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Globalization:

What is Globalization?
Some popular opinions are a s follows
-

The increasing interconnection of the worlds economic, cultural and political systems.
As per Legrain globalization is the way in which peoples lives are becoming increasingly
intertwined with those of distant people and places around the world economically, culturally
and politically .
As per Robertson (1992) globalization as a concept refers both to the compression of the world
and the intensification of consciousness of the world as a whole.
The growing interdependence of countries worldwide through the increasing volume and
variety of cross border transactions in goods and services and of international service capital
flows, and through the more rapid and widespread diffusion of technology--- (IMF) Guardian
report.

Modern Form of globalization


-

It is the actual period in which globalization took another phase, it worked towards promotion
of free trade
Globalization has been facilitated by advances in technology which have reduced the costs of
trade and trade negotiation rounds, originally under the auspices of the General Agreement on
Tariffs and Trade (GATT)
Barriers to international trade have been considerably lowered through international
agreements such as GATT

Main Form of globalization


1) Economic:
Under both the General Agreement on Tariffs and Trade (GATT) and its successor the World Trade
Organization (WTO), world trade has expanded rapidly.
TNCs have been the major force in increasing economic interdependence and several generations of
newly industrialized countries have emerged.

2) Cultural
Mixing of cultures has occurred through
-

Migration
Rapid spread of news, ideas and fashions through the media, trade and travel
Growth of global brands Nike, Coca cola, MacDonalds

Western culture has diffused to all parts of the world through television, cinema, the internet,
newspapers and magazines. This has been reflected in media, art, sport and leisure pursuits.

3) Political
The influence of nation states has diminished in many areas as more and more countries organize
themselves into trade blocs. The influence of western democracies on developing countries has also
been strong.
Relationships are also political the increasing role played by the United Nations around the world
epitomizes the developing cooperation between nations.
Growing importance of cross border pressure groups Friends of the Earth, Amnesty International
global civil society. Their actions have led to international rules on trade, environment, human rights,
war etc.

Globalization can be seen in terms of:


-

Urban - a hierarchy of global cities has emerged to act as Centres for the global economy
Demographic the growth of international migration and the rise of multicultural societies
Linguistic the emergence of English as the working language of the global village
Environmental the impact of activity in one country has a clear impact in others e.g. the
spread of pollutants and the impacts of global warming

Globalization is caused by four fundamental forms of capital movement throughout the global economy.
The four important capital flows are:-

Human Capital
Financial Capital
Resource Capital
Power Capital

Effect of globalization
-

Industrial
Financial
Economic
Political
Informational
Language

Competition
Competition
Cultural
Ecological
Social

Technical
Legal

Advantages
-

Goods and people are transported with more easiness and speed
The possibility of war between the developed countries decreases
Free trade between countries increases
Global mass media connects all the people in the world
The global village dream becomes more realistic
There is a propagation of democratic ideals
The interdependence of the nation-states increases
As the liquidity of capital increases, developed countries can invest in developing ones
The flexibility of corporations to operate across borders increases
The communication between the individuals and corporations in the world increases

Disadvantage
-

Increased flow of skilled and non-skilled jobs from developed to developing countries
Increased likelihood of economic disruptions in one nation affecting all nations
Corporate influence of nation-states far exceed of civil society organization and average
individuals
Threat that control the world media by a handful of corporation that limit cultural expression
Greater chance of reactions for globalization being violent in an attempt to preserve cultural
heritage.
Greater risk of diseases being transported unintentionally between nations
Spread of a materialistic lifestyle and attitude that sees consumption as the path to prosperity
International bodies like the World Trade Organization infringe on national and individual
sovereignty

Indian Economy
India opened up the economy in the early nineties following a major crisis that led by a foreign exchange
crunch that dragged the economy close to defaulting on loans.
Thus, Indian economy had experienced major policy changes in early 1990s. The new economic reform,
popularly known as, Liberalization, Privatization and Globalization .
(LPG model) aimed at making the Indian economy as fastest growing economy and globally competitive.
The series of reforms undertaken with respect to industrial sector, trade as well as financial sector
aimed at making the economy more efficient.
Indian economy was in deep crisis in July 1991, when foreign currency reserves had plummeted,
inflation had roared, fiscal deficit was very high and had become unsustainable; foreign investors and
NRIs had lost confidence in Indian economy. So major measures were initiated as a part of the
liberalization and globalization strategy in the early nineties included the following:-

Devaluation
Disinvestment
Dismantling of The Industrial Licensing Regime
Allowing Foreign Direct Investment
Non Resident Indian Scheme Throwing Open Industries Reserved For The Public Sector to
Private Participation.
Abolition of the (MRTP) Act
The removal of quantitative restrictions on imports

The reduction of the peak customs tariff


Wide-ranging financial sector reforms

At the present, we can also say about the tale of two Indias. We have the best of times; we have the
worst of times. There is sparkling prosperity, there is stinking poverty. We have dazzling five star hotels
side by side with darkened ill-starred hovels. We have everything by globalization, we have nothing by
globalization.

Bright Side of Globalization:


Particulars

1980-90

1993-2001

GDP
AGR(GDP)
FER
Cum FDI
GOM

5.6%

7.0%
$ 39 B

2003-04

2004-05

2005-2006

2006-07

7.5%
$ 107 B

8.5%
$ 145 B

9.0%
$ 180 B

9.2%

Growth
Rate
1.4%
1.7%
$ 141 B

$ 43.29 B
$ 50 B Note : Covers 45% of global market

FER: Foreign exchange reserve, GOM: gross operating Margin, GDP: Gross domestic product

Export increased by 24 percent in 2004-05 as compared to previous year. It stood at US $ 79 billion in


2004-05 compared with US $ 63 billion in the previous year.

Dark Side of Globalization:


On the other side of the medal, there is a long list of the worst of the times
-

(Demoting) Agriculture
Growth of poverty and unemployment
Degrading society
Growth of slum capitals

GDP Growth Rate


-

The global economy experienced an overall deceleration and recorded an output growth of
2.4% during the past year growth in real GDP in 2001-02 was 5.4% as per the Economic Survey in
2000-01. The performance in the first quarter of the financial year is5.8% and second quarter is
6.1%.
Indias imports in 2004-05 stood at US$ 107 billion recording an increase of 35.62 percent
compared with US$ 79 billion in the previous fiscal.
Latest GDP numbers indicate a growth of 5.5% in Q1 of 2012-13. This growth rate is slightly
higher than the 5.3% growth registered in Q4 of FY12, a consecutive decline for five quarters.
See chart below

Where does India stand


-

Over the past decade FDI flows into India have averaged around 0.5% of GDP against 5% for
China 5.5% for Brazil. Whereas FDI inflows into China now exceeds US $ 50 billion annually. It is
only US $ 4billion in the case of India

Consider global trade - India's share of world merchandise exports increased from .05% to .07%
over the part 20 years. Over the same period China's share has tripled to almost 4%

India's share of global trade is similar to that of the Philippines economy 6 times smaller
according to IMF estimates. India under trades by 70-80% given its size, proximity to markets
and labor cost advantages

Future Challenges
-

Sustaining the growth momentum and achieving an annual average growth of 9-10 %
Simplifying procedures and relaxing entry barriers for business
Boosting agricultural growth
Expanding industry
Developing world-class infrastructure
Allowing foreign investment in more areas
Effecting fiscal consolidation and eliminating the revenue deficit
Protecting domestic culture
proper pricing mechanisms and better direction of subsidies
Empowering the population

Globalization

Globalization is a process of interaction and integration among the people, companies, and
governments of different nations
It is a process driven by international trade and investment and aided by information technology
This process has effects on the environment, on culture, on political systems, on economic
development and prosperity, and on human physical well-being in societies around the world.

Globalization is not a novel phenomenon and entire 2 Millennium is marked by global trade and
annexation. The global business also picked up trade before 1st world war. But the pace of
globalization at present is unprecedented

Liberalization

Liberalization generally refers to the removal of restrictions; usually government rules and
regulations imposed on social, economic, or political matters.
Liberalization maybe trade, social, economic, or capital market related
Trade liberalization maybe with regard to reducing restrictions on imports or exports and
facilitating free trade

Also http://www.projectguru.in/publications/benefits-of-globalisation-to-india/