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NCERT Class 10 Social Science Chapter 21 Globalization and The Indian Economy
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Globalization and The Indian Economy
Chapter – 21
UNDERSTANDING ECONOMIC DEVELOPMENT (ECONOMICS)
TEXT BOOK QUESTIONS
Q. 1. What do you understand about globalization? Explain in your own words.
Answer: Globalization means that various economies of the world move in a manner that leads to emergence of a well integrated and cohesive global economy.
MNCs have contributed greatly in the process of globalization:
(i) by setting up production centers in various countries. and
(ii) by supplying produced goods, services and technology.
The countries of the world have come closer. It has also increased the movement of people between countries.
Q. 2. What was the reason for putting barriers to foreign trade and foreign investment by the Indian government? Why did it wish to remove these barriers?
Answer: Causes responsible for putting barriers:
(i) Because the government wanted to protect the interests of Indian industries-cottage, small scale and the large scale industries.
(ii) India was a backward country. It was not in a position to compete in the international market earlier.
(iii) The government of India desired to promote only the investment of India’s capital.
Reasons for removal of trade barriers:
(i) The government took on the basis of perception, membership of W.T.O., an international organization. Presently, 149 countries are its member nations.
(ii) It was thought that WTO would protect India from the pressures of stronger trading partners as WTO’s rules envisage non discrimination in the form of National Treatment and most favored nation (MFN) treatment to India’s exports in the market of other WTO members.
(iii) It was said that members would not discriminate tariff regimes among WTO members as also would honor their respective regulations and incentives, etc.
However, in implementation, WTO Agreements were just contrary to what was envisaged in its rules.
Q. 3. How would flexibility in labor laws help companies?
Answer: The government of India has taken many steps to attract foreign companies to invest in their companies. One of these steps is to allow flexibility in the labor laws. In the organized sector, the companies have to obey certain rules which aim to protect the worker’s rights. But in recent years, the government has allowed many companies to ignore many of these rules.
Instead of hiring workers on a permanent basis, companies hire workers for a short period when there is pressure of work. This has been done to reduce the cost of labor for the company. Thus flexibility in labor laws has greatly helped companies, especially MNCs.
Q. 4. What are the various ways in which MNCs set up, or control production in other countries?
Or
Explain any four ways by which MNCs exercise control on production.
Answer: (i) MNCs set up production units close to the markets; abundant supply of working people and other inputs including favorable government policies.
(ii) The money that they spent to buy assets such as land, building, machines and other equipment, they received from the USA in most cases because about 90% of MNCs are American origin.
(iii) They set up production jointly with some of the local companies of these countries. Initially, the benefit to the local company of such joint production was two-fold because MNCs gave it capital necessary for purchase of capital assets i.e., machinery, plants etc. coupled with technical know-how.
(iv) During some years, it carried on business with local companies as partners but the finished product bore the brand-name of MNC.
(v) The product was launched in the Indian market at the most competitive price and thus, consumers preferred MNCs product over that of local companies. It resulted in winding-up of. local company.
(vi) When an Indian company lost its market, the MNC came forward to buy its business with all assets and good-will. Thus, local companies were eliminated e.g., Hero-Honda, Maruti and Parakh Foods.
Q. 5. Why do developed countries want developing countries to liberalize their trade and investment? What do you think the developing countries should demand in return?
Answer: The World Trade Organisation (or WTO) is supported 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. That is why developing countries are therefore asking the developed countries governments, “We have to reduce trade barriers as per WTO rules. But you have ignored the rules of WTO and have continued the trade barriers. It is not a fair trade.”
I think developing countries should demand in return the free and fair flow of their labor and reduction in fero subsidies in the agriculture sector of developed countries.
Q. 6. “The impact of globalization has not been uniform’. Explain this statement.
Answer: The impact of globalization is not uniform. For some countries, it has been useful, while it manifests and promotes economic slavery imposed on several other nations.
(i) Producers: Globalization and greater competition among producers-both local and foreign producers-have been of advantage to consumers, particularly the well-off sections in the urban areas but it has snatched basic needs from the vulnerable sections of Indian society.
(ii) Producers and Workers:
(a) Impact on laborers and local business houses: A few wealthy companies are benefiting and growing MNCs in their size like parasites while local producers in majority are left with no other option but to close their business. Unskilled laborers are not accepted by MNCs or very rich companies.
(b) Effect on skilled laborers: A few skilled and technically qualified workers are looking at globalization as a full moon while for the majority of others, they look at it as a threat to the national economy. It is because flexible labor laws and stiff competition will anchor their sources of survival.
Q. 7. How has liberalization of trade and investment policies helped the globalization process?
Answer: I. Liberalization of trade and the process of Globalization:
Role of MNCs: Large MNCs in developed countries place orders for production with small producers. Garments, footwear, sports items are examples of industries where production is carried out by a large number of small producers around the world.
The products are supplied to the MNCs. But MNCs sell them under their own brand names to the customers. These large MNCs have tremendous power to determine price, quality, delivery and labor conditions for these distant producers. Thus, MNCs are modern East India companies seem a tool to impose economic slavery in the most cryptic way by the developed countries of the west particularly, USA because 90% of MNCs are USA’s origin.
MNCs are supported financially and through the ministerial conferences of WTO i.e., progeny of GATT.
II. Investment and the process of Globalization: The most common route for MNCs investment is to buy up local companies and then to expand their production. MNCs with huge wealth can quite easily do so. USA and other developed countries of the west are extending full support to them.
Q. 8. How does foreign trade lead to integration of markets across countries? Explain with an example other than those given here.
Answer: Foreign trade provides an opportunity for both producers and buyers to reach beyond the markets of their own countries. Goods travel from one country to another. There is huge competition between producers of one country and producers of another country. Competition among buyers also prevails. Thus foreign trade leads to integration of markets across countries.
For example, during Diwali seasons, buyers in India have the option of choosing between Indian and Chinese decorative lights and bulbs. Many shops have replaced Indian decorative lights with Chinese lights. For Chinese light manufacturers, this provides an opportunity to expand their business.
Q. 9. Globalization will continue in the future. Can you imagine what the world would be like twenty years from now! Give reasons for your answer.
Answer: Yes, I think the entire world would become a single market ie., a global village like twenty years from now.
My answer is based on the following reasons:
(i) MNCs would produce goods and services in those locations around the world which would be cheap for their production.
(ii) Foreign investment by MNCs would increase much more.
(iii) Foreign trade between countries would sufficiently rise.
(iv) A large part of the foreign trade would be controlled by MNCs.
(v) More and more goods and services investment and technology would move between countries.
(vi) There would be greater integration production and markets across countries due to greater foreign investment and foreign trade.
Q. 10. Suppose you find two people arguing: One is saying globalization hurts our country’s development. The other is telling, globalization is helping Indu to develop. How would you respond to these arguments?
Answer: (i) I would respond that globalization has not hurt our country’s development but in helping India to develop. But it has benefited well-off consumers and producers with skill, education and wealth.
(ii) On the other hand, many small producers and workers have suffered as a result of the rising competition. They have not shared the benefits of globalization.
(iii) The government should try to make globalization more fair. Fair globalization would create opportunities for all and ensure that the benefits of globalization are shared better.
Thus, both the arguments have some truth
in them. However, if steps are taken to have a fair globalization then the adverse effects may be minimized and may not hurt the country’s interest in development.
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 __________ Markets in India are selling goods produced in many other countries. This means there is increase __________ with other countries. Moreover, the rising number of brands that we see in the markets might be produced by MNCs in India. MNCs are investing in India because _________ __________ While consumers have more choices in the market, the effect of rising _________ _________ and _________ has meant among greater _________ among the producers.
Answer: Indian buyers have a greater choice of goods than they did two decades back. This is closely associated with the process of globalization. Markets in India are selling goods produced in many other countries. This means there is increasing cooperation with other countries. Moreover, the rising number of brands that we see in the markets might be produced by mncs in India. MNCs are investing in India because they can get cheap labor and other resources. While consumers have more choices in the market, the effect of rising foreign investment and foreign trade has meant greater competition among the producers.
Q. 12. Match the following:
Answer: (i) and (b)
(ii) and (e)
(iii) and (d)
(iv) and (c)
(v) and (a)
Q. 13. Choose the most appropriate option:
(i) The past two decades of globalisa- tion has seen rapid movements in:
(a) Goods, services and people between countries.
(b) Goods, services and investments between countries.
(c) Goods, investments and people between countries.
Answer: (b) Goods, services and investments 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 partnerships with local companies.
Answer: (b) Buy existing local companies.
(iii) Globalization 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.
Answer: (b) of people in developed countries.