Jain Group Of Institution

Name: Anil.S.Bhati Class: Global MBA F Section Subject: Managerial Economics Topic: Globalisation Roll no. 8

Submitted To, M.M.Gupta

Table of Contents: Introduction What is Globalization? Merits of Globalization Demerits of Globalization Impact of Globalization on Indian Economy

Introduction to Globalisation

Globalisation process by

is

which

people and nations of the world are unified into a single unit.

Although the generic term "globalisation" or "globalization" is usually used as a synonym for "economic globalisation," there are many other aspects to globalisation. History of Globalisation Although the history of the world is, in many ways, the history of globalisation, the term "globalisation" came into use in the 1970s. In the past, communications systems were more primitive and industrial capital was not as fluid as it is in modern times. The term came in to common usage in the mid-1980s and has now become the predominant description of global commerce, and cultural and environmental systems.

Economic Globalisation Economic globalisation describes the removal of trade barriers to facilitate the exchange of goods, capital, services and labor. Economic globalisation is the process by which companies either seek out areas with the lowest production costs or import labor through a "guest" worker program at a far lower cost than using local labor. Production costs are often lower because of lower wages, minimal environmental protections, and minimal implementation of worker safety programs. In many cases, workers brought in as "guest" workers are, in fact, kept in slave-like conditions. Cultural Globalisation Cultural globalisation is the process through which the dominant global culture is disseminated throughout less dominant cultures. At present, cultural globalisation is viewed as the dissemination of American culture throughout the rest of the world. This process occurs through the global popularity of American pop culture, including music, movies, and popular television programs that are often translated into local languages. Environmental Globalisation Over the past decade or so, the concept of environmental globalisation has become better understood. Activities in one hemisphere can have an

effect on the environment in another hemisphere. For example, carbon dioxide output in the United States affects surface temperatures in China. Conversely, as China's carbon dioxide output increases, it will affect surface temperatures in North America and Europe. On a smaller scale, industrial output in one country can be carried across borders and cause acid rain in another country. Critics of Globalisation Many vocal critics of globalisation have emerged. In many cases, the critics point out that globalisation primarily benefits the wealthy classes of societies. In other cases, the movement of environmental damage from a wealthy nation to a poorer nation is cited as a negative consequence of globalisation. Labor abuses are frequent and well documented and the loss of indigenous cultures can be a result of trends in cultural globalisation. What is Globalisation? Globalization refers to expanding global links, the organization of social life on a global scale, and the growth of global thinking, thus creating a world society. Globalization can also mean globalized business, and the process of expanding commerce to overseas sources and markets. Many people think that this world has no borders because we are so

connected but others complain that globalization is making the rich richer and the poor poorer. As far as the consumer is concerned, he can get what he wants in any country and as far as a company is concerned, it can get customers throughout the world. Wealthy companies seek the cheapest labour in any part of the world, to drive down the cost of production and increasing profits. MERITS AND DEMERITS OF GLOBALISATION: MERITS: 1. Imported goods are available 2. The country can produce what it produces best and import the rest 3. there is a feeling of an international economy 4. The local industries work hard to compete with international firms 5. Raw material is available 6. The standard of life becomes better 7. More jobs are created 8. There is security from famine, disease, etc as international firms intervene. 9. Trade in Goods and Services - From the theoretical aspect, international trade ensures allocating different resources and that has to be consistent. This specialization in the processes leads to better productivity. We all know from the economic perspective that restrictive trade barriers in emerging economies only impede

growth. Emerging economies can reap the benefits of international trade if only all the resources are utilized in full potential. This is where the importance of reducing the tariff and non-tariff barriers crop up. 10. Movement of Capital - The production base of a developing economy gets enhanced due to capital flows across countries. It was very much true in the 19th and 20th centuries. The mobility of capital only enabled savings for the entire globe and exhibited high investment potential. A country's economic growth doesn't, however, get barred by domestic savings. Foreign capital inflow does play an important role in the development of an economy. To be specific, capital flows either can take the form of foreign direct investment or portfolio investment. Developing countries would definitely prefer foreign direct investment because portfolio investment doesn't have a direct impact on the productive capacity expansion. 11. Financial Flows - The capital market development is one of the major features of the process of globalization. We all know that the growth in capital and mobility of the foreign exchange markets enabled better transfer of resources cross borders and by large the global foreign exchange markets improved. It is mandatory to go in for the expansion of foreign exchange markets and thus facilitate international transfer of capital. The major example of such

international transfer of funds led to the financial crisis - which has by now become a worrying phenomenon. DEMERITS: 1. Local industries get dislodged. 2. In times of war, there is a problem 3. There is political interference and conflicts arise 4. The balance of payments is badly affected 5. Under developed countries are exploited 6. The outsourcing of jobs to developing countries has resulted in loss of jobs in developed countries. 7. There is a greater threat of spread of communicable diseases. 8. There is an underlying threat of multinational corporations with immense power ruling the globe. 9. For smaller developing nations at the receiving end, it could indirectly lead to a subtle form of colonization. 10.Increased flow of skilled and non-skilled jobs from developed to developing nations as corporations seek out the cheapest labor 11. Increased likelihood of economic disruptions in one nation effecting all nations
12. Corporate influence of nation-states far exceeds that of civil society

organizations and average individuals 13. Threat that control of world media by a handful of corporations will limit cultural expression.

14. Greater chance of reactions for globalization being violent in an attempt to preserve cultural heritage 15. Greater risk of diseases being transported unintentionally between nations. 16. Spread of a materialistic lifestyle and attitude that sees consumption as the path to prosperity. 17. International bodies like the World Trade Organization infringe on national and individual sovereignty. 18. Increase in the chances of civil war within developing countries and open war between developing countries as they vie for resources Decreases in environmental integrity as polluting corporations take advantage of weak regulatory rules in developing countries.

IMPACTS OF GLOBALISATION ON INDIAN ECONOMY Positive impacts Of Globalisation Globalization is the new catchphrase in the world economy, dominating the globe since the nineties of the last century. People relied more on the market economy, had more faith in private capital and resources, international organizations started playing a vital role in the development of developing countries. The impact of globalization has been fair enough on the developing economies to a certain extent. It brought along with it varied opportunities for the developing countries. It gave a fillip for better access to the developed markets. The

technology transfer promised better productivity and thus improved standard of living.

Negative impacts of Globalization

Globalization has also thrown open varied challenges such as inequality across and within different nations, volatility in financial market spurt open and there were worsening in the environmental situation. Another negative aspect of globalization was that a majority of third world countries stayed away from the entire limelight. Till the nineties, the process of globalization in the Indian economy had been guarded by trade, investment and financial barriers. Due to this, the liberalization process took time to hasten up. The pace of globalization did not start that smoothly. Economic integration by 'globalization' enabled the cross country free flow of information, ideas, technologies, goods, services, capital, finance and people. This cross border integration had different dimensions cultural, social, political and economic. More or less the economic integration happened through four channels 1. Trade in goods and services 2. Movement of capital 3. Flow of finance 4. Movement of people