FACTORS THAT HAVE ENABLED GLOBALISATION

Technology
Rapid improvement in technology has been one major factor that has stimulated the
globalization process. For instance, the past fifty years have seen several improvements in
transportation technology. This has made much faster delivery of goods across long distances
possible at lower costs.

Even more remarkable have been the development in information and communication
technology. In recent times, technology in the areas of telecommunications, computers,
Internet has been changing rapidly. Telecommunication facilities (telegraph, telephone,
including mobile phones, fax) are used to contact one another around the world, to access
information instantly, and to communicate from remote areas. This has been facilitated by
satellite communication devices. As you would be aware, computers have now entered almost
every field of activity. Nowadays internet, where we can obtain and share information on
almost anything you want to know. Internet also allows us to send instant electronic mail (e-
mail) and talk (voice- mail) across the world at negligible costs.

Liberalization of foreign trade and foreign investment policy

If a country impose tax on import goods, those who wish to import goods would have to pay tax
on this. Because of the tax, buyers will have to pay higher price on imported goods. Foreign
goods will be costly and most people won’t prefer costly goods and automatically the import of
those goods will reduce. And on the other hand native goods makers will prosper.

Tax on import is an example of trade barrier. It is called a barrier because some restrictions has
been set up. Governments can use trade barriers to increase or decrease (regulate) foreign
trade and to decide what kinds of goods and how much of each, should come into the country.

The Indian government, after independence, had put barriers to foreign trade and foreign
investment. This was considered necessary to protect the producers within the country from
foreign completion. Industries were just coming up in the 1950s and 1960s, and completion
from imports at that stage would not have allowed these industries to come up. Thus, India
allowed imports of only essential items such as machinery, fertilisers, petroleum etc. Note that
all developed countries, during the early stages of development, have given protection
domestic producers through a variety of means.

Starting around 1991, some far reaching changes in policy were made in India. The government
decided that that time had come for Indian producers to compete with producers around the
globe. It felt that competition would improve the performance of producers within the country
since they would have to improve their quality. The decision was supported powerful
international organizations.

Thus, 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.

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 government imposes much less restrictions than before and is
therefore said to be more liberal.

WORLD TRADE ORGANISATION (WTO)

We have seen that the liberalisation of foreign trade and investment in India was supported by
some very powerful international organisations. These organisations say that all barriers to
foreign trade and investment are harmful. There should be no barriers. Trade between
countries should be ‛free’. All countries in the world should liberalise their policies.

World trade organisation (WTO) is one such organization whose aim is to liberalise
international trade. Started at the initiative of the developed countries, WTO establishes rules
regarding international trade, and sees that these rules are obeyed. Nearly 150 countries of the
world are currently members of the WTO (2006).

Though WTO is supposed to allow free trade for all, in practice, it is seen that the developed
countries have unfairly retained trade barriers. On the other hand, WTO rules have forced the
developing countries to remove trade barriers. An example of this is the current debate on
trade in agricultural products.

IMPACT OF GLOBALISATION IN INDIA

In the last fifteen years globalization of the Indian economy has come a long way. Let us look at
its effect on the lives of the people.

Globalization and grater completion 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. As a result, these people today, enjoy much higher standard of living than was
possible earlier.
Among producers and workers, the impact of globalization has not been uniform.

Firstly, MNCs have increased their investments in India over the past 15 years, which means
investing in India has been beneficial for them. MNCs have been interested in industries such as
cell phones, automobiles, electronics, soft drinks, fast food or services such as banking in urban
areas. These products have a large number of well-off buyers. In these industries and services,
new jobs have been created. Also, local companies supplying raw materials, etc. to these
industries have prospered.

Secondly, several of the top Indian companies have been able to benefit from the 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.

Moreover, globalization has enabled some large Indian companies to emerge as multinationals
themselves! Tata Mortors (automobiles), Infosys (IT), Ranbaxy (medicines), Asian paints
(paints), Sundaram fasteners (nuts and bolts) are some Indian companies which are spreading
their operations worldwide.

Globalization has also created new opportunities for companies providing services, particularly
those involving IT. The Indian company producing a magazine for the London based company
and call centers are some examples. Besides, a host of services such as data entry, accounting,
administrative tasks,engineering are now being done cheaply in countries such as India and are
exported to the developed countries.

The conditions of work and the hardships of the workers described above have become
common to many industrial units and services in India. Most workers, today , are employed in
the unorganized sector. Workers in the organized sector no longer get the protection and
benefits that they enjoyed earlier.

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.

Since globalization is now a reality, the question is how to make globalization more ‛fair’? 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. Its policies must protect the
interests, not only the rich and the powerful, but all the people in the country. For instance, the
government can ensure that labour laws are properly implemented and the workers get their
rights. It can support small producers to improve their performance till the time they become
strong enough to compete. 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.

In the past few years, massive campaigns and representation by people’s organisations have
influenced important decisions relating to trade and investments at the WTO. This has
demonstrated that people also can play an important role in the struggle for fair globalization.

CONCLUSIONS
We have looked at the present phase of globalization. Globalization is the process of rapid
integration of countries. This is happening through greater foreign investment, MNCs are
playing a major role in the globalization process. More and more MNCs are looking for locations
around the world that are cheap for their production. As a result, production is being organized
in complex ways.

Technology, particularly IT, has played a big role in organizing production across countries. In
addition, liberalization of trade and investment has facilitated globalization by removing
barriers to trade and investment. At the international level, WTO has put pressure in
developing countries to liberalise trade and investment.

While globalization has benefited well-off consumers and also producers with skill, education
and wealth, many small workers have suffered as a result of the rising competition. Fair
globalization would create opportunities for all, and also ensure that the benefits of
globalization are shared better.