Class 10 › Social Science › Economics — Understanding Economic Development Globalisation and the Indian Economy Class 10 Social Science · Economics — Understanding Economic Development · Chapter 4
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View all 15 amazing Marks Booster kits → This chapter explains globalisation as the rapid integration of countries through trade, investment, and the movement of goods, services, technology, capital and people. It describes the central role of multinational corporations (MNCs), which set up or control production across several countries to use cheaper labour and resources and to reach new markets, connecting distant economies. Foreign trade and foreign investment have grown rapidly since India’s liberalisation in 1991, when many trade barriers and restrictions on imports and investment were removed. The chapter discusses the factors that have enabled globalisation — especially advances in transport and information and communication technology — and the role of the World Trade Organisation in liberalising trade, while noting that developed countries often retain unfair advantages. It weighs the impact of globalisation, recognising benefits such as greater choice, better quality, lower prices and new jobs for some, against the struggles of small producers and workers who face stiff competition, and concludes that globalisation should be made fairer so its benefits are shared more widely.
Globalisation
The integration of economies through trade, investment, technology and movement of people.
Multinational corporation
A company that owns or controls production in more than one country.
Foreign investment
Investment made by MNCs and others to buy assets or set up production abroad.
Liberalisation
Removing government barriers and restrictions on trade and investment.
World Trade Organisation
An international body that aims to liberalise world trade.
Trade barriers
Restrictions such as taxes on imports used to regulate foreign trade.
Special Economic Zone
An area with world-class facilities and tax benefits to attract investment.
Foreign trade
The exchange of goods and services between countries.
Q1 What is globalisation? Answer Q2 How do MNCs spread their production across countries? Answer Q3 What was the impact of liberalisation in 1991? Answer Q4 Why is globalisation criticised? Answer Q5 How can globalisation be made fairer? Answer Q6 What is globalisation? Answer Q7 How do multinational corporations spread their production across countries? Answer Q8 What was the impact of liberalisation in 1991? Answer Q9 Why is globalisation criticised? Answer Q10 How can globalisation be made fairer? Answer Q1 Complete the following statement to show how the production process in the garment industry is spread across countries.
The brand tag says ‘Made in Thailand’ but they are not Thai products. We dissect the manufacturing process and look for the best solution at each step. We are doing it globally. In making garments, the company may, for example, get cotton fibre from Korea, ........ Answer Q1 1. Would you say Ford Motors is a MNC? Why? Answer Q2 2. What is foreign investment? How much did Ford Motors invest in India? Answer Q3 3. By setting up their production plants in India, MNCs such as Ford Motors tap the advantage not only of the large markets that countries such as India provide, but also the lower costs of production. Explain the statement. Answer Q4 4. Why do you think the company wants to develop India as a base for manufacturing car components for its global operations? Discuss the following factors: Answer Q5 (a) cost of labour and other resources in India Answer Q6 (b) the presence of several local manufacturers who supply auto-parts to Ford Motors Answer Q7 (c) closeness to a large number of buyers in India and China Answer Q8 5. In what ways will the production of cars by Ford Motors in India lead to interlinking of production? Answer Q9 6. In what ways is a MNC different from other companies? Answer Q10 7. Nearly all major multinationals are American, Japanese or European, such as Nike, Coca-Cola, Pepsi, Honda, Nokia. Can you guess why? Answer Q1 1. What was the main channel connecting countries in the past? How is it different now? Answer Q2 2. Distinguish between foreign trade and foreign investment. Answer Q3 3. In recent years China has been importing steel from India. Explain how the import of steel by China will affect. Answer Q4 (a) steel companies in China. Answer Q5 (b) steel companies in India. Answer Q6 (c) industries buying steel for production of other industrial goods in China. Answer Q7 4. How will the import of steel from India into the Chinese markets lead to integration of markets for steel in the two countries? Explain. Answer Q1 1. What is the role of MNCs in the globalisation process? Answer Q2 2. What are the various ways in which countries can be linked? Answer Q3 3. Choose the correct option.
Globalisation, by connecting countries, shall result in
(a) lesser competition among producers.
(b) greater competition among producers.
(c) no change in competition among producers. Answer Q1 1. In the above example, underline the words describing the use of technology in production. Answer Q2 2. How is information technology connected with globalisation? Would globalisation have been possible without expansion of IT? Answer Q1 1. What do you understand by liberalisation of foreign trade? Answer Q2 2. Tax on imports is one type of trade barrier. The government could also place a limit on the number of goods that can be imported. This is known as quotas. Can you explain, using the example of Chinese toys, how quotas can be used as trade barriers?
Do you think this should be used? Discuss. Answer Q1 1. Fill in the blanks.
WTO was started at the initiative of __________countries. The aim of the WTO is to ____________________. WTO establishes rules regarding ________________ for all countries, and sees that ___________________ In practice, trade between countries is not ______________________________. Developing countries like India have ___________________, whereas developed countries, in many cases, have continued to provide protection to their producers. Answer Q2 2. What do you think can be done so that trade between countries is more fair? Answer Q3 3. In the above example, we saw that the US government gives massive sums of money to farmers for production. At times, governments also give support to promote production of certain types of goods, such as those which are environmentally friendly. Discuss whether these are fair or not. Answer Q1 1. How has competition benefited people in India? Answer Q2 2. Should more Indian companies emerge as MNCs? How would it benefit the people in the country? Answer Q3 3. Why do governments try to attract more foreign investment? Answer Q4 4. In Chapter 1, we saw what may be development for one may be destructive for others. The setting of SEZs has been opposed by some people in India. Find out who are these people and why are they opposing it. Answer Q1 1. What are the ways in which Ravi’s small production unit was affected by rising competition? Answer Q2 2. Should producers such as Ravi stop production because their cost of production is higher compared to producers in other countries? What do you think? Answer Q3 3. Recent studies point out that small producers in India need three things to compete better in the market
(a) better roads, power, water, raw materials, marketing and information network (b) improvements and
modernisation of technology (c) timely availability of credit at reasonable interest rates. Answer Q4 Can you explain how these three things would help Indian producers? Answer Q5 Do you think MNCs will be interested in investing in these? Why? Answer Q6 Do you think the government has a role in making these facilities available? Why? Answer Q7 Can you think of any other step that the government could take? Discuss. Answer Q1 1. In what ways has competition affected workers, Indian exporters and foreign MNCs in the garment industry? Answer Q2 2. What can be done by each of the following so that the workers can get a fair share of benefits brought by globalisation? Answer Q4 (b) employers at the exporting factories Answer Q7 3. One of the present debates in India is whether companies should have flexible policies for employment. Based on what you have read in the chapter, summarise the point of view of the employers and workers. Answer Q1 1 What do you understand by globalisation? Explain in your own words. Answer Q2 2. What were the reasons for putting barriers to foreign trade and foreign investment by the Indian government? Why did it wish to remove these barriers? Answer Q3 3. How would flexibility in labour laws help companies? Answer Q4 4. What are the various ways in which MNCs set up, control or produce in other countries? Answer Q5 5. Why do developed countries want developing countries to liberalise their trade and investment? What do you think should the developing countries demand in return? Answer Q6 6. “The impact of globalisation has not been uniform.” Explain this statement. Answer Q7 7. How has liberalisation of trade and investment policies helped the globalisation process? Answer Q8 8. How does foreign trade lead to integration of markets across countries? Explain with an example other than those given here. Answer Q9 9. Globalisation will continue in the future. Can you imagine what the world would be like twenty years from now? Give reasons for your answer. Answer Q10 10.Supposing you find two people arguing: One is saying globalisation has hurt our country’s development. The other is telling, globalisation is helping India develop. How would you respond to these arguments? Answer Q11 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 increasing ______________ 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 greater _________________among the producers. Answer Q12 (i) MNCs buy at cheap rates from small producers Answer Q13 (ii) Quotas and taxes on imports are used to regulate trade Answer Q14 (iii) Indian companies who have invested abroad Answer Q15 (iv) IT has helped in spreading of production of services Answer Q16 (v) Several MNCs have invested in setting up factories in India for production Answer Q17 13.Choose the most appropriate option.
(i) The past two decades of globalisation 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 Q18 (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 Q19 (iii) Globalisation 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 Q1 I. Take some branded products that we use everyday (soaps, toothpaste, garments, electronic goods, etc.). Check which of these are produced by MNCs. Answer Q2 II. Take any Indian industry or service of your choice. Collect information and photographs from newspapers, magazine clippings, books, television, internet, interviews with people on the following aspects of the industry. Answer Q3 (i) Various producers/companies in the industry Answer Q4 (ii) Is the product exported to other countries? Answer Q5 (iii) Are there MNCs among the producers? Answer Q6 (iv) Competition in the industry Answer Q7 (v) Conditions of work in the industry Answer Q8 (vi) Has there been any major change in the industry in the past 15 years? Answer Q9 (vii) Problems that people in the industry face. Answer
Globalisation is the rapid integration of countries through:
A isolation of economies B trade, investment and movement of goods, services and people C war and conquest only D closing all borders
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