Notes on Globalization and the Indian Economy | MCQs & Q&A

Notes on Globalization and the Indian Economy for class 10

Class 10 | Economics | Unit 04 | NCERT

Things to remember:

• Globalization means interacting the economy of a country with the economies of other countries of free flow of trade and capital and movement of persons across borders.

• Integration of markets in different countries is known as foreign trade.

• Planning commission in India has laid emphasis on the development of foreign trade in the five year plans due to the following reasons.

• A country can make efficient use of its natural resources.

• It can export its surplus production.

• Further, through effective regularization of foreign trade, employment, output, precess and industrialization, economic development of a country can properly accelerate.

• Investment made by multinational corporations (MNCs) is called foreign investment.

• MNCs play an important role in the Indian economy by setting up production jointly with some of the local companies. Example- MNCs can provide money for additional investment like buying new machines for faster production.

• MNCs are playing major important role in the process of rapid integration or interconnection between countries. No more regions of the world are in closer contract with each other then a few decades back.

• Rapid improvement in information and communication technology has been one major factor that has stimulated the globalization process. To access information instantly and to communicate from remote areas, devices such as telephone, mobiles and computers are very useful. Further, it has played a major role in spreading out production of services across countries.

• Impact of globalization on the country is manifold.
This can be understood by these examples-
MNCs have increased there investments over the past 15 years, which is beneficial for them as well as for Indians also. This is because these MNCs provide employment opportunities to the masses and local companies supplying raw materials to these industries have prospered, but globalization has failed to solve the problem of poverty and it has widened the gap between the rich and the poor. Only skilled and educated clad had benefited from globalization.

• There is a greater choice for consumers, with the variety of goods and at cheap prices. Now they enjoy a much higher standard of living.

• Legalization of economy means to free it from direct or physical controls imposed by the government. In other words, it implies liberating the trade and industry from unwanted government control and restrictions.

• Let us see the effect of foreign trade through the example of Chinese toys in the Indian market. Chinese toys have becomes more popular in the Indian market because of their cheaper prices and new designs. Now Indian buyers have a greater choice of toys and at lower prices. Simultaneously, Chinese toy makers get the opportunity to expand business. On the other side, Indian toy makers face losses.

• World trade organization (WTO) was stared at the imitative of developed countries. The main objective of the world trade origination is to liberalize international trade. At present 149 countries are member of the WTO.

• At present central and state governments in India are taking special steps to attract foreign companies to invest in India. For this special economic zones (SEZs) are being set up. Special economic zones have world class facilities – electricity, telecommunication, broadband internet, roads, transport, storage.

• And recreational facilities – to attract investment from MNCs and other companies.

• Globalization and liberalization have posed major challenges for small producers and workers. Small manufactures have been hit hard due to completion. Several of the units have shut down rendering many workers jobless.

• Because of growing competition most employers these days prefer to employ workers flexibly. This means that workers have no secure jobs. This can be explained with the help of an example -35years old Sushila got a job after searching for 6 month. She is a temporary worker. She did not get any benefit such as provident fund, medical allowance, bonus etc. A day off from work means no wage.

• Competition among the garment export as allowed the MNCs to make large profit but workers denied their fair share of befit brought about by globalization.

Revise Chapter: Globalization and the Indian Economy

MULTIPLE CHOICE QUESTIONS of Globalization and Indian Economy

1. MNC stands for
(i) Multinational Corporation
(ii) Multination Corporation
(iii) Multinational Cities
(iv) Multinational Council

2. Investment made by MNCs is called
(i) Investment
(ii) Foreign Trade
(iii) Foreign Investment
(iv) Disinvestment

3. Process of integration of different countries is called
(i) Liberalization
(ii) Privatization
(iii) Globalization
(iv) None of the above

4. MNCs do not increase
(i) Competition
(ii) Price war
(iii) Quality
(iv) None of the above

5. This helps to create an opportunity for the producers to reach beyond the domestic market
(i) Foreign trade
(ii) Domestic trade
(iii) Internal trade
(iv)Trade barrier

6. Foreign Trade
(i) Increases choice of goods
(ii) Decreases prices of goods
(iii) Increases competition in the market
(iv) Decreases earnings

7. Globalization was stimulated by
(i) Money
(ii) Transportation
(iii) Population
(iv) Computers

8. Production of services across countries has been facilitated by
(i) Money
(ii) Machine
(iii) Labor
(iv) Information and communication technology

9. Tax on imports is an example of
(i) Investment
(ii) Disinvestment
(iii) Trade barrier
(iv) Privatization

10. Liberalization does not include
(i) Removing trade barriers
(ii) Liberal policies
(iii) Introducing quota system
(iv) Disinvestment

11. WTO stands for
(i) World Tennis Organization
(ii) World Trade Office
(iii) World Trade Organization
(iv) World Trade center

12. SEZ stands for
(i) Special Economic Package
(ii) Special Economic Zone
(iii) Special Ecology Zone
(iv) None of these

13. Globalization is not supported by
(i) Privatization
(ii) Liberalization
(iii) Information and communication technology
(iv) None of these

14. Which one is false?
(i) MNCs acquire small companies to expand production
(ii) MNCs enter into joint venture to enter into foreign markets
(iii) MNCS offer subsidy to the small scale industries
(iv) MNCs set up own production center in foreign countries

15. Small Scale industries face competition from
(i) Rising prices
(ii) Cheap imports
(iii) Exports
(iv) Subsidy

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CHECK YOUR ANSWERS:
1(i)  2(iii)  3(iii)  4(iv)  5(i)  6(iv)  7(ii)  8(iv)  9(iii)  10(iii)  11(iii)  12(ii)  13(iv)  14(iii)  15(ii)

QUESTION ANSWERS of Globalization and Indian Economy

1Q. 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.

2Q. 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.

3Q. 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.

4Q. What 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 result in freedom from closed and regulated economy.

5Q. How 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.

6Q. Mention three factors responsible for globalization.
Ans. Three factors responsible for globalization are:
(i) Growth of MNCs.
(ii) Growth of technology.
(iii) Development in transport and communication technology.




LONG TYPE QUESTION ANSWERS


1Q. What do you mean by Globalization? What are the effects of globalization in India?
Ans. Globalisation 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.
6) Foreign technology helps in raising the productivity.
7) Avenues open for new jobs. Like-supplying raw materials etc.
8) The rate of economic growth has rose from 3.62% to 6.5%.
9) Our foreign exchange reserves position has strengthened substantially from $1.28 billion in 1990 -1991.
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.

2Q. 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 liberalize 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 countries.
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.

3Q. 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 regions 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.

4Q. 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.

5Q. What are the advantages and disadvantages of MNCs?
Ans. Advantages:
(i) Availability of capital and foreign investment.
(ii) Availability of foreign exchange.
(iii) Promotion of small scale industries.
(iv) Foreign trade and integration of markets.
Disadvantages:
(i) Harmful for host country.
(ii) Harmful for the local producers.
(iii) Harmful for economic equality.
(iv) Harmful for freedom.

Globalization and Indian economy:

1. Make a list of Multi National Companies in field of Telecommunication, Infrastructure, and Beverages. 2. Collect the information or prepare the list of Global Agency working in the various fields of education, social welfare.