CLASS X TERM II

GLOBALISATION

Q1) Explain visible impacts of globalization on the Indian economy, with two
examples.

Ans. i) New jobs have been created in industries where MNCs have invested such as
electronics, fast food, cell phones etc.

ii) Some Indian companies have become multinational themselves due to

globalization, e.g. Tata motors, Ranbaxy.

Q2) What is globalization? Mention two main shortcomings of globalization in the

context of India.

Ans. i) Globalization means that various economies of the world move in a manner
that leads to emergence of well integrated and cohesive global economy,

Shortcomings are as follows.

i) Small manufacturer producing toys, vegetables oils, etc have been hit hard
due to competition.
ii) ii) In order to cut costs of the products, employers in exports industry try to
cut labor cost. Workers job is no longer secure.

Q3)What are the various ways in which countries can be linked?

Ans.i) MNCs can jointly produce with local companies of other countries.

ii) MNCs can buy the local companies.

iii) MNCs can place order for production with small producers of other countries.

Q4)What are the ways in which MNCs set up or control, production in other
countries?

Ans. i) Directly set up offices and factories for production.

ii) Set up production with some of the local companies of these countries.

iii) Buy up local companies and then expand.

iv) Place orders for production with small producers of the countries e.g.
garments, footwear, etc

Q5) Distinguish between foreign trade and foreign investment?

Ans. foreign investment refers to investment directly made in industry or other

spheres of economic activity of a country by foreign industrial houses or MNCs.
Foreign trade refers to exchange of goods purchase and sale across geographical
boundaries of the countries.

Q6. Why do developed countries want developing countries to liberalize their trade
and investment? Ans. developed countries feel that all the barriers to foreign trade
and investment are harmful for international trade. They want that trade between
countries should be free. Developed countries like USA, UK have high production
capacity and latest technology. They want their surplus produce to sell in other
countries and utilize their technology to their optimal use.

Q7) What are the impacts of globalization in India?

i) Wide variety of good is now available to the consumers.

ii) New jobs are created in industries.

iii) Local companies have prospered through supplying raw materials to the
industries.

iv) Top Indian companies have benefitted for successful collaborations with foreign
companies.

Q8) What are the fears of globalization?

i) globalization may not help in achieving sustainable development

ii) It may lead to widening of income inequalities among various countries.

iii) It may lead to greater dependence of underdeveloped countries on advanced

countries.

iv) It may impart some instability in worlds economies.

Q9) list some features of MNCs.

Ans. i) they are of giant size. The assets and sales of MNCs run into billions of
dollars and they also make supernormal profits.

ii) A multinational conducts international operations.

iii) It grows in a spontaneous and conscious manner.

Q10) How has competition benefitted people in India?

Ans. Due to competition, buyers can easily get good variety of quality products of
different countries at reasonable price. Producers now sell their products not only in
domestic market but also in different countries and thereby increase their profits.

ONE MARK QUESTIONS.

1. Company that owns or controls production in more than one nation

Ans.-MNCs.

2. Investment made by MNCs is called

Ans. foreign investment

3. Cargill foods a very large American MNC , has bought over smaller Indian
companies such as

Ans. Parakh foods.

4. Ford motors came to in

Ans.1995.

5. Rapid integration between countries is called.

Ans. globalization.

6.what is the name of the organization whose aim is to liberalize international trade
is

Ans. WTO.

7. Till 2006, how many members were there in WTO.

Ans. 150

8. Removing barriers or restrictions set by the government is known as.

Ans. liberalization.

9. Name the term which refers to globalization which creates opportunities for all
and ensures that is benefits are better shared.

Ans. Fair globalization.

10. Companies who set up production units the special economic zones do not have
to pay taxes for an initial period of.

Ans.5 years.

HOT QUESTIONS

1. It creates an opportunity for the producers to reach beyond the domestic market.
What does it refer to?

2. How rapid movement in technology has stimulated the globalization process?

State through examples.
3. How governments use trade barriers in relation to foreign trade?

4. Give examples of industries where the small manufacturers have been hit hard
due to competition.

5. What are the investments made by MNCs called and with what are the
expectations are these made?

MORE EXTRA QUESTIONS

Q.1 Write four functions of WTO.

Ans. Four functions of WTO are:
(i) Administering trade agreements between nations. (ii) Forum for trade
negotiations.
(iii) Handling trade disputes. (iv) Maintaining national
trade policy.

Q.2 What is the impact of WTO on Indian economy?

Ans. The impact of WTO on Indian economy is:
(i) An opportunity to India for trading with other member countries.
(ii) Availability of foreign technology to India at a reduced cost.
(iii) Many laws of WTO are unfavorable to the developing countries like India.
(iv) Certain clauses of WTO agreement on agriculture put restrictions on the
provision of subsidized food grains in India.

Q.3 What is trade barrier? How governments can use trade barriers?
Ans. Any kind of restrictions imposed on trade is called a trade barrier.
Governments can use trade barriers to increase or decrease (regulate) foreign trade
and to decide what kinds of goods and how much of each, should come into the
country.

Q. 4What is privatization and liberalization?

Ans. Privatization means allowing the private sector to set up industries which were
earlier reserved for the public sector. Removing barriers or restrictions set by the
government on trade is called liberalization. Thus, privatization and liberalization
results in freedom from closed and regulated economy.

Q. 5How MNCs can spread their production?

Ans. MNCs can spread their production by:-
1. Setting up joint production units with local companies.
2. To Buy up local companies and expanding its production base.
3. Placing orders with small producers

Q.6 Mention three factors responsible for globalization.

Ans. (i) Growth of MNCs.
(ii) Growth of technology.
(iii) Development in transport and communication technology.

LONG TYPE QUESTION ANSWERS

Q.1What do you mean by Globalization? What are the effects of

globalization in India?
Ans. Globalization is the integration or interconnection between the countries
through trade and foreign
investments by multinational corporations (MNCs).

Positive impacts:-
1) Greater choice and improved quality of goods at competitive price and hence
raises standard of living.
2) MNCs have increased investments in India.
3) Top Indian companies emerged as multinationals.
4) Created new opportunities for companies providing services like IT sector.
5) Collaborations with foreign companies help a lot to domestic entrepreneurs.
Negative impacts:-
1) Indian Economy faced the problem of brain drain.
2) Globalization has failed to mark its impact on unemployment and poverty.
3) Cut in farm subsidies.
4) Closure of small industries.

Q.2 What is WTO? What are the aims of WTO? What are the drawbacks of
WTO?
Ans. WTO is World trade organization. It is an organization which is in favour of
increasing the world trade through globalization.
The aims of WTO are:
(i) To liberalise international trade by allowing free trade for all.
(ii) To promote international trade among the countries of the world in an open
uniform and nondiscriminatory manner.
(iii) Removal of both the import and export restrictions.
The drawbacks of WTO are:
1) WTO is dominated by the developed country
2) WTO is used by developed countries to support globalization in areas that are
not directly related to trade.
3) Though WTO is supposed to allow free trade for all, in practice, it is seen that the
developed countries have unfairly retained trade barriers.

Q.3 What are MNCs? How the MNCs functions? What are the main guiding
factors of MNCs?
Ans. MNCs are Multinational corporations. It is a company that owns or controls production
in more than one Nation. MNCs set up offices and factories for production in region where
they can get cheap labour and other resources, closer to the markets. This is done to reduce
the cost of production and the MNCs can earn greater profits. MNCs not only sell its finished
products globally but also the goods and services are produced globally. The production
process is divided into small parts and spread across the globe.

The main guiding factors of MNCs are:

(i) Cheap production
(ii) Closeness of production unit to the markets.
(iii) Favourable government policies.

Q.4 What are the ways through which MNCs spread their production and
interact with local producers?
Ans. There are a variety of ways in which MNCs spread their production and interact
with local producers in various countries across the globe.
(i) Setting up partnerships with local companies,
(ii) Using the local companies for supplies
(iii) Closely competing with the local companies or buying them up,
(iv) MNCs are exerting a strong influence on production at these distant locations so
that they could produce at cheapest price and earn profit.

MORE QUESTIONS

Question .1. Define liberalization?

Answer : Liberalization of economy means to free it from direct or physical control imposed by the
government.

Question .2. What is globalization?

Answer : ntegrating our economy with world economy is called globalization. Reduction in economic gap
between different nations is done by removing all restrictions between nations on the movement of goods,
services, capital, technology and labour.

Question .3. What is privatization?

Answer : Privatization is defined as the transfer of ownership and control from the public sector to the
private sector. It means there is greater role of private capital and enterprise in the in the functioning of an
economy.

Question .4. State a positive aspect of Indias development strategy prior to 1991?
Answer : The strategy has helped India in creating a large industrial base and increase in industrial
production.

Question .5. State a negative aspect of Indias development strategy prior to 1991?
Answer : Laws formulated to regulate private sector failed to reduce the concentration of economic
power in the private sector. Corruption, inefficiency in work, mismanagement were the common features
in the public enterprises.

Question .6. What is bilateral agreements?

Answer : Whenever a country involve itself in a trade with some other country, there is an agreement
between them. This agreement is called bilateral agreement.

Question .7. What do you mean by export quotas?

Answer : For the protection of local consumers, government restricts giving limit of export of a particular
goods. This is called export quota.

Question .8. What do you mean by import quotas?

Answer : For the protection of local manufacturer form the competition of producers of other country,
government imposes taxes on the imported goods. This is called import quota.

Question .9. Define sustainable economic development?

Answer : The development taking place without damaging the environment and the development in the
present should not compromise on the needs of future generations is called sustainable development.

Question .10. Mention two problems that forced India to undertake new economic policy after
1991?
Answer : Factors responsible for the need for change in economic policy:-
(i) Bad performance of public sector.
(ii) Public sector could no achieve desired goal.
(iii) Balance of payment deficit of India were rising continuously since 1980 81.
(iv) Excess of anticipated expenditure over estimated revenue (i.e. fiscal deficit).
(v) Rising prices.

Question .11. Explain the various liberalization measures undertaken by the government of India?
Answer : Measures of liberalization taken by the Government of India:-
(i) Abolition of Industrial Licencing and registration.
(ii) Concession from Monopolies Act.
(iii) Freedom for Expansion and Production to Industries.
(iv) Increase in the Investment limit of the Small Industries.
(v) Freedom to Import Technology.
(vi) Freedom to Import Capital Goods.

Question .12. State any two impacts of liberalization and globalization in India?
Answer : The impacts of liberalization and globalization in India:-
(i) There is better services in communication sector such as telephone, colour television, and other
electronic goods at low prices(ii) Many food processing company have taken over the market, such as
Coca-Cola, Pepsi and other food products.

Question .13. State the strategies under new economic policy?

Answer :The strategies under new economic policy are:-
(i) Liberalization
(ii) Privatization
(iii) Globalization.

Question .14. Describe the changes that have occurred in India due to the adoption of the policy
of liberalization and globalization?
Answer : (i) Visible changes (a) There is better services in communication sector such as telephone,
colour television and other electronic goods at low price.
(b) Many food processing company have taken over the market, such as Coca-Cola, Pepsi and other food
products.
(ii) Invisible changes (a) The share of India in trade and services in the world has increased.
(b) Foreign direct investment in India has increased.
(c) Foreign exchange reserves have increased.
(d) Price rise in terms of percentage have declined.
(e) Marginal growth in industry and employment opportunities is shown.

Question .15. Examine the role of the state for protecting environment. Write three points?
Answer : Invironmental protection means its conservation and safeguard of people from all types of
pollution. The steps taken to protect it are:-
(i) It makes laws to improve living condition through environment protection legislation.
(ii) The Central Pollution Board controls water and air pollution.
(iii) Environmental Audit is compulsory from 1992 for all industries seeking environmental clearance.

Question .16. Mention three objectives of liberalization policy in large scale sector?
Answer : Objectives of liberalization policy:-
(i) To get favourable ratio of net profit to capital invested.
(ii) To seek better private and public participation in economic development and planning through profit
incentive and removal of physical controls.
(iii) To seek private sector participation in infrastructure development.

Question .17. There is a need of rapid industrialization of India. Give three reasons?
Answer :Need of rapid industrialization arises due to:-
(i) Industrialization provides a basis for rapid growth of income.
(ii) By setting more and more industries, opportunities of employment can be provided.
(iii) Industries can utilize all types of resources available in the economy and can use even scraps and
waste material.

Question .18. Negative aspect of Indias development strategy prior to 1991 relating to bad
performance of public sector was the only factor to create the need for a change in economic
policy. Do you agree with this. Comment?
Answer : No, there are other factors also. These are:-
(i) In June 1991, there was foreign exchange crisis in the country.
(ii) Balance of payment deficit of India was continuously rising since 1980 81.
(iii) Sharp rise in petrol prices.
(iv) Fiscal deficit.
(v) Increase in prices.
(vi) Unemployment.
(vii) Poverty.
(viii) Shortage of capital.
(ix) Slow economic growth.
(x) Technological backwardness.

Question .19. Why is sustainable development considered important for economic growth?
Answer : It has been felt that rapid economic growth and industrialization led to reckless exploitation of
natural resources.The stock of natural resources is limited and their use damages environment and
ecology. They cause pollution and disturb balance in nature.The important measures are:-
(i) Use of renewable and clean sources of energy.
(ii) Less use of fossil fuels.
(iii) Organic farming.
(iv) measures to reduce global warming.
India should enact laws and rules to protect environment and limit the use of energy.

NOTES

Q. Why do MNCs set up production jointly(with local companies)?

The benefits to the local company of such joint production is two-fold.
MNCs can provide money for the additional investments like buying new machines for faster
production.
2.MNCs might bring them latest technology for production.

VAROIUS WAYS IN WHICH MNCs ARE SPREADING THEIR PRODUCTION:

There are variety of ways in which MNCs are spreading their production and interacting with local
producers in various countries across the globe. They do this by various means:

1.By setting up partnerships with local company..

2.By closely competing with local companies or buying them -the most common route for MNC
investments is to buy up local companies and to expand production. With their huge wealth they can
easily do so..
3. By using local companies for supply - Large MNCs in developed countries place orders for
production with small producers.Eg., garments, footwear, sports item etc. The products are supplied to
MNCs which then sell these under their brand names ti the customers.
As a result, production in these widely dispersed locations is getting interlinked.
MNCs are exerting strong influence on production at these distant locations.

WAYS BY WHICH MNCs CONTROL PRODUCTION.

Top MNCs have enormous wealth and at times even bigger than the budget of the developing
countries.
--Another way in which they control production is that MNCs in the developed countries place orders
for production with small producers .
--The products are supplied to the MNCs, which then sell these under their brand names to the
customers.
--These MNCs have enormous power to determine price, quality, delivery. and labour conditions for
these distant producers.
TRADE AND FOREIGN TRADE
HISTORY:
--Various trade routes connecting India and South Asia to markets both in the East and West &
extensive trade that took place along these routes.
--It was trading interest which attracted various trading companies such as East India Company to
India.
Q. What is the function or purpose of foreign trade?
1--Foreign trade creates an opportunity for the producers to reach beyond the domestic markets i.e.,
markets of their own countries.
2--Producers can sell their produce not only in markets located within the country but can also
compete in markets located in other countries of the world.
3For the buyers, import of goods produced in another country is one way of expanding the choice of
goods beyond what is domestically produced.
EFFECTS OF FOREIGN TRADE:
There are various positive & negative effects of foreign trade. Its positive effects are
1.With the opening of trade, goods travel from one market to another.
2. Choice of goods in the markets rises.
3. Prices of similar goods in the two markets tend to become equal.
Producers in the two countries now closely compete against each other even though they are
separated by thousands of miles.
Foreign trade thus results in connecting the markets or integration of markets in different
countries.The economies of various countries are getting interlinked.
EFFECTS OF FOREIGN TRADE THROUGH THE EXAMPLE OF CHINESE TOYS IN INDIAN MARKETSChinese
toys in India.
Chinese manufacturers got an opportunity to export plastic toys to India.
Q. How did it benefit to India & to China?
To China: Chinese got an opportunity to trade and expand their business.
--As they were selling it at high selling price, they got high profits.
--Within an year 70-80% of toys shops have replaced Indian toys with Chinese toys.
To India:Indian buyers have more choice now.
--Prices are cheaper now.
--designs are new.
--But due to the cheaper prices & new designs , the Indian toy makers face losses, as their toys are
selling much less.
Q. What is Globalisation?
It is the process of rapid integration or interconnection between countries.
--There is one more way through which countries are becoming closer and that is Movement of
people between countries. People usually move from one country to another in search of jobs or better
education.This is also a result of Globalisation.
.
MNCS are playing major role in the Globalisation process.
MNCs have been looking for locations around the world , which would be cheap for their production
--As a result of greater foreign investment and greater foreign trade ,has been greater integration of
production and markets across countries.
--More and more goods and services, investments and technology are moving between the countries.
--Most regions of the world are in closer contact with each other than a decade back
--Foreign investment in the countries has been rising.
--Foreign trade between the countries has been rising.
--The activities of most of the MNCs involve substantial trade in goods and also services..
FACTORS THAT HAVE ENABLED GLOBALISATION
TECHNOLOGY: Rapid improvement in technology has been one major factor that has stimulated
globalisation process. Due to technology there has been improvements in various fields as in ,
1.TRANSPORTATION TECHNOLOGY.
a) In past fifty years this technological improvements has led to faster delivery of goods across long
distances at lower costs.
b) Containers for transport of goods: have led to huge reduction in port handling costs, increased the
speed with which goods can reach markets.
c) Airlines: the cost of air transport has fallen, this has enabled much greater volumes of goods being
transported by airlines.
2.INFORMATION AND COMMUNICATION TECHNOLOGY:
IT, has played a major role in spreading out production of services across countries.
Remarkable improvements have in the areas of telecommunications, computers &internet.
a)Telecommunications: facilitated by the satellite communication devices, facilities as telegraph,
telephone including mobiles, fax are used to contact around the world, to access the information
instantly,& to communicate in the remote areas.
b)Computer and internet: computers have entered in almost all the fields.
Internet allows one to share information on almost every thing, we can send instant e-mail and talk
through voice-mail across the world at almost negligible cost.