Globalisation And The Indian Economy Class 10 Notes Economics Chapter 4

What are Globalisation and the Indian Economy?

Globalisation

Globalisation can be defined as the integration between countries through foreign trade and foreign investments by multinational corporations (MNCs).

Today’s markets are consumers’ paradise

We as consumers have a wide variety of products available for our requirements. Smart watches, smart mobile phones, smart cars, smart fridges have all become the reality of today. We have a large number of choices available in almost all the products. This was not so before two decades ago.

MNCs

  • An MNC is a company that owns or controls production in more than one nation.
  • The advent of MNCs or Multinational Corporations made a wide variety of choices possible for the consumers.
  • An MNC decides about establishing production facility in any country on the basis of availability of cheap raw material, availability of cheap and quality labour force and proximity to the markets.

Modes of foreign investment by MNCs

  • By establishing production facilities itself.
  • By purchasing an existing factory.
  • By outsourcing or entering into joint venture with some existing company.

Integration of economies

Foreign trade and foreign investments have integrated the economies of the world. By making available the same products all over the globe or the availability of same product in various countries leads to price equilibrium, foreign trade and foreign investments which signifies the integration of the economies of the world.

Globalisation is the process of integration of economies of the world in which MNCs play a vital role. These MNCs, by developing their economic interests in more than one country, sourcing their resources from various countries and supplying their products to various countries, have truly proved to be a great integrating force.

Forces influencing globalisation

  • Technology, especially communication and transportation technologies.
  • Liberalisation policies.
  • International institutions like the WTO.
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  • 1. Globalisation : Globalisation can be defined as the integration between countries through foreign trade and foreign investments by Multinational Corporations (MNCs).
  • 2. Multinational Corporations (MNCs) : An MNC is a company that owns or controls production in more than one nation.
  • 3. Investment : Expenditure incurred to buy assets such as land, building, machines and other equipments for further production is called investment.
  • 4. Foreign Investment : Investment made by MNCs is called foreign investment.
  • 5. Foreign Trade : Foreign trade refers to the export
  • and import of goods by various countries.
  • 6. Trade barrier : A trade barrier refers to some restriction on the trade.
  • 7. Liberalisation : It refers to the relaxation of foreign trade and foreign investment rules by the government of the country.
  • 8. World Trade Organisation : World Trade Organisation (WTO) is an organisation whose aim is to liberalise international trade.
  • 9. Special Economic Zone (SEZ) : SEZs are confined industrial zones that have world-class facilities like electricity, water, roads, transport, storage, recreational and educational facilities.