GLOBALISATION

CLASS-X HANDOUT

Q1. How has Indian market been transformed in a matter of years? Explain
A1. Consumers in today’s world have a wide choice of goods and services. Eg
i) New models of automobiles can be seen on Indian roads
ii) The latest model of digital cameras, mobile phones and televisions made by leading
manufacturers of the world are within our reach.
iii) A similar explosion of brands can be seen for many other goods right from shirts to
processed juice. Such wide ranging choice of goods in our markets is a relatively recent
phenomenon and so we can say that in a matter of years our markets have been
transformed.
Q2. How was production organized in the middle of the 20th century?
A2.
i) Until the middle of the 20th century, the production was organized largely within
countries
ii) What crossed the boundaries of these countries were the material, food stuffs and
finished products
iii) Trade was the main channel connecting different countries. For example: trade routes
connecting India and South Asia were for markets both on the east and the west.
Trading companies such as the East India Company was set up in India.
Q3. How has the trading system changed in the recent past?
A3. At present, the Multinational Companies have come up and changed the pattern of trade.
MNC’s are not only selling their finished products globally but more importantly goods and services
are produced globally resulting in complex ways of organized production.
For example: While manufacturing a product
i) China provides the advantage of becoming a cheap manufacturing location.
ii) Mexico and Eastern Europe are useful centres where products are assembled as they are
close to the markets of USA and Europe.
iii) India has highly skilled engineers who can understand the technical aspects of
production. It also has educated English speaking youth who can provide customer care
service.
Q4. What are MNC’s?
A4.
i) An MNC is a company that owns or controls production in more than one nation.
ii) MNCs set up offices and industries for production in regions where they get cheap
labour and other resources.
iii) This is done so that the cost of production is low and they can earn greater profits.
Q5. ‘The advantage of spreading production across the border is truly immense’.
Explain with the help of an example.
A5.
i) A large MNC producing industrial equipment designs its products in research centers in
USA.
ii) The components are manufactured in China.
iii) These are shifted to Mexico and Eastern Europe where the products are assembled.
iv) The finished products are then sold all over the world.
v) The company’s customer care services are carried out through call centers located in
India.
Q6. State the factors that have led to the setting up of production by MNC’s.
A6. MNC’s set up production in areas:
 i) Which are close to the markets.
ii) Where skilled and unskilled labour is available at low cost.
iii) Availability of other factors which help in production are assured.
iv) Where there are suitable government policies to help their interests.

Q7. What is investment?

A7. The money that is spent to buy assets such as land, buildings, machines and other equipments is
called investment. Investments made by MNC;s is called foreign investment.

Q8. How do MNC’S hep in interlinking production in widely dispersed areas?

A8.
i) MNC’s set up production with the local companies of that country. It provides money
to the local companies to buy new machines.
ii) They allow to bring with themselves the latest technology for production.
iii) MNC’s buy local companies and then expand production.
iv) MNC’S control production by placing orders with small local producers. The products
supplied to them i.eto the MNC’s are sold under their brand name of production.
Thus we see that there are various ways in which MNCs are spreading their production
and interacting with local producers in various countries across the globe. As a result
productions in these widely dispersed locations are getting interlinked.
Q9. Differentiate between MNCs and other companies.
A9. MNC’s- i) They make investments in factories and offices located in foreign countries.
ii) They sell finished products as well as goods and services produced globally.
iii) For example – Coca Cola
OTHER COMPANIES- i) They make investments only in the global markets.
ii) They sell finished products globally but these are produced in their own country
iii) For example- Reliance

Q10. How does foreign trade leads to integration of markets across countries?
A10.
i) It creates an opportunity for the producers to reach beyond their domestic markets.
ii) Producers can sell their products not only in the domestic markets but also compete
with markets located n other countries of the world.
iii) For the buyers, importing of goods produced in other country is another way of
expanding the choice of goods than what is produced within the country.
iv) Prices of similar goods in the market tend to become equal.
v) Producers in different countries can closely compete against each other though they are
separated by thousands of miles.
Conclusion- therefore the foreign trade results in connecting markets or integrating
markets in different countries.
Q11. What is the effect of foreign trade in India? Explain with an example of Chinese
toys being sold in Indian markets.
A11.
i) Foreign trade helps countries to sell their products in the Indian markets at a cheaper
rate. Eg Chinese manufacturers have learnt about the opportunities to export toys to
India where toys are sold at higher price.
ii) Buyers have the choice of choosing between Indian and Chinese toys. The Chinese toys
have become more popular because of their cheaper price and new designs. Thus, 70-80
percent of the toy shops have replaced Indian toys with Chinese toys..
 iii) Foreign trade provides the Chinese toy makers an opportunity to expand their business
while Indian toy makers faces losses as their toys sell much less.

Q12. What is globalization?

A12. It is a process of rapid integration or interconnectedness between countries.
The ways of globalization between countries are:
i) More and more goods and services, investments and technology are moving between
countries.
ii) Most regions of the world are in close contact with each other.
iii) The countries are also linked by the movement of people between them. People move
from one country to another in search of education, better jobs or more income.
Q13. How do containers help in the transportation of goods?
A13.
i) Containers help in loading and unloading goods intact onto ships, railways and trucks.
ii) It has helped in the reduction of port handling costs and has increased the speed with
which exports can reach the markets.
iii) By using containers large volumes of goods can be transported by airlines
Q14. State the factors which have enabled globalization.
A14.
i) Rapid improvement in technology has been one major factor that has stimulated the
globalization process.
ii) The past 50 years have seen several improvements in transportation technology. This
has made possible much faster delivery of goods across long distances at lower costs.
iii) Even more remarkable has been the developments in Information and communication
technology. Telecommunication facilities are used to contact one another around the
world instantly and also to communicate in rural areas.

Q15. What is meant by trade barriers? Why did Indian government impose trade
barriers against foreign trade and investment after Independence? Why was there a
need to remove it?
A15. Trade barriers are restrictions imposed by the government on foreign trade.
The Indian government considered it necessary to protect producers from foreign competition.
Local industries were coming up in 1950’s and 1960’s hence India allowed import of only essential
items like machinery, fertilizers and petroleum. Moreover, all developed countries were trying to
give protection to the domestic producers through these means.
With liberalization, businesses were allowed to make decisions freely about what they wished to
import and export. The government is thus said to be more liberal. Starting around 1991, the
country decided that time has come for domestic producers to compete globally. It felt that
competition would improve the performance of domestic producers. Thus barriers on foreign trade
and investment were removed. This came to be known as liberalization.

Q16. How has development in information and communication technology stimulated

the globalization process?
A16. Telecommunication facilities like the internet, telephone and fax are used to contact one
another around the world. This has been possible by satellite communication devices. For example; a
news magazine published for London is designed and printed in New Delhi. The Delhi office
communicates with the London office using various communication facilities. Even the payment for
the work done is transferred from a bank in London to a bank in New Delhi through internet.
Q17. What has been the impact of globalization on consumers?
A17.
i) Globalization and greater competition among producers both local and foreign has been
of advantage to the consumers particularly the well off sections in urban areas.
ii) There is greater choice before the consumers.
iii) People enjoy a much higher standard of living than what was possible earlier.

Q18. What was the impact of globalization on:

i) MNC’S
ii) Top Indian Companies
iii) Small producers
iv) Workers
A18.
i) MNC’s
a) It has increased their investment over the past 20 years.
b) They have increased their investments in industries such as mobile phones, soft drinks, fast
food etc. and services such as banking in urban areas.
c) Through these industries new jobs have been created.
d) Local companies supplying to these industries have also prospered.
ii) Top Indian companies
a) Several top Indian companies have been able to benefit from increased competition. They
have invested in technology and production methods and thus raised their standard of
production.
b) Some have gained from successful collaboration with foreign companies.
c) Globalization has enables some large Indian companies to emerge as multi- nationals
themselves. Eg- Tata Motors, Infosys.
d) Globalization has also created new opportunities for companies providing services
particularly those involving IT services.
iii) Small producers
a) For a large number of small producers globalization has posed a major challenge due to
competition.
b) Batteries, plastic toys, dairy products and vegetable oils are some examples where the small
manufacturers have been hit hard due to competition.
c) Several of the industries have been shut down making many workers jobless.
iv) Workers
a) Faced with growing competition, most employers prefer to employ workers fairly.
b) Workers are appointed on temporary (adhoc) basis at low wages so that big companies and
MNC’s can make huge profits.
c) Workers have to put in long working hours and night shifts.
Q19. On account of globalization, what are the three ways by which countries are
connected?
i) Movement of people between countries in search of better education, better jobs, better
incomes.
ii) Movement of goods and services between the countries by way of exports and imports.
iii) Movement of investment and technology between the countries.
Q20. Distinguish between foreign trade and foreign investment.
A20. FOREIGN TRADE
i) It includes the movement of goods and services from one country to another.
ii) It creates boundaries for producers to reach out beyond the boundaries of their own
countries.
FOREIGN INVESTMENT
i) It includes setting up of factories, offices as well as spending money on other assets in
the countries.
ii) MNC’s through foreign investments interlink production in widely scattered locations. It
can be carried out by MNC or any other company on behalf of MNC.