers and workers, the impact of globalisations has not been uniform.

• MNCs have increased their investments in India over the past 15 years, which means investing in India has been beneficial for them. New jobs have been created. Local companies supplying raw materials, etc. to these industries have prospered.
• (Several of the top Indian companies have been able to benefit from the increased competition. They have increased competition. They have invested in newer technology and production methods and raised their production standards. Some have gained from successful collaborations with foreign companies.
• Globalisation has enabled some larger Indian companies to emerge as multinational themselves.
• Globalisation has also created new opportunities for companies providing services, particularly those involving IT.

LIBERALISATION OF FOREIGN TRADE AND FOREIGN INVESTMENT POLICY:

• Government puts tax on import of certain items. Suppose the Indian government puts tax on the import of Chinese toys. This will raise the price cert these toys. Chinese toys will no longer be cheap in Indian market and its import will automatically reduce. Indian toy maker will, automatically proper.
• Tax on imports is an example of trade barrier. It is called a barrier because some restrictions have been set up. Government can use trade barrier to regulate foreign trade.
• The Indian government, after independence, had put barriers to foreign trade and foreign investment. This was considered necessary to protect our industries.
• Industries were just coming up in the 1950s and 1960s and competition from imports at that stage would not have allowed these industries to come up. India allowed the imports of only essential item such as machinery, fertilizers petroleum etc.
• All developed countries, during the early stages of development, have given protection to domestic producers through a variety of means.
• The government decided that the time had come for Indian producers to compete with producers around the globe. It feet that competition would improve the performance of Indian companies as they had to improve the quality.
• Thus, barriers on foreign trade and foreign investment were removed to a large extent.
• Removing barriers or restrictions set by the government is what is known as liberalization. With liberalization of trade, businesses are allowed to make decisions freely about what they wish to import or export.

THE STRUGGLE FOR A FAIR GLOBALISATION:

• The above evidence indicates that not everyone has benefited from globalization.
• People with education skill and wealth have made the best use of the new opportunities.
• On the other hand, there are many people who have not shared the benefits.
• Fair globalization would create opportunities for all, and also ensure that the benefits of globalization are shared better.
• The government can play a major role in making this possible.
• The government can ensure that labour laws are properly implemented and the workers get their rights.
• The government can use trade and investment barriers. It can negotiable at the WTO for ‘fairer rules’.
• It can also align with other developing countries to fight against the domination of developed countries in the WTO.
• People’s organizations have influenced important decisions relating to trade and investments at the WTO.