*UPDATED* For 2022-23 Boards Exam

SHOBHIT NIRWAN's
DESIGNED

GLOBALISATION &
THE INDIAN ECONOMY
NOTES
 Multinational corporations
-

Interlinking Products Across countries

-
FDI
-

Partnerships / Joint Venture

-

local companies 1 Mergers / Takeovers

-

Contract to local companies

foreign Trade
trade helps in integration ?
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foreign
Globalisation and
The Indian Economy
Globalisation
-

Globalisation and Migration

-

Trade Barrier
New Economic Policy 1991
It liberalisation
-

Impact of Globalisation in India

-

Positive Effect
-

Negative effect

How Globalisation can be made fair ?

 ①

Multinational corporations (MNCs)

°
A MNC is a
nation .
company
that owns or controls production in more than one

°
MNCs set up offices and factories for production in regions where they can
labour and other resources
get cheap .

°
This is done so that the cost of production is low fat most 50 -

60% ) and MNCs

can earn greater profits .

MNCs not
only sell its finished products globally but also the goods and services
°

are produced
globally .

: An American
company manufactures its product in China , sells it in Europe and
°

eg
-

,
its call centre is in India .

#
Interlinking Production Across countries : lcbse 20177
MNCs link the production process of different countries Some ways of .

interlinking
production across countries are :

o
foreign Direct Investment (FDI) Investment made by a company based:
in our
country ( usually an MNC ) into a company based in another country
,
.

°
Partnerships / Joint MNCs setup production unit jointly with some of the
Venture :

local companies of that region Local companies get new technology and money to
.

expand their factory from this partnership .

° local companies / Mergers / Takeover The most common route for :

MNC is to
buy up
local companies and then expand production .

o
contracts to local companiesMNCs place order for production with many small
:

producers . MNCs then receives the product and sell it under their brand name .

Foreign Trade

foreign trade is a trade between different countries of the world . It is also

called international trade , external trade or inter regional trade -
.

Foreign trade helps in the integration of Markes as I close 2018,20157 :

°
It facilitate movement of goods and services between countries .

°
It facilitate movement of people , ideas and technology .

It
gives opportunity to producers to reach beyond local / domestic markets
°
.

Increases competition , overall reduction in the price of

goods
°
.
 ②

Globalisation
Globalisation is the
process of rapid integration or interconnection between
countries .
More and more
goods and services , investment and technology is
between countries
moving .

# Globalisation and migration :

factors that helped globalisation led

are (Cbse -

2020,2019 )
°
Development in transportation has to cheap quick delivery of goods over

long distances Eg : Trains ships highways etc

.
-

, ,
.

°
Information and communication Technology (ICT or IT) has revolutionised the
spreading of production of services across the globe .

New
technologies like e banking telephones fax , internet has made
communication and
-

, ,

payments easy for businesses .

and removed trade

In 1991 the Indian made in policies
government changes
°
,
barriers to a large extent .

# Trade Barrier :

°
Government puts restrictions to control the foreign trade ,
these restrictions
are called trade barrier Eg : Tax on imports
.
-

etc .

° All developed countries , during the early stage of development have given
protection to domestic producers through trade barriers .

quality of goods
'
way of restriction on volume or
'
°

Similarly Quotas are a

to be
imported or exported .

4313 New Economic Around 1991 , it was felt that Indian producers must
Policy 1991 : '

compete with producers around the globe , so that they can improve their
performance and quality of goods and services That's why Government of .

India in 1991 made some major changes in its trade policy .

° When government removes trade barriers , it is known as Liberalisation .

World Trade Organisation ( WTO)

whose aim is to liberal lose international trade
It its an
organisationcountries
started by developed
.
It was

nearly
now of WTO But
164 countries are member -

,
it is seen that the developed countries have
unfairly retained trade barriers
while on other hand WTO toCes developing countries to remove trade barriers .

Impact of Globalisation on India

POSITIVE IMPACTS : ( Cbse 2018 , 2017 ; 20153
MNCs started investing in India and with time they increased investment as

investing in India had been beneficial for them .

 ③

°
Top indian companies raised their production standards due to competition and they
also got new technologies by
collaborating with MNCs .

°
Some large Indian companies become MNCs like TATA Asian Paints Infosys ele and , , ,
contributed to economic
growth of India .

° As many
foreign companies come to India , huge number of jobs were created and
more opportunities were created for Indian companies .

Consumers more choices and cheaper This also increased the standard
products
got
°
.

of living of people .

NEGATIVE IMPACTS
small local businesses l companies could not face the competition and had to be shut
down Eg : toys factories of India etc
.
.

°
Labour laws were made flexible to attract foreign investment which was against the
employees .

°
Regional products like dhoti , matkaete are not growing or have been replaced by some
foreign product .

K3B Special Economic cones (St z) :

In recent years the Central and State Governments in India
°
,
set -

up industrial
called SEZ so as to attract
zones
, foreign companies to invest in India .

°
SEZs have world class facilities like
electricity , water, road ,transportation,
storage , recreational and educational facilities .

o
companies with in unit in SEG do not have to pay tax for first five years and
have flexibility labour laws .

How Globalisation can be made fair ?

°
Govt must protect the
.

interest of all the people not just the rich such as by

,
.

making better labour laws and implementing them .

o
Govt .
can support small producers till the time they get strong enough to compete .

Govt . can use trade barriers in favour of them .

°
Govt . Can
align with other developing countries to fight against the domination
of developed countries in WTO .
Chapter-4: GLOBALISATION
2020
30. Read the extract and answer the questions that follows:
Today, the world has been converted into a large village with the help of efficient and fast
moving transport. Transport has been able to achieve this with the help of equally developed
communication system. Therefore, transport, communication and trade are complementary
to each other. Today, India is well-linked with the rest of the world despite its vast size,
diversity and linguistic and socio-cultural plurality. Railways, airways, waterways,
newspapers, radio, television, cinema and internet, etc. have been contributing to its
socio-economic progress in many ways. The trades from local to international levels have
added to the vitality of its economy. It has enriched our life and added substantially to
growing amenities and facilities for the comforts of life. It is thus, evident that a dense and
efficient network of transport and communication is a prerequisite for local, national and

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global trade of today.
30.1-Why is there a need to interlink with the world?
30.2-Infer the importance of means of transportation and communication for socioeconomic
progress?

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30.3How does trade strengthen the economy of a country?

34. Describe the role of technology in promoting the globalisation process.

tN
ANSWERS:
30.1 There is need to interlink with the world for development, advancement, globalization
etc.
30.2 i). They are the very basis of industries and trade of country.
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ii). Create job employment opportunities

iii). Help to grow economy
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30.3
i). Trade between nation and countries are the index to its economic prosperity.
ii). It generates employment.
Sh

31. The challenge of sustainable development require control over industrial pollution:
i). Industrial pollution is hazardous to live beings as it spews toxic chemicals in air and water
thereby contaminating surroundings.
ii). Sustainable development can be achieved when care for the environment is given
supreme importance.
iIi). As such sustainable development helps achieve industrial pollution under regulation.
iv). For example, a manufacturing concern that manufactures medicines as part of
sustainable development and treats the polluted water as part of good manufacturing
practice in the in-house effluent treatment plant.

34. Role of technology in globalization:

i). There have been many improvements in the transport section which helps in export and
import of goods. This increases trade relations between countries.
ii). Since technology improves efficiency, the process of exchange has become faster and
cheaper.
iii). Development in information and communications technology has been the most
beneficial since information can be now sent in seconds across the world.
iv). Development in IT also has led to the production of services through outsourcing like call
centres, online teaching etc.
v). Telecommunications have improved contact between people. People living in two
different countries can easily be in touch with minimal prices.

2019
6. Analyse the contribution of fast transport in globalisation.

10. Assess any three advantages of globalisation.

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ANSWERS:
6. Technological advancements have helped in expanding the production of goods and
services and encouraged greater trade among the nation states. It also contributed to the

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growth of railways, ships, airways and further innovations for easier transportation of goods
and mobility of people. Technological changes have led to the increased awareness among
people, telecommunication and growth of electronic media. The Internet has also helped in
the greater exchange of ideas and beliefs among the people.
tN
10. GLOBALISATION and greater competition among local and foreign producers has been
of advantage to consumers.
i). There is greater choice before the consumers. Now, they enjoy improved quality and
hi

lower prices of several products.

ii). Consumers enjoy higher standards of living than was possibleearlier.
iii). It integrates countries through foreign trade and foreign investments by multinational
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companies.
Interconnections have many dimensions-cultural, political, social and economic.

OR
Sh

Advantages of MNCs are:

i). There are better employment opportunities.
ii) It also helps in the development of new technologies.
iii). There is improvement in infrastructure.
iv). Availability of a variety of goods.

2018
25. How has foreign trade been integrating markets of different countries ? Explain with
examples.
OR
How do we feel the impact of globalisation on our daily life ? Explain with examples.

ANSWER:
25. Foreign Trade is Integrating markets of different countries
(i) Foreign trade creates an opportunity for the producers to reach beyond the domestic
markets.
(ii) Producers can sell their products in the markets located in other countries.
(iii) It helps for expanding the choice of goods beyond the domestic market.
(iv) It is main channel for connecting countries.
(v) It is Highly helpful for extensive trade.
OR
Impact of Globalization in our daily life
(i) Transportation technology has made much faster delivery of goods across long distances
possible and that too at lower rates.
(i) The invention of computers, internet, mobile phones and fax has made contact with each
other around the world quite easy.
(iii) New jobs have been created in industries where MNCs have invested, such as

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electronics, fast food, cell phones etc.
(iv) The prices of various products have come down due to competition among the
producers and manufacturers.
(v) People are getting more employment because some Indian companies have become
multinational themselves due to globalisation.

2017
irw
18. How do Multi-National Corporations (MCs) interlink production across countries ?
tN
Explain with examples

26. Analyse any five positive effects of globalisation on the India economy.
hi

ANSWER:
18. MultiNational Corporation (MNC) interlink their production across countries in various
ways
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(i) A multinational corporation (MNC) is usually a large company that owns and controls
production in more than one nation. MNCs set up offices and factories for production in
regions where they can easily get cheap labour and other resources. This is done to
minimise the cost of production end to maximise the profit.
Sh

(ii) The MNC is not only selling its finished products globally, but more important, the goods
and services are produced globally.
(iii) The production process is divided into small parts and spread out across the globe.
(iv) The most common route for MNCs investments is to buy local companies and then to
expand production.

26. It is very difficult to reform politics through legal ways.

i) Devising new laws can help to discourage the practice of wrong political practices and
encourage new ones.
ii) But these changes can't only help to reform politics that is a challenge to democracy.
iii) For example just by changing the rules in cricket can't improve the quality of the game.
iv) In cricket, players, coaches and administrators can improve and bring good changes to
the game.
v) Similarly, in politics, the reforms have to be carried out by political parties, activists,
pressure groups, movements and citizens.

2016
9. (a) "The multinational companies (MNCs) choose China as an alternative location for
investment ?" Explain the statement.
OR
(b) Highlight any three benefits of industrialization on the society
OR
(c) What led to the expansion of population in Bombay in the mid 19th century ? Give any
three reasons.

ANSWERS:

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9. (a) The multinational companies (MNC's) choose China as an alternative location for
investment because :
(i) After revolution of 1949, China graduallyentered the field of world economy. It attracted
the foreign MN's to invest in china's economy.

consumer base. irw

(ii) China is the most populous country in the world, besides labour they formed a large

(iii) Wages in China were relatively low. So, it was great attraction for the MNC's.
OR
tN
(b) Benefits of industrialization on society are as under:
1. It removes poverty by generating large sum of employment.
2. It helps in economic growth of the nation.
3. It helps in the growing of trade by producing more goods.
hi

OR
(c) Three reasons for Bombay's expansion
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(i) When Bombay became the capital of Bombay Presidency in 1819, the city expanded.
With the growth of trade in cotton and opium, large communities of traders, bankers, as well
as artisans and shopkeepers came to settle in Bombay.
(ii) When textile mills were established in Bombay there was fresh surge of migration. The
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first cotton textile mill in Bombay was established in 1854. In 1921, there were 85 cotton
mills with about 146,000 workers.
(iii) Bombay was a junction of two major railways. This encouraged an even higher scale of
migration into the city. For example, famine in dry regions of Kutch drove large number to
Bombay in 1888-89.

2015
19. "Foreign trade integrates the markets in different countries." Support the statement with
arguments.
28. "Globalization and greater competition among producers has been advantageous to
consumers." Support the statement with examples.
ANSWERS:
19. Foreign trade provides opportunities for both producers and buyers to reach beyond the
domestic market of their own countries. Goods travel from one country to another. For the
buyers, import of goods produced in another country provides opportunity to extend their
choice of goods beyond what is domestically produced.
Competition among producers of various countries prevail as they can sell their products not
only in the domestic market but also compete in the market of other countries. Thus, foreign
trade has been the main channel connecting countries. For example Silk route connects
India and South Asia to the markets in both the East and West.

28. Globalization and greater competition among producers-both local and foreign, has been
of advantage to consumers in the following ways :
(i) Companies have invested in new technologies to raise their production quality to compete
with the MNCs, thus, ensuring that consumers get better quality products and get satisfied.

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(ii) Indian companies has collaborated with MNCs to produce more functional and advanced
products, thus, benefitting the consumers.
(iii) Consumer can enjoy improved quality at lower prices for several products. This has led
to higher standard of living.

(v) The quality of goods has been improved.

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(iv) There is great choice available to the consumers in goods.

(vi) Due to competition the prices of various products has decreased.

tN
2013
8. Which one of the following was the main aim to form 'World Trade Organisation'?
a) To liberalise international trade
b) To promote trade of rich countries
hi

c) To promote trade of poor countries

d) To promote bilateral trade
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19. How are local companies benefited by collaborating with multinational corporations?
Explain with examples.

25. 'Advancement of the international trade of a country is an index of its economic

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prosperity'. Justify the statement with five arguments.

29. How has improvement in technology stimulated the globalisation process? Explain
with five examples.

ANSWERS:
8. A
19. When local companies launch a joint venture with MNCs:
The MNCs provide the finances for additional investments for faster production.
ii. MNCs bring with them the latest technology for enhancing and improving production.
iii. Some Indian companies have had very successful foreign collaborations.
Globalisation has enabled some Indian companies to expand into multinational
corporations.
iv. Parakh Foods was a small company which has been bought over by a big American
company Cargill foods. Parakh Foods had built a large marketing network in various parts of
India as a well-reputed brand. It had four oil refineries whose control has now shifted to
Cargill. Now, Cargill is the largest manufacturer of edible oil in India making five million
pouches daily.

25. Advancement of a country's international trade is an index of its economic prosperity

because :
i. International trade is in fact an 'economic barometer' of a country. A healthy volume of it
ensures a trickling down of prosperity into the macroeconomy as well.
ii. No country is self-sufficient in all resources or services. It has to resort to international
trade in order to satisfy one or the other needs of its economy.
iii. If the balance of international trade is favourable to a country, it can earn more foreign
exchange and hence strengthen its financial position in the market.

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iv. International trade induces a country to develop secondary and tertiary sectors for
exporting goods which can fetch more foreign exchange.
v. A country's economic prosperity can be gauged by the health of its international trade.

irw
29. The following are the factors which have helped in the process of globalisation:
Rapid development in technology has contributed a great deal in furthering globalisation.
Technological advancement has resulted in faster delivery of goods and services across
longer distances at cheaper costs.
tN
ii. Development in information and communication technology has brought the world a lot
closer. Telecommunication technologies such as telephone, telegraph and fax are often used
to contact people and organisations around the world, access information on an urgent basis
and communicate with remote areas. Tele-conferences are nowadays often used in order to
avoid long trips around the world.
hi

iii. Developments in information technology have helped in the spreading out of the
production of services around the globe. Orders are nowadays placed through the Internet,
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designing is done on computers and payments are done online. E-mail and voice-mail are
available at negligible costs.
iV. The cost of air transport has fallen gradually. This has resulted in greater volumes of
goods and people being transported across the world.
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V. E-banking, e-commerce, e-learning, e-mail and e-governance are becoming more

commonplace.

2012
26. How has foreign trade been integrating markets of different countries in the world?
Explain with examples.

Answer: 26. Foreign trade creates an opportunity for the producers to reach beyond the
domestic markets.
- Producers can sell their produce not only in markets located within the country but
can also compete in markets located in other ountries of the world.
- Similarly for the buyers, import of goods produced in another country is one way of
expanding the choice of goods beyond what is domestically produced.
 - With the opening of foreign trade, goods travel from one market to another. qChoice
of goods in the market rises.
- Prices of similar goods in two markets tend to become equal.
- Producers in the two markets or to say two countries now closely compete against
each other even though they are separated by thousands of kilometres.
- These foreign trade connects the markets of different countries.
- For example, if there are a large number of foot-wear brands available in the Indian
markets. A consumer who is aware of international trends can choose between a
local brand like Bata, Lakhani Phoenix and international brands like Adidas, Nike,
Reebok, etc.

2011
15. Which of the following is not a feature of a Multinational Company?

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(A) It owns/controls production in more than one nation.
(B) It sets up factories where it is close to the markets.
(C) It organises production in complex ways.
(D) It employs labour only from its own country.

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26. Explain any three advantages of globalisation.

Answer:
tN
26. Globalization is the effort towards creating the whole global community into one
village. Three advantages of globalisation are namely:
Global market:
Privatisation of state-owned industries has led to flourishing emerging markets in developed
hi

countries. Globalisation has pushed businesses to increase their transactions across

borders to escalate consumer demand.
Foreign investment:
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The flow of foreign capital is another positive effect of globalisation. Companies directly
invest in foreign soil by starting production units there. Successful native companies attract
foreign investment pushing up the reserve of foreign exchange available.
Culture:
Sh

Today's world is an amalgamation of varied cultures that have come together over time.
Good practices from across the world can be absorbed to be in tune with the changing
times. There is a free flow of art forms, languages, food and customs across the world post
globalisation.