GLOBALIZATION

IN
THE INDIAN ECONOMY
 Mid 20th Century
Production largely organized within countries.
Raw materials, food stuff and finished
products crossed countries.

TRADE – was the main channel to connect

distant boundaries
MNCs = Multinational Corporations emerged
then. They are the companies that own or
control production in more than one nation.
 Name of some MNCs
• Apple:Started by Steve Jobs and
his friends in 1976. American
MNC.
• Coco-Cola: Established in the
year 1886 by Asa Briggs Candler.
Thump up, Fanta, Mazza are few
beverages brought out by this
famouse company in India.
• Nestle: Switzerland based food
company that introduced in
India in the year 1912. Some of
its selling products are Nescafe,
maggie, Nestle Milk, Kitkat,
Barone, Milky Bar etc.
 Multinational Corporations
 It Setup offices and factories for production in
regions where they can get cheap labour and other
resources.
 This helps in greater profits to
the company as cost of production is low.
Their goods and services are produced
globally
Result = production is organized in
increasingly complex ways.
Production is divided in small parts across the
globe to gain advantage for their closeness to
the markets of every country and can be easily
produced there.
 INTERLINKING
PRODUCTION ACROSS
COUNTRIES
MNCs Setup production offices and factories
on the basis of the availability of skilled and
unskilled labour at cheap prices.
They look at the government
policies for their interests.
 Foreign Investment
The money that is spent on to buy assets such as:
Land, Building, Machines and other equipments
made in the hope of earning
profits by MNCs is called FOREIGN INVESTMENTS.
Any investment is made with the hope that these
assets will earn profits.
 MNC with the local companies
• MNCs set up production with the some of local
companies of these countries.
 Advantages to local companies
 Joint production is 2 fold
1. MNCs can provide additional investments like,
buying new machines for faster production
2. MNCs might bring them the latest technology

 MNCs investments is to buy up local companies

and then expand production.
 Large MNCs in developed countries place orders
for production with small producers like garments,
footwears etc.
 The products are supplied to the MNCs, which then
sell these under their own brand names to the
customers.
 The MNCs have tremendous powerto determine
• price
• Quality
• Delivery and
• Labour condition for these distant production.
 Interacting of MNCs and Local producers

 By setting up partnerships with local companies,

 By using the local companies for supplies,
 By closely competing with local companions
or buying them up.

 MNCs are exerting a strong influence on

production at there distant locations.
As a result, production in these widely dispersed
locations is getting interlinked.
FOREIGN TRADE AND
INTEGRATION OF
MARKETS
For a long time foreign trade has been the
main channel connecting countries.
 Impact Foreign Trade
Producer:-
This creates the opportunity for the producers
to reach beyond the domestic markets i.e.
markets of their own country.
Producers can then sell their goods not
only within their country but also
around the globe.
Consumer:-
 Import of goods produced in another country is one
way of expanding the choice of goods beyond what is
domestically produced.
Market:-
 Competition increases among local and foreign
companies.

FOREIGN TRADE THUS RESULT IN CONNECTING THE

MARKETS OR INTEGRATION OF MARKETS IN
DIFFERENT COUNTRIES.
 Competition increases

Made in India Made in China

more costly cheaper rate
Old design New design and
attractive
What is Globalization?
 Globalization
 “Globalization is the process of integration or
inter-connection between countries.”
 MNCs are playing role in the globalization
process.
 More and more goods and services, investments
and technology are moving between countries.
 Not only that, movement of human being from
one country to another also increases,
 Most region of the world is in closer contact with
each other than a few decade back.
 Factor responsible for Globalization
1. Technology
2. Development in telecommunication,computer,
internet etc.
Technology:
 Rapid improvement in technology has been
one of the major factors that has stimulated
the globalization process.
In the last 50 years, the world has witnessed a
major improvement in transportation
technology.
This has made much faster delivery of goods
across long distance at lower cost.
 Development in telecommunications,
computers, internet etc.
These has given a big boost to the process of
globalization.
Because of the modern facilities, it is very easy
to access information instantly, and to
communicate form remote areas. .
 Liberalization and Foreign trade and
investment
 Liberalization-The liberalization of trade means
allowing foreign companies to start their business
as government restrictions are removed.
 Trade Barier-some restriction on foreign goods
like tax on imports. Government can use trade
barriers to increase or decrease foreign trade and
to decide what kinds of goods and how much of
each, should come into the country.
The Indian government, after independence,
had put barriers to foreign investment
This was considered necessary to protect the
producer within the country from foreign
competition.
In 1991, the government decided that time
had come for Indian producers to compete
with producers around the globe.
It felt that competition would improve the
performance of producers within the country
since they would have to improve their
quality.
Barriers to foreign trade and foreign
investment were removed to a large extent.
Removing of these restrictions/ barriers set by
the government was termed as liberalization.
 World Trade Organization
 WTO or the World
Trade Organization is an
organization which
deals with the rules of
trade among the
nations.
 WTO is one such
organization whose aim
is to liberalize
international trade.
Though WTO is supposed to allow a free trade
to 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 the trade
barriers.
 Impact of Globalization in India
1. Consumer:
Globalization and greater competition among
producers has been advantage to consumers.
 Consumers now enjoy improved quality with
low prices for several products.
As a result, these people enjoy higher
standard of living than was possible realier.
2. Producer:
a. Foreign Investment in India:
b. New Technology and production methods.
c. Rise of Indian multinational co-operation.
d. Loss to small producers
e. employment opportunities
 Steps of fair globalization.

Proper implementation of labour laws.

• Financial support to small producers
• Negotiation with WTO
 Bibliography
• Content-NCERT Textbook
• Image- Google Image
Thank you