Globalisation and the Indian Economy · Class 10 Economics: 78 flashcards
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1. What is globalisation?
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The process of rapid integration or interconnection between countries, through greater foreign trade and foreign investment.
2. What is an MNC?
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A company owning or controlling production in more than one country at a time.
3. Why do MNCs set up production in other countries?
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To get cheap labour and other resources, so that costs are low and profits are greater.
4. What is investment?
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Money spent to buy assets such as land, buildings, machines and other equipment.
5. What is foreign investment?
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Investment made by MNCs in another country.
6. What has happened to foreign investment by MNCs in the past two to three decades?
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It has been rising, as more MNCs look for cheap locations for production.
7. What is the basic function of foreign trade for producers?
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It gives them an opportunity to reach beyond domestic markets and compete in markets of other countries.
8. What does foreign trade do for buyers?
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It expands their choice of goods beyond what is produced domestically.
9. How does foreign trade integrate markets?
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Goods travel between markets, choice rises, prices of similar goods tend to become equal, and producers in different countries compete closely.
10. Distinguish foreign trade from foreign investment.
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Foreign trade is buying and selling goods across countries; foreign investment is MNCs buying assets such as land, buildings and machines in other countries.
11. What has been the result of greater foreign investment and greater foreign trade?
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Greater integration of production and markets across countries.
12. What role do MNCs play in globalisation?
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A major role: they invest across countries and control much of foreign trade, linking production and markets.
13. How did Ford Motors' Indian plant link markets?
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It produced cars for India, exported cars to other developing countries and exported car components to its factories around the world.
14. Name five ways in which countries can be linked.
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Movement of goods, services, investments, technology and people.
15. Why do people move between countries?
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In search of better income, better jobs or better education.
16. Why has movement of people between countries not increased much?
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Because of various restrictions.
17. What effect does globalisation have on competition among producers?
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It increases competition, since producers in connected countries compete in each other's markets.
18. Which three things moved rapidly between countries in recent decades, according to the exercise?
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Goods, services and investments.
19. What was the main channel connecting countries in the past, and how is it different now?
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In the past it was foreign trade; now, besides trade, foreign investment by MNCs also links countries.
20. In what limited sense does the chapter study globalisation?
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As integration between countries through foreign trade and foreign investment by MNCs.
21. Name one major factor that stimulated globalisation.
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Rapid improvement in technology.
22. What have improvements in transportation technology made possible?
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Much faster delivery of goods across long distances at lower costs.
23. How do containers work in transport?
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Goods go into containers which are then moved whole — onto a ship, a railway wagon, a plane or a truck — without being unpacked.
24. State two benefits of containers.
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A huge reduction in port handling costs, and faster delivery of exports to markets.
25. What has happened to the cost of air transport, and with what effect?
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It has fallen, enabling much greater volumes of goods to be transported by airlines.
26. What does information and communication technology include?
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Telecommunications, computers and the Internet.
27. Name four telecommunication facilities mentioned in the chapter.
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Telegraph, telephone, mobile phones and fax.
28. What do telecommunication facilities allow people to do?
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Contact one another around the world, access information instantly and communicate from remote areas.
29. Which devices have helped telecommunication reach across the world?
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Satellite communication devices.
30. What does the Internet allow people to do?
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Obtain and share information on almost anything, and send e-mail and voice-mail across the world at negligible cost.
31. What role has IT played in globalisation?
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A major role in spreading out production of services across countries.
32. In the magazine example, how does the text reach Delhi?
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Through the Internet.
33. How do the Delhi designers get instructions from London?
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Through telecommunication facilities.
34. How is the magazine designed, and how does it reach London?
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It is designed on a computer, printed in Delhi and sent to London by air.
35. How is payment made for the magazine?
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Instantly, from a bank in London to a bank in Delhi, through the Internet (e-banking).
36. Would globalisation have been possible without the expansion of IT?
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Not at its present speed and scale; IT lets firms coordinate work and move payments instantly across countries.
37. Give an example of a service whose production has spread across countries because of IT.
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Call centres providing customer care abroad (also design, data entry, accounting).
38. Over roughly what period has transport technology improved, according to the chapter?
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The past fifty years.
39. Which is described as 'even more remarkable' than transport improvements?
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Developments in information and communication technology.
40. What do the two kinds of technology do for globalisation?
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Transport technology moves goods faster and cheaper; IT moves information and coordinates production instantly.
41. What is a trade barrier?
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A restriction set up by the government on foreign trade, such as a tax on imports or a quota.
42. Why is a tax on imports called a trade barrier?
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Because it sets up a restriction that makes imports costlier and reduces them.
43. What happens if India puts a tax on imported Chinese toys?
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Imported toys become costlier, Chinese toys are no longer as cheap, imports fall, and Indian toy-makers prosper.
44. What is a quota?
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A limit on the number of goods that can be imported.
45. How could a quota be used on Chinese toys?
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The government could allow only a fixed number of Chinese toys to be imported, however cheap they are, protecting Indian toy-makers.
46. Why do governments use trade barriers?
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To turn foreign trade up or down as it chooses, and to settle which goods may enter the country and in what quantity.
47. Why did India put barriers on foreign trade and investment after Independence?
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To protect producers within the country from foreign competition while industries were just coming up.
48. When were Indian industries 'just coming up'?
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In the 1950s and 1960s.
49. Which imports did India allow after Independence?
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Only essential items such as machinery, fertilisers and petroleum.
50. Did developed countries also protect their producers?
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Yes — all developed countries did so during their early stages of development.
51. When did India begin far-reaching changes in trade and investment policy?
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Around 1991.
52. Why did India decide to remove barriers from around 1991?
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It felt competition with producers around the globe would improve the performance and quality of Indian producers.
53. Who supported India's 1991 decision to liberalise?
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Powerful international organisations.
54. What changed after barriers were removed?
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Importing and exporting became straightforward, and foreign companies could open factories and offices here.
55. Define liberalisation.
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Removing barriers or restrictions set by the government.
56. What does liberalisation of trade allow businesses to do?
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Decide freely what they wish to import or export.
57. Why is the government called 'more liberal' after liberalisation?
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Because it imposes far fewer restrictions than before.
58. How has liberalisation helped globalisation?
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By removing barriers, it let foreign trade grow and MNCs invest, integrating India with the world economy.
59. Name two trade barriers.
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A tax on imports and a quota.
60. Were barriers removed completely in 1991?
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No, they were removed to a large extent, starting around 1991.
61. Is this topic examined in the board paper?
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No. It is part of the interdisciplinary project, internally assessed for 5 marks.
62. Where do MNCs prefer to set up production?
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Close to markets, where skilled and unskilled labour is cheap, where other factors of production are assured, and where government policies suit them.
63. What are two benefits to a local company of joint production with an MNC?
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The MNC can provide money for additional investment such as new machines, and bring the latest technology.
64. What is the most common route for MNC investment?
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Buying up local companies and then expanding production.
65. Which company did Cargill Foods buy in India?
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Parakh Foods.
66. In which industries do MNCs place orders with many small producers?
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Garments, footwear and sports items.
67. When did Ford Motors come to India, and how much did it invest?
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In 1995, spending Rs 1,700 crore on a plant near Chennai with Mahindra and Mahindra.
68. How did Chinese toys in Indian markets affect Indian buyers and toy-makers?
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Buyers got more choice at lower prices; Indian toy-makers faced losses.
69. What is the aim of the WTO?
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To liberalise international trade.
70. At whose initiative was the WTO started?
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Developed countries.
71. Why do developing countries call WTO rules unfair?
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Developed countries have retained trade barriers such as huge support to their farmers, while developing countries were forced to remove theirs.
72. Name three Indian companies that became multinationals.
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Any three: Tata Motors, Infosys, Ranbaxy, Asian Paints, Sundaram Fasteners.
73. What are Special Economic Zones?
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Industrial zones with world-class facilities, where companies pay no taxes for an initial five years, set up to attract foreign investment.
74. Which small industries were hit hard by competition?
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Batteries, capacitors, plastics, toys, tyres, dairy products and vegetable oil.
75. Who has benefited most from globalisation, according to the chapter?
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Well-off consumers and people with education, skill and wealth.
76. What is fair globalisation?
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Globalisation that creates opportunities for all and ensures its benefits are shared better.
77. Name two steps the government can take for fair globalisation.
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Ensure labour laws are implemented, and support small producers until they can compete (also: negotiate fairer WTO rules, use barriers if necessary).
78. How can people's organisations help fair globalisation?
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Through campaigns and representation that have influenced trade and investment decisions at the WTO.
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