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What is
Globalization?
DAV Dwarka _ Prepared by Ms. Geeta
Meaning of Globalization
Rapid integration between
countries.
It includes :-
Free export & import
of Goods and Services
Unrestricted exchange
ofDAV Dwarka _ Prepared by Ms. Geeta
Free flow of Capital
Free movement of
People
(for better income, job,
education orIntegration
Example medical
between
facilities.) Countries: one
shirt sold in the US could have
been made from Chinese cotton
by workers in Thailand. Then it
could have been shipped in a
French Freighter that had a
Spanish crew.
DAV Dwarka _ Prepared by Ms. Geeta Gupta
Barriers in
Foreign Trade &
Investment
Two types :-
1. Tariff Barriers
Tariff means tax. E.g.
Import duty, Export
duty etc.
DAV Dwarka _ Prepared by Ms. Geeta
2. Non-tariff Barriers
Not in form of a tax. E.g.
Import Quota i.e.
quantitative restrictions
on imports, types of
goods which can be
traded.
Removal of these
barriers indicates
DAV Dwarka _ Prepared by Ms. Geeta
Globalisation - a broader
concept
Many dimensions :-
Economic
Cultural
Political
Social
In chapter, focus on
Economic interconnection
through foreign trade &
DAV Dwarka _ Prepared by Ms. Geeta Gupta
History of Globalization in India
Prior to 1991:
Mainly Closed Economy.
(Imports of essential
industrial goods, petroleum
products, fertilizers etc.
were allowed.)
Barriers on Foreign Trade
and Investment.
DAV Dwarka _ Prepared by Ms. Geeta Gupta
Why Restrictions?
Because,
Indian industries
were :
at infant stages of
development.
unable to face
foreign competition.
DAV Dwarka _ Prepared by Ms. Geeta Gupta
Why Restrictions were
removed?
Mounting Fiscal
Deficit
Balance of Payments
(BoP)
Crisis
Gulf crisis led to rise
in
DAV Dwarka _ Prepared by Ms. Geeta Gupta
Inflation rising cost
of living
Inefficient functioning of
Public Sector
Loan taken from World
Bank & IMF which
pressurized India to open
up.
Also, Indian Govt. felt
that competition
DAV Dwarka _ Prepared by Ms. Geeta would
Gupta
As a result, in 1991:
New Economic Policy (NEP) was formed.
Three Elements of NEP: LPG
1.Liberalization: Removal
of restrictions set by the
Govt.
2.Privatization: Shifting
ownership to private
entrepreneurs.
DAV Dwarka _ Prepared by Ms. Geeta Gupta
Who has played major role in Globalization?
Corporation
Natio Natio Natio
Owns/controls n1 n2 n3
production in
E.g.
more
Dwarka _ Prepared by Ms. Geeta Gupta
Meaning of Investment &
Foreign Investment
Foreign Investment:
Investment by foreign countries
in domestic economy.
DAV Dwarka _ Prepared by Ms. Geeta Gupta
Foreign Investment
FDI FII
Foreign Direct Foreign
Investment Institutional
Investment in Investment
fixed assets or Investment in
production by domestic
MNCs
We (mainly).
will companies
focus on FDI in chapter.
DAV Dwarka _ Prepared by Ms. Geeta Gupta
Routes through which
MNCs invest
Four Routes:
Partnership with existing
local companies.
(E.g. Ford Motors collaborated with
Mahindra & Mahindra, Japans Honda
collaborated with Hero Cycles of
India.)
Buying up local companies.
(E.g. Cargill Foods bought over Parakh
Foods.)
DAV Dwarka _ Prepared by Ms. Geeta Gupta
Supply orders to
small producers i.e.
outsourcing.
(E.g. Shoes producing
foreign co. give orders to
Small Shoe makers of Agra.)
By closely
competing with local
companies.
DAV Dwarka _ Prepared by Ms. Geeta Gupta
Top 10 MNCs in India
Microsoft Corporation
: America
Nestle : Switzerland
Procter & Gamble :
America
PepsiCo : America
DAV Dwarka _ Prepared by Ms. Geeta Gupta
Hewlett Packard (HP) :
America
Coca Cola : America
IBM : America
Tata Group : India
City Group : America
Source:
http://top10wala.in/top-10-biggest-mnc-in-i
ndia-largest-multi-national-companies-in-th
e-country/
DAV Dwarka _ Prepared by Geeta Gupta
Why?
Among these top
10,
6 MNCs from
America and
only 1 from India!
Why most of the
MNCs
DAV Dwarka _ Prepared by Ms. Geeta Gupta
Factors necessary to
become an MNC
Huge Capital
(Money/Investment)
Innovative Technology
Managerial Skills
Developed countries are
enriched with these factors
more than the developing
countries.
DAV Dwarka _ Prepared by Ms. Geeta Gupta
MNCs of India
OPPORTUNI BENEFITS
TIES FOR SHARED
ALL BETTER.
DAV Dwarka _ Prepared by Ms. Geeta Gupta
Role of Government
Formation of Policies for
benefits of all
Labour Laws - properly
implemented
Support to Small
Producers
Enforce Some Barriers (if
needed)
Negotiation with WTO
Alignment with Developing
Countries
To fight against domination of developed
countries.
DAV Dwarka _ Prepared by Ms. Geeta Gupta
Conclusion
Globalization is undoubtedly
important for growth &
development of a country.
But we have to focus on a FAIR
Globalization.
The target should not be just
profit maximization & capturing
larger market share.
Rather aim should be to share
ideas, innovations, wealth,
DAV Dwarka _ Prepared by Ms. Geeta Gupta
DAV Dwarka _ Prepared by Ms. Geeta Gupta
DAV Dwarka _ Prepared by Ms. Geeta Gupta
Ques. State the types of goods which
are produced by the following brands.
Also, classify these companies into
Indian MNCs & Foreign MNCs.