Chapter 4 – Globalisation And The Indian Economy Questions and Answers: NCERT Solutions for Class 10 Social Science – Economics

1. What do you understand by globalisation? Explain in your own words.

Answer:
Globalisation is defined as the integration between countries through foreign trade and foreign investments by multinational corporations (MNCs). Increase in foreign trade, migration of people, spread of technology, capital flow, private and public investments from foreign countries all together contribute to globalisation. Globalisation has been facilitated by several factors like rapid improvements in technology, liberalisation of trade and investment policies and, pressures from international organisations such as the WTO.

2. What was the reason for putting barriers to foreign trade and foreign investment by the Indian government? Why did it wish to remove these barriers?

Answer:
The Indian government, after Independence, had put barriers to foreign trade and foreign investment. This was done to protect the producers within the country from the foreign competition especially when industries had just started to come up in the 1950s and 1960s.
But later, in 1990s, the government accepted that foreign competition would encourage Indian industrialists to improve the quality of their products and removing these barriers would increase trade and quality of products produced in the country.

3. How would flexibility in labour laws help companies?

Answer:
Flexibility in labour law helps companies to attract foreign investments. Instead of hiring workers on a regular basis, companies hire workers flexibly for short periods when there is intense pressure of work. Company heads can negotiate wages and terminate the employees depending on market conditions. This will lead to an increase in the company’s competitiveness and reduce its labour cost.

4. What are the various ways in which MNCs set up, or control, production in other countries?

Answer:
Various ways in which MNCs set up, or control, production in other countries are:
• MNCs set up production units close to the market so that they get cheaper labour.
• To increase production, MNCs collaborate with some local companies as the production rate would rapidly increase.
• MNCs buy local companies and expand their production with help of new technology.
• They place orders for production with the small producers and sell these products under their own brand name to the customers worldwide.

5. Why do developed countries want developing countries to liberalise their trade and investment? What do you think should the developing countries demand in return?

Answer:
Developed countries want developing countries to liberalise their trade and investment so that their own companies can establish their business in the developing countries. The manufacturing costs are less in the developing nations due to the availability of cheap labour and other resources at low cost. Therefore, MNCs belonging to the developed nations on setting up industries in the less-expensive developing nations can earn huge profits. Also setting up factories and industries in developed countries increases competition.
The developing countries should, in turn, ask for a fair removal of trade barriers in order to protect their own industries.

6. “The impact of globalisation has not been uniform.” Explain this statement.

Answer:
The impact of globalisation has not been uniform because it has benefitted only the rich and developed countries. The developing countries are only a source of setting industries and getting cheaper labour and the entire profits are earned by the developed countries. Many small manufacturers with low capital have not been able to withstand the competition from the large MNC’s. Workers are now employed flexibly in the face of growing competition. This has reduced their job security.

7. How has liberalisation of trade and investment policies helped the globalisation process?

Answer:
The liberalisation of trade and investment policies helped the globalisation process in the following ways:
• It has helped in the removal of trade barriers.
• It has made foreign trade and investment easier.
• It led to the increase in imports and exports across the nations thereby contributing to the process of globalisation.
• It has allowed the developed countries to establish their industries and offices in the developing countries which in turn is helping in the spread of globalisation.

8. How does foreign trade lead to integration of markets across countries? Explain with an example other than those given here.

Answer:
Because of foreign trade, the producers are now able to compete and export their goods to the markets of other countries. Not just the sellers, but the buyers are also being benefitted through this. Their choices have expanded as now they get to choose products manufactured by not only domestic companies but also by the foreign companies. Due to the increased competition in the market the prices of the goods have also decreased.
For example, the Indian market today is flooded with several varieties of smart phones of foreign brands at competitive prices. This has benefited the consumers as they can choose from various options available in the market on the basis of comparing their features and prices.

9. Globalisation will continue in the future. Can you imagine what the world would be like twenty years from now? Give reasons for your answer.

Answer:
Globalisation will continue in the future as well. Twenty years from now:
• Productive efficiency will be improved
• Competition in the market will increase
• Quality of the goods will be improved
• Trade and capital flows will increase
• Advancement in every field will be evident
This will occur because, twenty years from now, we will find further strengthening of the forces of globalisation. Liberalisation will get augmented and trade barriers will further be reduced. MNCs will converge with other companies producing the same goods.

10. Supposing you find two people arguing: One is saying globalisation has hurt our country’s development. The other is telling, globalisation is helping India develop. How would you respond to these arguments?

Answer:
Globalisation has come with both advantages and disadvantages in our country.
• The advantages of increased globalisation are:
• Increase in the volume of trade
• Increase in the employment opportunities
• Increase in variety of goods in the market, for the buyers to choose from
• Improvement in the quality of goods due to increased competition in the market
The disadvantages of increased globalisation are:
• Small scale industrialists may not be able to compete with those international enterprises and earn much profit.
• Workers are employed “flexibly” hence they do not get job security.

11. Fill in the blanks.
Indian buyers have a greater choice of goods than they did two decades back. This is closely associated with the process of ______________. Markets in India are selling goods produced in many other countries. This means there is increasing ______________ with other countries. Moreover, the rising number of brands that we see in the markets might be produced by MNCs in India. MNCs are investing in India because _____________. While consumers have more choices in the market, the effect of rising _______________ and ______________has meant greater ________________among the producers.

Answer:
Indian buyers have a greater choice of goods than they did two decades back. This is closely associated with the process of globalisation. Markets in India are selling goods produced in many other countries. This means there is increasing trade with other countries. Moreover, the rising number of brands that we see in the markets might be produced by MNCs in India. MNCs are investing in India because of cheaper production costs. While consumers have more choices in the market, the effect of rising demand and purchasing power has meant greater competition among the producers.

12. Match the following.
(i) MNCs buy at cheap rates from small producers (a) Automobiles
(ii) Quotas and taxes on imports are used to regulate trade (b) Garments, footwear, sports items
(iii) Indian companies who have invested abroad (c) Call centres
(iv) IT has helped in spreading of production of services (d) Tata Motors, Infosys, Ranbaxy
(v) Several MNCs have invested in setting up factories in India for production (e) Trade barriers

Answer:
(i) MNCs buy at cheap rates from small producers (b) Garments, footwear, sports items
(ii) Quotas and taxes on imports are used to regulate trade (e) Trade barriers
(iii) Indian companies who have invested abroad (d) Tata Motors, Infosys, Ranbaxy
(iv) IT has helped in spreading of production of services (c) Call centres
(v) Several MNCs have invested in setting up factories in India for production (a) Automobiles producers

13. Choose the most appropriate option.
(i) The past two decades of globalisation has seen rapid movements in
(a) goods, services and people between countries.
(b) goods, services and investments between countries.
(c) goods, investments and people between countries.

Answer: (b) goods, services and investments between countries

(ii) The most common route for investments by MNCs in countries around the world is to
(a) set up new factories.
(b) buy existing local companies.
(c) form partnerships with local companies.

Answer: (b) buy existing local companies.

(iii) Globalisation has led to improvement in living conditions
(a) of all the people
(b) of people in the developed countries
(c) of workers in the developing countries
(d) none of the above

Answer: (d) none of the above