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Globalization and Indian Economy-


of the world in modern times Economy is interconnected. This interconnection of the world economy is called globalization or globalization. To understand this, let’s take the example of a company named Apple.

This is a US company. Apple mobile phone parts are made in China and countries in Southeast Asia. After that Apple phones are sold in every country of the world. It shows that the number of economic activities that go into making a product and reaching the customers,

Globalization and Indian Economy-

Among them, various activities take place in different parts of the world. This is a great example of globalization. Therefore, if there is any turmoil in China’s economy, then it also affects the economies of other countries.

2-Development of globalization

Trade has served to connect different parts of the world since ancient times. You must have heard the name of Silk Route. The route through which Chinese silk went to Arabia and then to the countries of the West and other countries was called the Silk Route.

The Silk Route was not only the movement of goods but also the movement of people and ideas. The zero and decimal system from India had reached other parts of the world only through trade. Noodles originated in China. Noodles reached other parts of the world through trade and went on to have many names; Like savories, pasta, etc.

Globalization accelerated as a result of the Industrial Revolution. After that, initially raw materials were exported from Asia and products were imported from Europe. The situation began to change from the middle of the nineteenth century.

From the middle of the twentieth century onwards many companies started spreading their feet in different parts of the world. This is how multinational companies were born.

Globalization and Indian Economy-

Reasons for Globalization:

Need to reduce expenses: Every company tries its best to reduce the cost of production. For this, if needed, companies get many stages of production completed in different countries.

If a company named Apple makes its products in America, then there will be more expenses because workers in America have to pay more. If work is done in Taiwan or China, the cost will be less because workers in these countries have to be paid less.

Every effort is made to procure the raw material from such a place where it is available at the cheapest price. In this way the cost of getting work done from different countries can be reduced and profits can be increased.

Exploration of new market: Every market has a limited number of customers. Any company can sell its product in the domestic market only to a certain extent. New markets are needed to sell more than that.

Suppose a farmer’s field has a tremendous yield of vegetables. His village is so small that even if he wants to, he cannot sell all his vegetables. To sell his vegetables at the right price, the farmer will have to go to the new market. The same is the case with companies. They always need to explore new markets.

Consequences of Globalization:

Better Employment Opportunities: Economic activities have increased rapidly due to globalization. New employment opportunities have been created. Many new economic centers have developed only after globalization, such as Gurgaon, Chandigarh, Pune, Hyderabad, Noida, etc.

Lifestyle changes: Globalization has completely changed the lifestyle of the people. Before 1990, most people used to live in two pairs of pant shirts. Most of the school students had few clothes apart from the school dress. Today most of the students have different dress for school, different dress for playing, different dress for going to market and different dress for party. Earlier people used to eat fried papad or homemade potato chips in the name of snacks. Now chips of different flavors are available in packets.

Unequal Benefits of Development: Globalization has increased economic inequality even more rapidly. On the one hand, the manager of a big company gets a salary of lakhs of rupees, while on the other hand the daily wage laborers do not even get minimum wages. Even today, it becomes difficult for a large section of the population to get two meals a day.

Use of Wrong Methods by Developed Countries: Developed countries advocate reducing trade barriers on the one hand, while they use trade barriers in their own countries. Countries like America give huge grants to their farmers. Developing countries only suffer from this.

Globalization and Indian Economy-

5-Important Question Answer-

Question 1. What do you understand by globalization? Explain in your own words.

Answer: Today, the way the economy of the whole world is interconnected, that connection is called globalization. To understand this let’s take the example of Google. It is based in the US but its consumers are in every corner of the world. Whether you are in Delhi or Dehradun, with the help of Google, you can get any information in a pinch. Today the offices of this company are in many countries like India. Google today is a living example of globalization.

Question 2. What were the reasons for the imposition of restrictions on foreign trade and foreign investment by the Government of India? Why did the government want to remove these barriers?

Answer: At the time of independence, the private entrepreneurs of India were short of capital. So the local industry at that time needed protection. The Indian government imposed restrictions on foreign trade and foreign investment so that local industries could flourish. Gradually the situation started changing and the Indian market became attractive. After that the government decided to remove these blockers.

Question 3. How will the flexibility in labor laws help companies?

Answer: Flexibility in labor laws will benefit the companies. With the help of this law, companies will be able to control the number of workers. In many businesses the demand for workers is only in certain months. In other months, the expenditure on wages of such workers puts the companies in loss. Having flexible laws will get rid of this and improve the profitability of the company.

Question 4. How do MNCs establish control over production or products in other countries?

Answer: In other countries, multinational companies establish control over production or products in many ways. Some of these are given below:

  • Most of the MNCs initially enter into a joint venture with a local company to start their operations. This is done so that the knowledge of the local market can be taken advantage of by the local company. There is also the benefit of having already deposited the business of the local company.
  • There comes a time when there is considerable growth in business. Thereafter the MNC terminates the joint venture. This is done so that the control over the business becomes even better.
  • Some MNCs start working independently from day one. Such a company often wants to have complete control from the very beginning.
  • Some MNCs produce only for the local market, while some others produce for export.

Question 5. Why do developed countries want developing countries to liberalize their trade and investment? Do you believe that developing countries should also make such demands in return?

Answer: Often the companies of developed countries put pressure on their government to create favorable environment for business in other countries. Under that pressure, developed countries seek liberalization of their trade and investment from developing countries. Developing countries should do the same.

Question 6. ‘The effect of globalization is not uniform’. Explain this statement in your own words.

Answer: It is true that the effects of globalization are not uniform. This has had both advantages and disadvantages. The standard of living of the people of India has improved after economic liberalization. Employment opportunities have also increased. But the gap between the rich and the poor has widened even more. Competition has also increased after economic liberalization, due to which the existence of small businessmen is under threat.

Question 7. How does liberalization of trade and investment policies help in the process of globalization?

Answer: Liberalization of trade and investment policies helps a lot in the global process. These policies pave the way for foreign investment. Along with this, the avenues for import and export also open up. Local companies and businessmen get inspiration to improve quality. Many multinational companies get the opportunity to get different stages of production done from different countries.

Question 8. How does foreign trade help in integration of markets of different countries? Explain with a different example from the one given here.

Answer: Foreign trade connects the different markets of the world, which leads to their integration. To understand this let us take the example of a car. Ford is an American company and manufactures cars. If the engine of any of his cars is made in America, then the seat belt is made in India. The headlight is made in China and the gear box is made in Taiwan. This is how different stages of car manufacturing take place in different corners of the world. After that the finished car is sold in many countries.

Question 9. Globalization will continue in future. Can you imagine what the world would be like twenty years from now? Give reason for your answer.

Answer: To understand what will happen twenty years from now, it is necessary to look at the fast growing e-commerce in today’s date. Today, when you place an order to buy something on Amazon, it may be that that item is being made in a factory located three thousand kilometers from you. He may have to cross four or five kingdoms to reach you. We will get to see the detail of this in the middle of the year. You can order a suit from a shop in Paris by sitting in a jhumri tilaya. Many technologies will play a role in accomplishing all this, such as internet, high-speed means of transport, drones, online payments, etc.

Question 10. Suppose you find two people arguing – one is saying that globalization has hurt the development of our country, the other is saying that globalization has helped in the development of India. How would you answer these people?

Answer: I think globalization has helped in the development of India. My parents say that before I was born, the telephone used to be a luxury item. People had to wait for years for a telephone connection. When the mobile phone came in the beginning, it was so expensive that common people could not buy it. Had to stand in line to get the sim card. Today it is difficult to read without mobile. Notices, homework, etc from my school come through mobile only. My sociology teacher sends answers to many questions from mobile itself.

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