 Globalisation is the new buzzword that has

come to dominate the world since the nineties

of the last century with the end of the cold war
and the break-up of the former Soviet Union
and the global trend towards the rolling ball.
The process of globalisation
 includes opening up of world trade
 internationalisation of financial markets
 population migrations
 more generally increased mobility of
persons, goods, capital, data and ideas
Impact on India
Over the years more and more sectors
opened up:
• foreign direct investments
portfolio investments facilitating
•
entry of foreign investors
in telecom, roads, ports, airports,
insurance and other major sectors
Impact on India
• This issue is particularly important for the
Indian economy, where services have grown
faster than manufacturing in the last ten
years.
• Services have grown at an annual rate of 8
per cent while manufacturing has grown by 6
per cent.
• The faster growth of services is largely due to
the fast growth of the use of IT in domestic
and foreign industry and services.
Phases of Globalisation
Phase 1: “Humanising” the globe
• Consumption moves to production.
• Trade is rare.

Phase 2: “Localising” the world economy (12,000

BCE - 1820)
• Bundling of production and consumption
• Agriculture allows people to move production
to consumers.
• Trade is rare but regular.
Phases of Globalisation
Phase 3: The Old Globalisation (1820 - 1990)
• Production & consumption separate
geographically.
• Trade increases massively.

Phase 4: The New Globalisation (1990 - Now)

• Factories separate geographically (offshoring).
• Trade and international knowledge flows
increase massively
 By 2025 the India's economy is projected to be
about 60 per cent the size of the US economy.
 The transformation into a tri-polar economy
will be complete by 2035, with the Indian
economy only a little smaller than the US
economy but larger than that of Western
Europe.
 By 2035, India is likely to be a larger growth
driver than the six largest countries in the EU,
though its impact will be a little over half that
of the US.
India, which is now the fourth largest
economy in terms of purchasing power
parity, will overtake Japan and become third
major economic power within 10 years
India’s share of world merchandise exports
increased.

Exports have reached a record figure of US $

102.7 billions during the financial year
2005-06. India’s exports grew by 22.5 per
cent in August 2010 to 16 billion US Dollars.
The sectors registering healthy exports growth
include:

• cottonyarn, gems and jewellery, iron ore,

engineering and petroleum, oil and
lubricants.
• However, the readymade garments,
handicrafts, handlooms and carpets sectors
are still in bad shape.
 Impact on the Government

 Positive effects o Negative effects

 Increased economic
development  MNC power increased
 Expanded  MNCs externalize cost to
infrastructure countries
 Transfer of modern
 Competition results in
management
techniques too many concessions
 Greater  MNCs influence local
interdependence among policies
business partners  Companies incorporate
in low tax countries
 Pressure to reduce social
benefits
• Positive effects  Negative effects
• Increased job  Job displacement
opportunities  Loss of industries or
• Upgraded economic groups
education  Lowered labor
system standards
• Increased  Downward wage
training pressure
 Decreased union power
 Diminished social
contract
  Globalization lets countries do what they can do
best. If, for example, you buy cheap steel from
another country you don’t have to make your
own steel. You can focus on computers or other
things.

 Globalization gives you a larger market.

You can sell more goods and make more
money. You can create more jobs.

 Consumers also profit from globalization.

Products become cheaper and you can get
new goods more quickly.
  Globalization causes unemployment in
industrialized countries because firms move
their factories to places where they can get
cheaper workers.

 Globalization may lead to more environmental problems. A

company may want to build factories in other countries
because environmental laws are not as strict as they are at
home. Poor countries in the Third World may have to cut
down more trees so that they can sell wood to richer
countries.