Globalisation and the Indian Economy · Class 10 Economics: quick revision, 46 bites

Globalisation

One world, many links.

Takeaway. Countries tied closer together.

MNC

More than one country.

Takeaway. Production across borders.

Foreign Investment

Buying assets abroad.

**Investment** = money spent on land, buildings, machines and equipment. When an **MNC** makes it, it is **foreign investment**.

Takeaway. Made in hope of profit.

Looking for Cheap Locations

Why MNCs move.

In the past two to three decades, MNCs have looked for places **cheap for production** — so foreign investment has been **rising**.

Takeaway. Cheap labour and resources.

Foreign Trade Integrates Markets

Markets meet.

Takeaway. Integration of markets.

Ford Motors in India

One plant, many markets.

Produced cars for Indian buyers, **exported cars** to other developing countries and **exported car components** to its factories worldwide.

Takeaway. MNCs control much foreign trade.

Trade + Investment = Integration

Put it together.

Greater **foreign investment** and greater **foreign trade** → greater **integration of production and markets** → **globalisation**.

Takeaway. MNCs play a major role.

How Countries Are Linked

Five kinds of links.

Takeaway. G-S-I-T-P.

Restrictions on Movement of People

People move least.

People move for better jobs, income or education, but movement has **not increased much** because of **various restrictions**.

Takeaway. Goods move freely; people less so.

Greater Competition

Tougher rivals.

By connecting countries, globalisation results in **greater competition among producers**.

Takeaway. Local and foreign producers compete.

Goods, Services, Investments

The MCQ trap.

Recent decades saw rapid movement of **goods, services and investments** — not people. Pick the option without 'people'.

Takeaway. Exercise 13(i).

The Chapter's Meaning of Globalisation

A narrow lens.

The chapter studies globalisation in an **economic** sense — integration through **foreign trade and foreign investment by MNCs** — not its cultural or political sides.

Takeaway. Stay within the chapter's definition.

Technology Stimulated Globalisation

What pushed globalisation?

**Rapid improvement in technology** has been one major factor behind globalisation — moving **goods** and **information** faster and cheaper.

Takeaway. Factor number one.

Transportation Technology

Fifty years of change.

Improvements in the past **fifty years** have let **goods travel long distances far faster** and at **lower cost**.

Takeaway. Faster and cheaper.

Containers

The humble box.

Goods packed in containers are loaded **intact onto ships, railways, planes and trucks**.

Takeaway. Cheaper, quicker trade.

Cheaper Air Transport

Cargo by air.

Air transport costs have **fallen**, so airlines carry **much greater volumes of goods**.

Takeaway. More goods fly.

Information and Communication Technology

Even more remarkable.

Takeaway. Information moves instantly.

Satellites and Telecom

Reaching remote areas.

Telecom facilities, helped by **satellite communication devices**, let people contact the world, access information instantly and communicate from **remote areas**.

Takeaway. Distance no longer isolates.

The Internet

Almost free messages.

Obtain and share information on almost anything; send **e-mail** and talk (**voice-mail**) across the world at **negligible cost**.

Takeaway. Cheap global communication.

IT at Work

A London magazine, made in Delhi.

Takeaway. Services produced across countries.

IT Spreads Production of Services

Services go global.

IT has played a **major role in spreading out production of services** — design, call centres, data work — across countries.

Takeaway. Exercise 12(iv): call centres.

IT and Globalisation

Would it happen without IT?

Argue that IT lets firms coordinate work and move payments instantly across continents; without its expansion, the present **speed and scale** of globalisation would not have been possible.

Takeaway. Answer with reasons, not just 'no'.

Name Both Kinds of Technology

Not just the Internet.

Takeaway. Two halves of one factor.

The Textbook Cartoon

Who benefits?

A child asks why a London magazine is printed beautifully in Delhi while her own textbook is hard to read — technology's benefits may not reach everyone.

Takeaway. A question of fair sharing.

Trade Barrier

Not a wall.

Takeaway. A barrier restricts.

An Import Tax on Chinese Toys

Tax the toys.

Importers pay the tax → toys cost more → Chinese toys lose their price advantage → **imports fall** → **Indian toy-makers prosper**.

Takeaway. Tax protects local producers.

Quota

Only so many.

Takeaway. Caps quantity, not price.

Governments Regulate Trade

Why barriers?

Barriers let governments **increase or decrease** foreign trade and decide **what kinds of goods, and how much**, should enter.

Takeaway. A tool of regulation.

Protection After Independence

Young industries need shelter.

Barriers on **foreign trade and investment** protected Indian producers while industries were **just coming up in the 1950s and 1960s**.

Takeaway. Shield first, compete later.

Developed Countries Protected Too

India was not alone.

All developed countries protected their producers in their **early stages of development**.

Takeaway. Protection is a common stage.

1991: Time to Compete

The big change.

Takeaway. Barriers removed to a large extent.

Liberalisation

Fewer rules.

Takeaway. Less restriction.

After Liberalisation

What changed on the ground.

**Bringing goods in and sending them out became straightforward**, and **foreign companies were free to open factories and offices** in India.

Takeaway. Trade and investment opened up.

How Liberalisation Helped

The link to globalisation.

Removing barriers let **foreign trade grow** and **MNCs invest**, integrating India's production and markets with the world.

Takeaway. Exercise 7.

Why Barriers, Why Remove Them?

Two-part question.

**Put up**: to protect young industries of the 1950s-60s from foreign competition. **Removed**: from 1991, so competition would improve producers' performance and quality.

Takeaway. Exercise 2 of the chapter.

Not More Government

What does liberal mean?

Takeaway. Less restriction.

Project Topic — Not on the Board Paper

Read this first.

Takeaway. Use for the project.

Where MNCs Set Up

Where do MNCs go?

Takeaway. Low cost, big markets.

How MNCs Spread Production

Three routes.

Takeaway. Partner, Buy, Order.

Cargill and Parakh Foods

A takeover.

American MNC **Cargill** bought **Parakh Foods**, its marketing network and four refineries — becoming India's largest edible oil producer (5 million pouches daily).

Takeaway. Buying local firms.

Chinese Toys in India

Winners and losers.

Takeaway. Trade integrates markets.

The WTO

Rules for world trade.

Started at the initiative of **developed countries**; aims to **liberalise international trade**; about **160** members.

Takeaway. Free trade, unequally applied.

Benefits of Globalisation

Who gained?

Well-off consumers got choice and quality; MNCs and their suppliers grew; Indian firms like **Tata Motors, Infosys, Ranbaxy** became MNCs; IT services expanded.

Takeaway. Skill, education, wealth helped.

Costs of Globalisation

Who struggled?

Small producers (capacitors, toys, tyres, dairy, vegetable oil) were hit hard; workers moved to **temporary, lower-paid** jobs.

Takeaway. Impact was not uniform.

SEZs and Flexible Labour

Attracting investment.

**SEZs** offer world-class facilities and **no taxes for five years**; governments also allowed **flexibility in labour laws**, so firms hire workers for short periods.

Takeaway. Good for firms, hard on workers.

Fair Globalisation

A better deal.

Create **opportunities for all** and **share benefits better** — through labour law enforcement, support for small producers, fairer WTO rules and people's campaigns.

Takeaway. Government and people both have roles.