Globalisation

Intro

Globalisation refers to the integration of markets in the global economy, leading to

the increased interconnectedness of national economies.  Markets where
globalisation is particularly common include financial markets, such as capital
markets, money and credit markets, and insurance markets, commodity markets,
including markets for oil, coffee, tin, and gold, and product markets, such as markets
for motor vehicles and consumer electronics. The globalisation
of sport and entertainment is also a feature of the late 20th and early 21st centuries.

The advantages of
globalisation
Globalisation brings a number of potential benefits to international producers and
national economies, including:

1. Providing an incentive for countries to specialise and benefit from the

application of the principle of comparative advantage.

2. Access to larger markets means that firms may experience higher demand for
their products, as well as benefit from economies of scale, which leads to a
reduction in average production costs.

3. Globalisation enables worldwide access to sources of cheap raw materials,

and this enables firms to be cost competitive in their own markets and in
overseas markets. Seeking out the cheapest materials from around the world
is called global sourcing. Because of cost reductions and increased revenue,
globalisation can generate increased profits for shareholders.

4. Avoidance of regulation by locating production in countries with less strict

regulatory regimes, such as those in many Less Developed Countries(LCDs).

5. Globalisation has led to increased flows of inward investment between

countries, which has created benefits for recipient countries. These benefits
include the sharing of knowledge and technology between countries.

6. In the long term, increased trade is likely to lead to the creation of more
employment in all countries that are involved.
The disadvantages of
globalisation
There are also several potential disadvantages of globalisation, including the
following:

1. The over-standardisation of products through global branding is a common

criticism of globalisation. For example, the majority of the world’s computers
use Microsoft’s Windows operating system. Clearly, standardising of
computer operating systems and platforms creates considerable benefits, but
critics argue that this leads to a lack of product diversity, as well as
presenting barriers to entry to small, local, producers.

2. Large multinational companies can also suffer from diseconomies of scale,

such as difficulties associated with coordinating the activities of subsidiaries
based in several countries.

3. The increased power and influence of multinationals is also seen by many as

a considerable disadvantage of globalisation. For example, large multinational
companies can switch their investments between territories in search of the
most favourable regulatory regimes. MNCs can operate as
local monopsonies of labour, and push wages lower than the free market
equilibrium.

4. Critics of globalisation also highlight the potential loss of jobs in domestic

markets caused by increased, and in some cases, unfair, free trade.

5. Globalisation can also increase the pace of deindustrialisation, which is the

slow erosion of an economy's manufacturing base.

6. Jobs may be lost because of the structural changes arising from globalisation.
Structural changes may lead to unemployment and may also widen the gap
between rich and poor within a country.

7. One of the most significant criticisms of globalisation is the increased risk

associated with the interdependence of economies. As countries are
increasingly dependent on each other, a negative economic shock in one
country can quickly spread to other countries. For example, a downturn in car
sales in the UK affects the rest of Europe as most cars bought in the UK are
imported from the EU. The Far East crisis of the 1990s was triggered by the
collapse of just a few Japanese banks.

Most recently, the collapse of the US sub-prime housing market triggered a

global crisis in the banking system as banks around the world suffered a fall in
the value of their assets and reduced their lending to each other. This created
a liquidity crisis and helped fuel a severe downturn in the global economy.
 GLOBALISATION IN INDIA
Imagine a small village market where all are free to come and sell
their products at whatever price they desire. There are no limitations
on control of their products or the prices. This is a globalised trade.
Anyone, in general context referring to any country, that can
participate to set up, acquire, merge industries, invest in equity and
shares, sell their products and services in India. Humans have moved
into a phase where everything is accessible without any difficulty.
What if you weren’t able to buy goods from an online site managed
by an international brand? It might make you feel angry, or irritated.
The world wasn’t always open to free trade or cross-border
investments. It was around two to three decades ago when the
concept of ‘globalization’ was spread far and wide. This allowed
nations to carry out trade and other activities in a systematic manner.

When we talk about globalization and the Indian economy, one

name strikes our mind, that is, Dr. Manmohan Singh. He was the
finance minister in the 1990s when globalization was fully
implemented and experienced in India. He was the front man who
framed the economic liberalization proposal. Since then, the nation
has gradually moved ahead to become one of the supreme economic
leaders in the world.

Benefits of Globalization Impacting India

 After 1991, the rise in GDP that dropped to 13% in 1991 -92
extended momentum in the following five years (1992-2001).
Moreover, the annual average rate of growth in GDP was recorded
to be 6.1%.
 Furthermore, export growth skyrocketed to 20% in 1993-94. For
1994-95, the figures were recorded to be 18.4 per cent. Export
growth statistics in recent years have been very impressive.
Rise in Employment: With the opening of SEZs or Special
Economic Zones, the availability of new jobs has been quite
effective. Furthermore, Export Processing Zones or EPZs are also
established employing thousands of people. Another factor is cheap
labour in India. This has motivated big firms in the west
to outsource work to companies present in this region. All these
factors are causing more employment.

Surge in Compensation: After the outburst of globalization, the

compensation levels have stayed higher. These figures are impressive
as compared to what domestic companies might have presented.
Why? The level of knowledge and skill brought by foreign
companies is obviously advanced. This has ultimately resulted in
modification of the management structure.

Improved Standard of Living and Better Purchasing

Power: Wealth generation across Indian cities has enhanced since
globalization has fully hit the nation. You can notice an improvement
in the purchasing power for individuals, especially those working
under foreign organizations. Further, domestic organizations are
motivated to present higher rewards to their employees. Therefore, a
number of cities are experiencing better standards of living together
with business development.

Disadvantages of Globalization in India

If we are discussing globalization and the Indian economy, then
talking about the negative effects is also important. The informal
sector is purposely not listed in the labour legislation. For example,
informal workers aren’t the subject considering the 1948 Factories
Act. This scheme covers vital factors such as common working
conditions, safety, and health, the ban on child labour, working hours
etc.  Also, globalization has caused poor health, disgraceful working
conditions, as well as bondage, happening in different parts of the
country.

However, even from an economic standpoint, there are many challenges which have
remained unaddressed. Globalisation has led to increasing casual employment and
the weakening of labour movements. We have failed to adopt a strategic policy in
agriculture for an enhanced and sustained growth. Education, and especially health,
have received inadequate attention, despite intermingling with the globalized world.

Globalisation is also responsible for a surge in practices such as commercial

surrogacy and human trafficking. Our real challenges are issues such as competence
in governance and a slowdown in private industrial investment. Therefore, in the
face of globalization, the need of the hour is to have less centralised, more competent
and independent regulators, and swifter resolution of disputes by the judiciary.

globalisation has led to distress in the lives of small farmers and tribal people who
are often displaced to provide land for multinational corporations (MNC).

Besides, World Trade Organisation (WTO) free trade norms are such that
they benefit the farmers of wealthy nations.

What’s also important to register is that while globalisation can bring such a
magnanimous shift in the social lives of people, it’s restricted to only the ‘haves’. The
‘have-nots’ remain unaffected since they are bracketed out of the resource pool due
to lack of access and agency.

The rapid expansion of globalisation and capitalism has also given rise to
consumerism which has now begun to target vulnerable segments such as teenagers.

While MNCs have given a plethora of equal work opportunities to educated women,
an ILO report points out that labour force participation rate among women in India
has been dropping to one of the lowest in South Asia.

Many scholars have also criticised the blind adoption of western values with terms as
‘aping the West’. English has begun dominating Indian languages not only for official
purposes but also in everyday parlance.

Many Indian art forms such as Kalchattis, stone pots from Tamil Nadu, and
performing arts such as Burrakatha, are no longer in vogue. Thus, a more balanced
approach to globalization would make it a more affable process. This will happen
when yoga becomes a common exercise the world over, Indian basmati becomes the
preferred variety of rice, and when chess is played in international games such as
Olympics and so on and forth.
conclusion
Globalisation, hence, has impacted every aspect of Indian society, its culture and
economy. As elucidated above, India has largely benefitted from globalization,
though it can benefit even further when it becomes a net exporter of cultural and
technological goods and services.

Today, it is felt that India is more dependent on the world than the world is on India.
This reality needs to change to favour Indian needs. We must create a kind of
globalisation that not only makes the rich richer but equips the poor to enrich their
lives. That, then, will be the true merit of globalisation.