4.2 TEXT QUESTIONS : (Exercises)
1. What do you understand by globalisation ? Explain in your own words .
Ans:
i) It is the process by which the whole world becomes a single market . It is the rapid integration or interconnection between countries through foreign trade and foreign investments by multinational corporations (MNC’s) .
ii) In this process we become economically interdependent at the international level .
iii) We can also produce goods and services and sell them in other countries .
2. What was the reasons for putting barriers to foreign trade and foreign investment by the Indian government ? Why did it wish to remove these barriers ?
Ans:
i) It is necessary to protect the domestic producers from foreign competition . Indian industries were just coming up in the 1950’s and 1960’s .
ii) Competition from imports would not have allowed these industries to grow .
iii) It wished to remove these barriers because over the years Indian producers became able to compete with producers around the globe . It was felt that competition would improve the performance of domestic producers .
3. How would flexibility in labour laws help in companies ?
Ans:
i) Companies could employ workers on a temporary basis so that they do not have to pay them for the whole year .
ii) They could keep workers in very long working hours and night shifts . So that they could cut labour costs and earn more profits .
iii) They could pay low wages and force them to work overtime to earn high profits .
iv) They would not have to give provident fund , gratuity , pension etc .
4. What are the various ways in which MNC’s set up , or control , production in other countries ?
Ans: The MNC’s set up production where :
i) It is close to the markets .
ii) There is skilled and unskilled labour available at low costs .
iii) They buy local companies and then expand production .
iv) They use the local companies for supplies and then sell these items under their own brand names to the customers .
v) They closely compete with the local companies .
5. Why do developed countries want developing countries to liberalise their trade and investment ? What do you think should the developing countries demand in return ?
Ans:
i) They could expand their business in developing countries through foreign trade and foreign investments by MNC’s .
ii) They should demand removal of unfairly retained trade barriers .
iii) They should remove agricultural and other subsidies .
6. “The impact of globalisation has not been uniform.” Explain this statement .
Ans: The impact of globalisation has not been uniform among producers and workers .
Positive Impact:
i) Globalisation is beneficial for the consumers especially rich people in urban areas .
ii) A large number of jobs have been created in automobile , electronics , soft drinks etc .
iii) Local companies supplying raw material have prospered .
iv) Top Indian companies have been able to benefit from increased competition by adopting advanced technology .
v) It has also created new opportunities for companies providing service especially those involving information technology , data entry , accounting etc .
Negative Impact:
i) There are a number of industries such as toys , tyres , batteries , etc . Where small manufacturers have been hit hard due to foreign competition .
ii) Thousands of uneducated and unskilled labourers ha
7. How has liberalization of trade and investment policies helped the globalisation process ?
Ans: It has helped the globalisation process in the following ways :
i) Movements of goods and services between countries .
ii) Increase in foreign investments .
iii) Movement of new and advanced technology .
iv) Movement of people between countries in search of better income , better jobs or better education .
8. How does foreign trade lead to integration of markets across countries ? Explain with an example other than those given here .
Ans: Foreign trade :
i) Gives opportunity for the producers to sell their goods and services beyond the markets of their own countries .
ii) Gives opportunity for the buyers to expand the choice of goods and services .
iii) Prices of similar goods in the two countries tend to become equal .
iv) Producers in the two countries closely compete against each other .
Thus , foreign trade leads to integration of markets across countries . This can be clearly explained by the following example :
As a result of opening of trade , foreign mobile markets , came into the Indian markets . In the competition between Indian and Foreign mobiles , foreign proves better . So , Indian buyers have a greater choice of mobiles at lower prices . Indian mobile makers face losses because their mobiles sell much less .
9. Globalisation will continue in future . Can you imagine what the world would be like twenty years now ? Give reasons for your answer .
Ans: Yes . according to me the whole world would become a single market twenty years from now .
i) The Multinational Companies would produce goods and services in those locations around the world which would be cheap for their production .
ii) Foreign investment by the MNC’s would increase much more .
iii) Foreign trade between countries would sufficiently rise .
iv) A large part of the foreign trade would be controlled by the MNC’s .
v) There would be greater integration of production and markets .
vi) There would be greater movement of people between countries .
10. Supposing you find two people arguing : one is saying globalisation has hurt our country’s development . The other says , globalisation is helping India develop . How would you respond to these arguments ?
Ans: I would say that globalisation has not hurt our country’s development but is helping India develop . But it has benefitted rich consumers and producers with skill , education and wealth . On the other hand , many small producers and workers have suffered as a result of increasing competition . They have not shared the benefits of globalisation .
The government should try to make globalisation more equal as it would create opportunities for all .
11. Fill in the blanks :
Indian buyers have a great choice of goods than two decades ago . This is closely associated with the process of _________ . Markets in India are selling goods produced in many other countries . This means there is increasing __________ with other countries . Moreover , the rising number of brands that we see in the markets might be produced by the MNCs in India . MNCs are investing in India because __________________ . While consumers have more choices in the market , the effect of rising _____________ and ___________ has meant greater ________ among the producers .
Ans: Indian buyers have a great choice of goods than two decades ago . This is closely associated with the process of Globalisation . Markets in India are selling goods produced in many other countries . This means there is increasing foreign trade with other countries . Moreover , the rising number of brands that we see in the markets might be produced by the MNCs in India . MNCs are investing in India because they find India a vast market and availability of factors of production at low costs . While consumers have more choices in the market , the effect of rising foreign trade and foreign investment has meant greater competition among the producers .
12. Match the following :
| i) The MNCs buy at cheap rates from small producers . | a) Automobiles |
| ii) Quotes and taxes on imports are used to regulate trade . | b) Garments , footwear , sports items |
| iii) Indian companies who have invested abroad . | c) Call centres |
| iv) IT has helped in spreading of production of services . | d) Tata Motors , Infosys , Ranbaxy |
| v) Several MNCs have invested in setting up factories in India for production . | e) Trade barriers . |
Ans: i) b) ii) e) iii) d) iv) c) v) a) .
13. Choose the most appropriate option :
i) The past two decades of globalisation has seen rapid movements in
a) goods , services and people between countries .
b) goods , services and investment between countries .
c) goods , investments and people between countries .
ii) The most common route for investments by MNCs in countries around the worls is to
a) set up new factories .
b) buy existing local companies .
c) form partnerships with local companies .
iii) Globalisation has led to improvement in living conditions
a) of all the people .
b) of people in the developed countries .
c) of workers in the developing countries .
d) none of the above .
Ans:
i) b) goods , services and investment between countries
ii) b) buy existing local companies i
ii) d) none of the above .
Additional Activity / Project:
1. Take some branded products that we use every day (soaps , toothpaste , garments , electronic goods and so on) . Check which of these are produced by MNCs .
Ans: Students , do it yourself .
2. Take any Indian industry or service of your choice . Collect information and photographs from newspapers , magazine clippings , books , television , Internet , interviews with people on the following aspects of the industry :
i) Various producers/companies in the industry .
ii) Is the product exported to other countries .
iii) Are there MNCs among the producers ?
iv) Competition in the industry .
v) Conditions of work in the industry .
vi) Has there been any major change in the industry in the past fifteen years ?
vii) Problems that people in the industry face .
Ans: Students , do it yourself .
(Questions 3 , 4 and 5 has to be done by the students only)