Friday, 30 November 2012

Class X - Globalisation and the Indian Economy

Questions in the Exercise
Q.1. What do you understand by globalisation? Explain in your own words.
Ans. Globalisation means integrating the economy of a country with the economies of other countries under conditions of free flow of trade, capital and movement of persons across borders. It includes
(i) Increase in foreign trade
(ii) Export and import of techniques of production.
(iii) Flow of capital and finance from one country to another
(iv) Migration of people from one country to another.

Q.2. What was the reasons for putting barriers to foreign trade and foreign investment by the Indian government? Why did it wish to remove these barriers?
Ans. The Indian government had put barriers to foreign trade and foreign investment because at that time it was necessary to protect the Indian producers from the foreign competition.
In New Economic Policy in 1991, it was thought by the government to remove these barriers so that Indian producers can compete with producers around the globe. Thus competition improves the quality of their products.

Q.3. How would flexibility in labour laws help companies?
Ans. Flexibility in labour laws helps companies to cut down the cost of production. Now, instead of hiring workers on a regular basis, companies hire workers flexibly for short periods and this reduces the cost of labour for the company.

Q.4. What are the various 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 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 its production with the help of modern technology.
(c) They place orders for small producers and sell these products under their own brand name to the customers worldwide.

Q.5. Why do developed countries want developing countries to liberalise their trade and investment? What do you think should the developing countries demand in return?
Ans. Developed countries feel that all barriers to foreign trade and investment are harmful for international trade. They want that trade between countries should be free. Developed countries like the USA and UK have high production capacity and latest technology.
Developing countries should demand fair globalisation which ensures opportunities and benefits for all. Interest of the workers should also be taken care of.

Q.6. “The impact of globalisation has not been uniform.” Explain this statement.
Ans. While globalisation has benefited the well-off consumers and also producers with skill, education and wealth, many small producers and workers have suffered as a result of the rising competition.

Q.7. How has liberalisation of trade and investment policies helped the globalisation process?
Ans. Liberalisation of trade and investment has facilitated globalisation by removing barriers to trade and investment.
At international level, WTO has put pressure on developing couintries to liberalise trade and investment.

Q.8. How does foreign trade lead to integration of markets across countries? Explain with an example.
Ans. Foreign trade provides opportunities for both producers and buyers to reach beyond the markets of their own countries. Goods travel from one country to another.
Competition among producers of various countries as well as buyers prevails. Thus foreign trade leads to integration of markets across countries. For example, during Diwali season, buyers in India have the option of choosing between Indian and Chinese decorative lights and bulbs. So this provides an opportunity to expand business.

Q.9. Globalisation will continue in the future. Can you imagine what the world would be like twenty years from now? Give reason for your answer.
Ans. After twenty years, world would undergo a positive change which will possess the following features—healthy competition, improved productive efficiency, increased volume of output, income and employment, better living standards, greater availability of information and modern technoloy.
Reason for the views given above : These are the favourable factors for globalisation :
(a) Availability of human resources both quantitywise and qualitywise.
(b) Broad resource and industrial base of major countries.
(c) Growing entrepreneurship
(d) Growing domestic market.

Q.10. Supposing you find two people. One is saying globalisation has hurt our country’s development. The other is telling, globalisation is helping India develop. How would you respond to these arguments?
Ans. Benefits of globalisation of India :
(a) Increase in the volume of trade in goods and services
(b) Inflow of private foreign capital and export orientation of the economy.
(c) Increases volume of output, income and employment.
Negative Impact / Fears of Globalisation.
(a) It may not help in achieving sustainable growth.
(b) It may lead to widening of income inequalities among various countries.
(c) It may lead to aggravation of income inequalities within countries.
Whatever may be the fears of globalisation, I feel that it has now become a process which is catching the fancy of more and more nations. Hence we must become ready to accept globalisation with grace and also maximise economic gains from the world market.

Q.11. Fill in the blanks :
Indian buyers have a greater choice of goods than they did two decades back. This is closely associated with the process of         (1)          . Markets in India are selling goods produced in many other countries. This means there is increasing        (2)         with other countries. Moreover, the rising number of brands that we see in the market might be produced by MNCs in India. MNCs are investing in India because               (3)               . While consumers have more choices in the market, the effect of rising         (4)           and         (5)           has meant greater        (6)         among the producers.
Ans. (1) Globalisation (2) Trade (3) They can get cheap labour (4) Prices (5) Standard (6) Competition

Q.12. Match the following.
(i) MNCs buy at cheap rates from small producers (a) Automobiles
(ii) Quota and taxes on imports are used to (b) Garment, footwear, sports
regulate trade items
(iii) Indian companies who have invested abroad (c) Call centres
(iv) It has helped in spreading of production of services. (d) Tata Motors, Infosys, Ranbaxy
(v) Several MNCs have invested in setting up factories (e) Trade barriers.
in India for production of
 Ans. (i) (b) (ii) (e) (iii) (d) (iv) (c) (v) (a)

Q.13. Choose the most appropriate option.
(i) The past two decade of globalisation has seen rapid movements of
(a) goods, services and people between countries.
(b) goods, services and investments between countries.
(c) goods, investment and people between countries.
(ii) The most common route for investments by MNCs in countries around the world is to
(a) set up new factories.
(b) buy existing local companies.
(c) form partnership with local companies.
(iii) Globalisation has led to improvement in living conditions
(a) of all the people
(b) of people in the developed countries.
(c) of workers in the developing countries.
(d) none of the above.
Ans. (i) (a) (ii) (b) (iii) (c)

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