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 PRODUCTION ACROSS
COUNTRIES
❖ Trade in India was existed since from the ancient
period.

❖ Production was largely organised within countries till

the mid of 20th Century.

❖ India exported raw materials and food stuff and

imported finished goods during British rule.

❖ At the end of 20th century the Multinational

Corporations have emerged across the world.
What are Multinational Corporations?

A multinational corporation is a company that

operates in its home country, as well as in other
countries around the world.
 Product Designing
in USA

MNCs Cheap
Skilled work as Manufacturing
Engineers - agencies
location - China
India of
globalisation

Market - Mexico
and Eastern
Europe
 INTERLINKING PRODUCTION ACROSS
COUNTRIES

Closeness to the markets.

Availability of skilled and unskilled labour at

low costs.

Favourable government policies that look after

the MNC’s interests.
Investment
Money spent to buy assets such as land,
building, machines, etc.
Foreign Investment
Investment made by MNCs

Profits
How do MNCs spread their production?

● An MNC set up production jointly with local

companies of the country (Joint production).

● Most common route for MNCs investments is to buy

up local companies and then to expand production.
E.g. Cargill Foods.

● MNCs place their orders for production with small

producers and sell under their own brand name.

● MNCs have power of determining price, quality,

delivery, and labour conditions, etc.
FOREIGN TRADE AND INTEGRATION OF
MARKETS

Foreign trade refers to any

transaction of products, services
and capital crossing borders and
nations.
 Functions

Expands
market for Price Drop
producers

Consumer Competition
choice
 WHAT IS GLOBALISATION?

Globalization is a process of interaction and integration

among the people, companies, and governments of
different nations.

Under Globalisation, there is a movement of:

● People
● Goods & services
● Investments
● Technology between the countries.
 FACTORS THAT HAVE ENABLED
GLOBALISATION

Information &
Communication

Rapid
improvement
in technology
LIBERALIZATION OF FOREIGN TRADE &
FOREIGN INVESTMENT POLICY

Liberalisation: Removing barriers or

restrictions set by the government.

Tax Barriers: Tax on imports which restrict

foreign trade.
 LPG POLICY: 1991

Barriers on foreign trade and

foreign investment were
removed in India.
 Benefits
❖ Businesses were allowed to make decisions
freely about what they wish to import or
export.

❖ Goods could be imported and exported easily

and foreign companies could set up factories
and offices easily across the world.
 WORLD TRADE ORGANISATION

Established on: 1 January 1995

Objective: to liberalise international trade.

Set rules regarding international trade, and sees that

these rules are obeyed.

Members:
Nearly 160 countries of the world are the members of
the WTO (as per 2014)
WTO is supposed to allow free trade for all, but in
practice, developed countries have unfairly retained
trade barriers.

For Example: Different rules set for agricultural

development in India and USA.
 IMPACT OF GLOBALISATION IN INDIA
Benefits
to the
Indian
Producers

❖ Greater competition among Indian producers.

❖ Top Indian companies are able to benefit from the

increased competition.

❖ For Example: Tata Motors (automobiles),

Infosys (IT), Ranbaxy (medicines), etc.

❖ Investments were made in newer technology and

production methods.

❖ Increased in production standards.

Benefits to
the Indian
Consumers

❖ Greater choice before the consumers

❖ Improved quality products

❖ Lower prices for products

❖ Higher standards of living

Benefits
to the
Indian
Economy
❖ Successful collaborations with foreign
companies.

❖ New opportunities for companies

providing services, particularly those
involving IT.

For example:
Indian company producing a magazine for
the London based company and call centres.

❖ New jobs have been created.

❖ Local companies supplying raw

materials, to the MNCs have prospered.
Benefits
to MNCs

MNCs have their interests in;

● cell phones
● automobiles
● electronics
● soft drinks
● fast food
● services such as banking in urban areas.
❖ Central and state governments in India are
taking special steps to attract foreign
companies to invest in India.

❖ Industrial zones, called Special Economic

Zones (SEZs), are being set up.

❖ SEZs are to have world class facilities:

● Electricity
● Water
● Roads
● Transport
● Storage
● Recreational and
● Educational facilities
● Companies in SEZs do not have to pay taxes for
an initial period of five years.

● Government has also allowed flexibility in the

labour laws to attract foreign investment.

● Small producers compete or perish.

● For Example: Manufacturers of batteries, toys,

capacitors, plastics, dairy products, etc have
been hit hard due to competition.
Globalisation
& Workers

❖ Globalisation and the pressure of

competition have changed the lives of
workers.

❖ Companies hire workers ‘flexibly’ for short

periods.

❖ Wages are low.

❖ Most workers, today, are employed in the

unorganised sector.
 THE STRUGGLE FOR A FAIR
GLOBALISATION

➢ Globalisation is advantageous only to the

people with education, skill and wealth.

➢ Government must ensure;

○ Labour laws are properly implemented
and the workers should get their rights.

○ To support small producers to improve

their performance.
● Use trade and investment barriers.

● Negotiate at the WTO for ‘fairer rules’.

● Can align with other developing countries with

similar interests to fight against the domination
of developed countries in the WTO.

● People also can play an important role in the

struggle for fair globalisation.
Reach out to me at :
ankana.kumari@vedantu.com