 World wide integration and deepening of

economic activities
 Integrated production and consumption
systems
 Facilitated by IT revolution, liberalization and
deregulation
 Unprecedented mobility of goods, services,
capital and people
 Events all over the world strongly
interdependent
“…(the) integration of national
economies into the international
economy through trade, direct foreign
investment…short-term capital flows,
international flows of workers and
humanity generally, and flows of
technology…” (Bhagwati, In Defense of
Globalization, p. 3)
 Internationalization (trade & investment)
 Liberalization (freeing markets)
 Universalization (cultural interchange)…or…
 Westernization (Western cultural dominance)
 “Deterritorialization” (compression of time and
space)
1. Globalization of consumption: The
nation in which a product was made
becomes independent of the nationality
of the consumer.
2. Globalization of production/ownership:
The nationality of the owner and
controller of productive assets is
independent of the nation housing them. For
example, Canada's assets are owned by
foreigners at the same proportion as
foreigners own all world assets.
Consequently, only about 3% of Canadian
assets would be owned by Canadians.
Similarly, Canadian based firms would have
roughly 97% of their total assets overseas.
Jointly owned by companies from 4 countries:
France
German
Britain and
Spain.
Wings from Britain,
Fuselage and tail from Germany,
Doors from Spain,
Cockpit and final assembly in France.
1,500 suppliers in 27 countries.
 More than 35 percent of components for the
consortium's aircraft are supplied from over 500
American companies.
 Numerous suppliers also are located in the Asia-
Pacific.
Singapore Technologies Aerospace produces wing ribs
and passenger doors for the A320, and engine mounts
and thrust reverser doors for the A340.
India's Hindustan Aeronautics Limited also builds A320
passenger doors.
Globalisation

Globalisation
could involve
all these
things!
 Integration of Economies

 The increasing reliance of

economies on each other
 The opportunities to be able to
buy and sell in any country in
the world
 The opportunities for labour and
capital to locate anywhere in the
world
 The growth of global markets in
finance
Stock Markets are now accessible from
anywhere in the world!
 Integration of Economies

• Made possible by:

– Technology
– Communication networks
– Internet access
– Growth of economic cooperation – trading
blocs (EU, NAFTA, etc.)
– Collapse of ‘communism’
– Movement to free trade
 Trade versus Aid?

• Benefits of Trade:
– Increased choice
– Greater potential for
growth
– Increase
international
economies of scale
– Greater
employment
opportunities
Trade has led to massive increases in
wealth for many countries.
 Trade versus Aid?

• Disadvantages
of trade:
– Increase in gap between
the rich and the poor
– Dominance of global trade
by the rich, northern
hemisphere countries
– Lack of opportunities for the
poor to be able to have
access to markets
– Exploitation of workers and
growers How far does trade help children
like these?
 Corporate Expansion

• Multi-national
or trans-national
corporations (MNCs
or TNCs)
– businesses with
a headquarters
in one country but
No matter where you go in the world, with business
certain businesses will always have a
presence.
operations in a
number of others.
 Corporate Expansion

• Characteristics:
– Expanding revenue
– Lowering costs
– Sourcing raw materials
– Controlling key supplies
– Control of processing
– Global economies
of scale

Controlling supplies may be one reason

for global expansion.
 Corporate Domination

Key Issues:
– Damage to the
environment?
– Exploitation of labour?
– Monopoly power
– Economic degradation
– Non-renewable
resources
– Damage to cultures
Shell and Nike’s activities
have come under severe
criticism in some quarters.
 Feasibility: The Shrinking Globe

1500 -1840 1850 - 1930 1950s 1960s

Propeller Jet
Steam locomotives aircraft passenger
Best average speed of
average 65 mph. 300 - 400 aircraft,
horse-drawn coaches
Steamships average mph. 500 - 700
and sailing ships, 10
36 mph. mph.
mph.
 Manufacturing

Design
 India in 1980 China in 1980
• Ahead of China esp. in • Still struggling with
free enterprise and per Communist Egalitarian
capita earnings past and lack of enterprise
India in 2005 China in 2005
• Full of vigour but • Government took charge
political system still of enterprise in late
trapped in clanship 1980’s, transforming
management of the China into a modern
Nation instead of taking industrial nation which
charge of enterprise increased per capita
income by a factor of 5
 What is globalisation?
 Spread of; manufacturing, services, markets,
culture, lifestyle, capital, technology and ideas across
national boundaries and around the world.
 Also the integration of these geographically
dispersed economic and social activities.
 Huge impacts on people and nations. The whole
world is affected by globalisation
• Globalization in India has allowed
companies to increase their base of
operations, expand their workforce with
minimal investments, and provide new
services to a broad range of
consumers.
• One of the major forces of globalization
in India has been in the growth of
outsourced IT and business process
outsourcing (BPO) services.
• Access to television grew from 10% of the urban
population (1991) to 75% of the urban population (1999).
• Cable television and foreign movies became widely
available for the first time and have acted as a catalyst in
bulldozing the cultural boundaries.
• All these technologies have changed perceptions and
dreams of ordinary people.
• Unmarried boys and girls are sharing same apartment
and staying away from their parents.
• Indian youths leaving education in mid-way and joining
MNC's
• There has been a increase in the violence, particularly
against women.
• Scientific and technological innovations have made
life quite comfortable, fast and enjoyable.
• More availability of cheap and filthy material (CD's or
DVD's of Hollywood movies, porn movies, sex toys,
foreign channels like MTV) in the name of
liberalization.
• In India, land-line or basic phone was a prestige
symbol few years back but now you find people riding
bicycle with a mobile in hand, talking or listening
music or even clicking cameras of their phones
targeting pretty girls or ladies.
• Society has become more open compared to its earlier
conservative look due to exposure to other cultures through
DTH or cable network.
• This has contributed to dating, celebration of friendship
days/valentine day, and resulted to rising number of call girls
and make them more prone to sexually transmitted diseases.
• People are less worried for government jobs as MNC's and
private or public sector are offering more lucrative jobs.
• Extension of internet facilities even to rural areas.
• In place of old cinema halls, multiplex theatre are coming up.
• Old restaurants are now replaced by Mc. Donalds. Fast food
and Chinese dishes have replaced juice corners and Parathas.
• More inflow of money has aggravated deep rooted problem of
corruption?
• More scandals and scams compared tp pre-globalization era.
• Girls being blackmailed by their ex-boy friends using MMS
• Ban on TV channels for showing sex and violence violating
all norms
• Girls being raped in moving vehicles
• There is deterioration in social values as evident from less
respect for ladies, older people
 Indian Economy under
Globalization

Key Elements
 Economy opened up to imports of
goods, services and capital
 Privatization vigorously pursued
 Deregulation accelerated
 India's GDP: 2002-07 9.4%
700 8.4%

600 8.5% 7.5%

Fastest GDP growth of 9.4
500
The Indian economy USD Billion
400
percent in 2006-07, since last 18
years
has witnessed 300 4%
534
590 631

an unprecedented 200 424

484

growth…. 100

Booming Indian 0
2002-03 2003-04 2004-05 2005-06 2006-07
services and GDP at Constant Prices

industry sector 700

are providing 600

168 Growth in sectors (2006-07):
the required 500 155
Industry: 10.9%
USD Billion

impetus to the 400

104 109 116
117 Services: 11%
Agriculture: 2.7%
economic growth 300
103 91
200
319 347
100 205 223

0
1999-00 2002-03 2005-06 2006-07
Services Agriculture Industry
 India's Exports: 2002-07 (till February 2007)
120 112.40
103.42
100 83.81
80 63.95 India's Import: 2002-07 (till February 2007)
52.81 180 162.30
USD Billion

60 149.65
160
40 140
111.89
120
20

USD Billion
100 78.28
0 80 61.52
60
2002-03 2003-04 2004-05 2005-06 2006-07
40
(upto Feb. 20
07) 0
2002-03 2003-04 2004-05 2005-06 2006-07
(upto Feb.
07)
 FDI Inflow - India: 2001-07
18,000
15,730
16,000 Net FII into India: 2001-07
14,000 12
10.00 10.20
12,000 10 9.40
10,000
USD Million

8
8,000 6.72
5,546

USD Billion
6,000 4,222 6
3,755
4,000 3,134 2,634
4
2,000
1.80
0 2
0.60
2001-02 2002-03 2003-04 2004-05 2005-06 2006-07
0
2001-02 2002-03 2003-04 2004-05 2005-06 2006-07
 Tata Steel buys Corus Plc USD 12.1 billion

Hindalco acquired Novelis Inc. USD 6 billion

Essar Steel acquired Algoma Steel USD 1.58 billion

Suzlon Energy Ltd. acquires REpower USD 1.6 billion

Videocon Industries acquired Daewoo USD 730 million

Electronics Corporation Limited
Huge country, large numbers, big territory:
Billion plus people over 2.5 million square
kilometers

Diverse languages, ethnicities, religions

Caste and other pre-capitalist relations

 72 % live in rural areas (2001)

 73 % of rural labour force in agriculture and allied activities.

(Males 66.5 %, Females 83.6 %) (2004-05)

 As of 2004-05, estimated employment was 457 million, of

which 70 million were regularly employed, 130 million casual
and 257 million self-employed

 86.32 % of the employed were in the unorganized sector, rest

in organized sector
• A country of savers has become spenders.
• Greater employment opportunities for the
masses.
• Companies and government have changed
the way they do business to cut the red
tapisum.
• The rupee has gained on the dollars so it is
less advantage for Indians to live overseas
and send money back home.
• The rate of growth of the GDP of India has been on
the increase from 5.6 % during 1980-90 to 7% in
the 1993-2001 period.
• In the last four years, the annual growth rate of
the GDP was impressive at 7.5% (2003-04), 8.5%
(2004-05),9% (2005-06) and 9.2% (2006-07).
• The foreign exchange reserves were $ 39 bn
(2000-01), $107 bn (2003-04),$145 bn (2005-06) and
$180 bn (in February 2007).
• India’s trade deficit during 1990-1991 to
2006-2007 ranged between 3.6% to 6.9% of
GDP.
• The fluctuation in Foreign portfolio
Investment were much sharper then FDI, The
FPI rate decreases by 36% from period
1990-00 and again shows upward growth rate
in period 00-07 was 22.1%.
• FDI (net) shows a gradual upward growth
from $97 million in 1990-1991 to $3272
million in 2000-2001 and again rising and
touching the peak of $8779 million in
2006-2007.
• Share in world exports raise from
0.52% in 1990 to 1% in 2007. In the rate
of growth of per capita income there
has been a sharp acceleration in the
growth of per capita income, almost
doubling to an average of 7.2% p.a.
(2003-04 to 2007-08).
• Industrialisation did not take place as per
expectation.
• Share of agriculture in the GDP went down
drastically to 24 per cent and further to 22
per cent in 2006-07.
• The number of rural landless families
increased from 35 per cent in 1987 to 45 per
cent in 1999, further to 55 per cent in 2005.
 Corruption, lack of efficiency in work
and ineffective management became
the common features of public sector.
Decreased FDI: The data of FDI shows
50% (approx) gradual upward growth
from 90-00. The FDI growth decreased
by 20% from period 2000-07.
• Our progress in education has been
slow and superficial , without depth
and quality, to compete the
international standards. People
depending on agriculture in India is
about 60% where as the same for U.K.
Is 2% and U.S. Is 2%.
2010
GDP – USD 1.36 trillion
GDP growth rate – 9%
Services contribution – 60-65%
Balance of Trade – Negative balance
should increase with
surging imports versus exports
Investment goal – USD 370 billion
2008
GDP – USD 1.16 trillion
GDP growth rate – 9.5%
Services contribution – 60%
Balance of Trade – Negative balance
should increase with surging imports
versus exports
Investment goal – USD 305 billion

2006
GDP – USD 590 billion
GDP growth rate – 9%
Services contribution – 54%
Balance of Trade – USD (-)46.2 billion
Investment goal – USD 250 billion
• To conclude the benefits of economic
reforms on the Indian economy would
get achieved, only if the negative
impacts are settled or neutralized.
Hence, along with globalisation and
restructuring the economy, efforts.
Indian Economy
Opportunities Unlimited
Thank You