Globalisation and indiàn economy notes

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Globalisation is the process of rapid integration or interconnection between countries through foreign trade and foreign investments. Multinational corporations (MNCs) are playing a major role in the globalization process. MNCs are spreading their production across countries in order to reduce cost and earn higher profits. They set up offices and factories in different countries for production. They invest in different countries to buy land, building, machines and other equipments. Investment made by MNCs is called foreign investment. As a result, productions in these widely dispersed locations are getting interlinked. Similarly, they sell l their produce in different countries and connect the markets of different countries. This process not only benefits the producers but also the consumers by providing wide range of consumer goods. It also provides more employment opportunities, new technology, etc. to host country. Thus, globalisation is the integration of foreign trade and markets of different economies. There are two factors that have enabled globalization. First, rapid improvement in technology and second, liberalization of foreign trade and foreign investment. Developments in information and communication technology facilitate the expansion of products and ideas amongst nations. Decrease in transportation cost is the essence of globalization with which production and produced goods can spread across the world. Removing barriers or restrictions set by the government is known as liberalisation. Stating around 1991, the government of India removed barriers on foreign trade and foreign investment to a large extent. To attract foreign companies to invest in India, Indian government has set up special economic zones (SEZ) which have world class technology and where relaxation in taxes is provided. Globalisation is also supported by the international organisations like World trade organisation (WTO), international monetary fund (IMF), etc. WTO propounds that there should be free trade. IMF helps in fostering global monetary cooperation between countries. The impact of globalisation is not uniform. It creates intense competition for domestic producers, changes the lives’ of workers, etc. Owing to this reason, we are struggling for fair globalisation that ensures the benefits of globalization shared better and create equal opportunities for all.