NCERT Solutions Class 10 Social Science Understanding Economic Development Chapter 4

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

Ans-

Globalisation is a process of integrating the economy of the country with other economies of the world through trade in goods and services, capital flows and technology. Besides the movement of goods and services, investments and technology, globalisation also results from the movement of people between countries in search of better income, quality education or better jobs. Globalisation results in integration of markets in different countries.

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

Ans-

(1) After independence, Indian government had to put barriers to foreign trade and foreign investment in order to protect the domestic producer from foreign competition.

(2) At that time new industries were starting up in India and immense competition from foreign imports at that stage would have hampered them badly and also may not even let them to come up.

(3) Thus, Indian government allowed imports of only essential goods such as petroleum, machinery, etc. and provided protection to the domestic producers through various means.

Reasons to remove these barriers are:

(1) The barriers on foreign trade and foreign investment have been removed to a large extent by the Indian government in the process of liberalisation.

(2) With the beginning of 1991, some major changes in the India’s policies were made. The Indian government felt that the time has come for Indian producers to compete and produce globally.

(3) This was done with the objective to improve the performance of producers within the country as they would face huge foreign competition and they would have to improve their quality.

(4) This decision was supported by powerful international organisations.

(5) Now, the goods can be imported and exported easily and also foreign companies could set up their offices and factories in India.

Q.3 How would flexibility in labour laws help companies?

Ans-

1. The flexibility in labour laws helps in attracting foreign investment and help companies in becoming more competitive and progressive.
2. With flexible labour laws, instead of hiring workers on a regular basis, companies can hire workers ‘flexibly’ for short periods when there is pressure of work.
3. Further companies can negotiate on terms of employment, wages and can terminate employment, depending on market conditions.
4. This will reduce the cost of labour for the company and helps in increasing its competitiveness.

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

Ans-

• The multinational companies play a major role in the process of globalisation. They have spread their production in various countries.
• MNCs set up offices in regions where they can get cheap labour and other resources to carry the operations.
• They set up the production units in those places which are quite close to the market and labours are easily available. This is done so that the cost of production can be reduced and they can earn greater profits. MNCs also set up production units jointly with some of the local companies of other countries.
• MNC’s might also look for government policies that look after their interests.
• Also at time, MNC’s place orders for production with small producers in different countries. The products are then supplied to the MNCs, which then sell these under their own brand to end consumers. Footwear, sport items industries are examples of industries where production is carried out by a large number of small producers around the world.

Q.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?

Ans-

Developed countries want developing countries to liberalise their trade and investment so that they can expand their markets in other countries. With liberalized trade and investment policies MNCs belonging to developed countries can set up their production units in developing countries where production can take place at low cost, thereby increase their profits.

The developing countries should ask the same favour in return from the developed countries. Also they should ask for some sort of protection for their domestic producers from unfair competition from imports.

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

Ans-

1. Critics of the new economic policy say that globalisation is a strategy of the developed nations to expand their markets in other countries.
2. It has compromised the welfare and identity of people belonging to poor countries.
3. Market driven globalisation has widened the disparities amongst nations.
4. Globalisation has posed major challenges for a large number of small producers and workers of developing nations.
5. Due to intense competition, these days most employers prefer to employ workers on temporary basis. This means job insecurity for the workers.
6. With increasing imports and tough competition from MNCs, the small manufacturers in industries like batteries, plastic, toys etc. are suffering badly.

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

Ans-

Liberalisation of foreign trade and foreign investment policy has stimulated globalisation during the last two decades. When the government of a country removes barriers upon international trade, this process is known as liberalisation of foreign trade. Liberalisation of foreign investment means removing several restrictions on the inflow of foreign capital in domestic economy.

Liberalisation of trade in service indicates removing several restrictions on international trade in various services. Example: Vodafone, which is UK’s company, has entered into the telecommunication sector of India for providing mobile phone services.

With liberalisation of trade businesses are free to make decisions about what they wish to import or export. Liberalisation of investment meant that foreign companies could now set up factories and offices more freely. Thus, liberalisation of trade and investment policies has helped the globalisation process by making foreign trade and investment much easier.

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

Ans-

With the opening of trade, goods travel from one market to another.

It creates an opportunity for the producers to reach beyond the domestic market.

Producers can sell their products not only within the country but also in the markets of other countries.

When foreign goods enter into a market, they have to compete against local products. If they happen to be inferior they will not gain a market. If they happen to be comparatively expensive they may not readily find consumer acceptance.

These products will have to adjust, according to the prevailing prices and quality. If the imported product is better than local product, the local producers will try to improve the quality of their products. In either case the price will adjust and finally become equal or near equal or competitive in the two markets.

This phenomenon is known as integration of market.

For example:

Mobile phones and laptops manufactured by the top multinational companies are available in all the markets are of same quality and almost of same price.

Q.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.

Ans-

Twenty years from now, if the globalisation process continues in a fair and equitable manner, the entire world will be integrated into one international market. There will be better living conditions, greater access to modern technology and information, increased volume of outputs, more trade and capital flows along with the mobility of labour. The reasons behind the views given above are the positive effects of globalisation which includes:

• Increase in availability of quality products and services at competitive prices to the consumers due to globalisation.
• Increase in productivity due to investments in new technologies with liberalisation policies at place.
• Changes in consumption pattern leading to high standard of living, etc.

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

Ans-

Every policy has two sides to it, so is with the globalisation.

The negative impacts of globalisation are:

1. Large MNCs by their power to influence price, raw material and labour, they can wipe out local competitors.
2. Big corporations take advantage of weak regulatory rules and exploit consumers and make huge profits.
3. By virtue of their very large economic capacity and influence, MNCs can exert influence on a country’s policies and its international relations.

The positive impacts of globalisation in India are as follow:

1. Increased availability of quality products and services at competitive prices to the consumers.
2. Increased productivity due to investments in new technologies.
3. Changed consumption pattern leading to high standard of living.

Q.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.

Ans-

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 less or 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.

Q.12 Match the following.

Ans-

Q.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.

(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.

(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

Ans-

(i) (a) Goods, services and people between countries.

Explanation: Globalisation is a process of integrating the economy of the country with other economies of the world through trade in goods and services, capital flows and technology. Besides the movement of goods and services, investments and technology globalisation also results from the movement of people between countries in search of better income, quality education or better jobs.

(ii) (b) Buy existing local companies

Explanation: The most common route for MNC investment is to buy local companies and then to expand production. For example: Cargill foods an American MNC, has bought over Parakh Foods, a smaller Indian company.

(iii) (d) none of the above

Explanation: Not everyone in a country has benefited from the globalisation. On one hand we have people with education, skills and wealth who have made best use of the new opportunities, on the other hand we have people who have not benefited by globalisation and are even worse off.