Quick Revision Notes & Formula Sheet

Class 10 Social Science (Economics)

Chapter: Globalisation and the Indian Economy

1. Key Definitions & Concepts

• Globalisation (गैलोबलाइजेशन / वैश्वीकरण): Integration or interconnection between countries through foreign trade and foreign investments by Multinational Corporations (MNCs). It involves the greater exchange of goods, services, investments, technology, and people across borders.

• Multinational Corporation (MNC - बहुराष्ट्रीय कंपनी): A company that owns or controls production in more than one nation. MNCs set up offices and factories for production in regions where cheap labour and other resources are available.

• Foreign Investment (विदेशी निवेश): Investment made by MNCs (like buying land, building factories, machinery, etc.) to earn profits.

• Foreign Trade (विदेशी व्यापार): Trade that takes place between different countries. It creates an opportunity for producers to reach beyond domestic markets.

• Liberalisation (उदारीकरण): Removing barriers or restrictions set by the government on trade and foreign investment. It allows businesses to make decisions freely about what they wish to import or export.

• Privatisation (निजीकरण): The transfer of ownership, property, or business from the government to the private sector.

• World Trade Organisation (WTO - विश्व व्यापार संगठन): An international organisation whose aim is to liberalise international trade. It sets rules for global trade and sees that these rules are obeyed. (Headquarters: Geneva, Switzerland).

• Fair Globalisation (न्यासंगत वैश्वीकरण): A globalisation that creates opportunities for all and ensures that benefits of globalisation are shared better.

2. How MNCs Interconnect Countries

MNCs do not only sell their finished products globally; more importantly, the goods and services are produced globally. The production process is divided into small parts and spread across the globe.

• Spreading Production:

  • China provides cheap manufacturing locations.
  • India has highly skilled engineers and IT professionals.
  • Customer care services are often outsourced to countries like India due to English-speaking populations and low costs.

• Ways MNCs Control Production:

  1. Setting up production jointly with local companies: Providing money for additional investments and bringing the latest technology.
  2. Buying up local companies: A common method is to buy local companies and then expand production (e.g., Cargill Foods bought Parakh Foods in India).
  3. Placing orders with small producers: Producing items like garments, footwear, and sports accessories through local producers around the world and selling them under their own brand name.

3. Role of Technology in Globalisation

Rapid improvements in technology have been one of the major factors stimulating the globalisation process.

• Transport Technology: Faster delivery of goods across long distances at lower costs (container ships, cargo planes).
• Information and Communication Technology (ICT):
  • Telecommunications (telegraph, mobile phones, internet) are used to contact each other around the world, access information instantly, and communicate from remote areas.
  • Outsourcing: Companies use the internet to get work done from developing countries where wages are lower (e.g., data entry, accounting, voice-call centers).

4. Trade Barriers (व्यापार अवरोधक)

• Definition: Restrictions set by the government on foreign trade.
• Example: Tax on imports (Import Duty).
• Purpose:
  • To regulate foreign trade.
  • To protect domestic producers from foreign competition.
• Historical Context in India: In 1947, India put barriers on foreign trade and foreign investment to protect domestic industries from foreign competition. In 1991, the government decided that the time had come for Indian producers to compete with producers around the world (New Economic Policy / LPG Policy).

5. Impact of Globalisation in India

Positive Impacts (Advantages):

1. Greater Choice: Consumers (especially well-off sections) have a wider choice of goods (like mobile phones, cars, electronics) at lower prices.
2. New Jobs: Creation of new jobs in industries where MNCs invest (like IT, electronics, fast food).
3. Local Companies as MNCs: Several top Indian companies have grown stronger through globalisation (e.g., Tata Motors, Infosys, Ranbaxy, Asian Paints).
4. Service Sector Growth: New opportunities created in IT, data entry, administrative services, and engineering.

Negative Impacts (Disadvantages / Challenges):

1. Job Insecurity: Employment is no longer permanent; workers are employed flexibly when needed.
2. Long Working Hours and Low Wages: Small producers and unorganised sector workers often face exploitation.
3. Closure of Small Local Industries: Small manufacturers (e.g., batteries, plastic toys, tires, dairy products) have been hit hard due to severe competition from cheaper imports.
4. Uneven Benefits: Globalisation has benefited well-off consumers and large producers, but small workers and producers have not shared the benefits equally.

6. The Struggle for a "Fair Globalisation"

• Role of Government:
  • Ensure that labor laws are properly implemented and workers get their rights.
  • Support small producers to improve their performance until they become strong enough to compete.
  • Use trade and investment barriers if necessary.
• Role of People / Movements:
  • Organise campaigns and mass protests against unfair WTO rules.
  • Demand fair trade practices globally.