globalisation and indian economy ppt.pptx

globalisation and indian economy ppt.pptx

1. N C E R T C L A SS X CH A PT E R SUBJE C T – E C ON O MI C S B y :- Shivam Pandey Globalisation and Indian Economy

2. MAH E NDR A P A R E E K

3. As consumers we have a wide choice of goods and services before us. The latest models of digital cameras, mobile phones and televisions made by the leading manufacturers of the world are within our reach. Today, Indians are buying products produced by nearly all the top companies in the world. from shirts to televisions to processed fruit juices. Such wide-ranging choice of goods in our markets is a relatively recent phenomenon.

4. How do we understand these rapid transformations? 4 P R ODU C TION A C R OS S C OU N T R Y Until the middle of the 20 th century, production was largely organi s ed within c o u n t r ie s . Colonies such as India exported raw materials and food stuff an d im p o r te d f i ni s hed g o od s . T rad e w a s the mai n c hannel c o nne c ting distant c o un t r ie s . Then multinational corporations (MNCs) emerged on the scene. A MNC 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. Th i s is done so th a t the cost of p r odu c tion is l o w an d the M N C s can ea r n g r e a ter p r ofit s .

5. SPREADING Of PRODUCTION By MNC – 5 A larg e MNC p r o d u c ing i n d us t r ial equipm e nt designs & research centres - United States compon e nts man u f a c t u r ed in Chin a (being a c heap man u f a c t u r ing lo c a tio n ) These a r e then shipped to Me x ico a nd Easte r n Europe - assembled _ ( useful for their closeness to the markets in the US an d Eu r o p e ) fin i she d products a r e sol d all o v e r th e w orl d . comp a n y ’ s custome r car e _ ca l l centre s _ In d i a . I n dia h a s highly skilled engineers who can understand the technical aspects of production. It also has educated English speaking youth who c a n p r o vi d e c us t om e r ca r e se r vi c e s .

6. 1 R & D 2 COMPONENTS MAN U FECTURERING 3 AS S EMBLING 4 COM P AN Y S T OR ES 6 ⚫ 5 C M A A H L E N L D C R A E P A N R T E E E K RS

7. SPREADING Of PRODUCTION By MNC – 7 The MNC is not only selling its finished products globally, but more important, the goods and services are produced globally. Production is organised in increasingly complex ways. The production process is divided into small parts and spread o u t a c r oss the g lo b e . And all this probably can mean 50-60 per cent cost- savings for the MNC!

8. INTERLINKING PRODUCTION ACROSS COUNTRY- 8 MNCs set up production where it is close to the markets ; where there is skilled and unskilled labour available at low costs ; and where the availability of other factors of production is assured MNCs might look for FAVOURABLE government policies Having assured themselves of these conditions, MNCs set up f a c t o r ies an d of f ices f o r p r o d u c tio n . The money that is spent to buy assets such as land, b u i l d i n g , mach i nes a n d other equ i pment is ca l led investment. Investment made by MNCs is called foreign investment . Any investment is made with the hope that these assets will earn p r M o A f i H t E s NDR A P A R E E K

9. 1 MNCs set up production jointly with some of the local companies. The loc a l c o mpa n y of su c h j oint p r odu c tion gets The benefit o f t w o - fol d . Fi r st , MNCs c a n p r o vide money for additional i n v es t men t s , li k e b u y ing n e w ma c h i nes for f aste r p r odu c tion. Sec o n d , MNCs m ight b r ing w i th them the l a test technology for production

10. 2 MNC investments buys up local companies and then to expand production. Example - Cargill Foods an American MNC has bought over smaller Indian companies such as Parakh Foods. Parakh Foods - large marketing network it Is brand was well- reputed. four oil refineries

11. 3 There’s another way in which MNCs control production Large MNCs in developed countries place orders for production with small producers. Garments, footwear, sports items are examples of industries where production is carried out by a large number of small producers around the world. MAH E NDR A P A R E E K

12. 3 There’s another way in which MNCs control production The products are supplied to the MNCs, which then sell these under their own brand names to the customers These large MNCs have tremendous power to determine price, quality, delivery, and labour conditions for these distant producers. MAH E NDR A P A R E E K

13. MNCs are spreading their production and interacting with local producers in various countries By setting up partnerships with local companies MAH E NDR A P A R E E K

14. By using the local companies for supplies MAH E NDR A P A R E E K

15. By closely competing with the local companies or buying them up MNCs are exerting a strong influence on production at these distant locations. As a result, production in these widely dispersed locations is getting interlinked.

16. Summary By setting up partnerships with local companies By using the local companies for supplies By closely competing with the local companies or buying them up MAH E NDR A P A R E E K

17. FOREIGN TRADE AND INTEGRATION OF MARKET foreign trade has been the main channel connecting countries. the trade routes like silk routes. it was trading interests which attracted various trading companies such as the East India Company to India. What then is the basic function of foreign trade ? MAH E NDR A P A R E E K

18. foreign trade creates an opportunity for the producers to reach beyond the domestic markets, i.e., markets of their own countries. Producers can sell their produce not only in markets located within the country but can also compete in markets located in other countries of the world. for the buyers, import of goods produced in another country is one way of expanding the choice of goods beyond what is domestically produced

19. With the opening of trade, goods travel from one market to another . Choice of goods in the markets rises . Prices of similar goods in the two markets tend to become equal. Producers in the two countries now closely compete against each other Foreign trade thus results in connecting the markets or integration of markets in different countries MAH E NDR A P A R E E K

20. WHAT IS GLOBALISATION- MNCs have been looking for locations around the world which would be cheap for their production. Foreign investment by MNCs in these countries has been rising. foreign trade between countries has been rising rapidly. A large part of the foreign trade is also controlled by MNCs. MAH E NDR A P A R E E K

21. WHAT IS GLOBALISATION- Ford Motors in India not only produces cars for the Indian markets, it also exports cars to other developing countries and exports car components for its many factories around the world. The result of greater foreign investment and greater foreign trade has been greater integration of production and markets across countries. Globalisation is the process of rapid integration or interconnection between countries.

22. MNCs are playing a major role in the globalisation process. More and more goods and services, investments and technology a r e m o ving be t w een c o u n t r ie s . Besides the movements of goods, services, investments and technology, there is one more way in which the countries can be connected. This is through the movement of people between countries in sear c h of bet t er i n c om e , bet t er j obs o r better ed u c a tio n . MAH E NDR A P A R E E K

23. FACTORS THAT ENABLED GLOBALISATION- TECHNOLOGY- Technology has been stimulated the globalisation process. Transportation technology has made much faster delivery of goods across long distances possible at lower costs. Technology in the areas of telecommunications, computers, Internet has been changing rapidly. Telecommunication facilities (telegraph, telephone including mobile phones, fax) are used to contact one another around the world, to access information instantly, and to communicate from remote areas.

24. FACTORS THAT ENABLED GLOBALISATION- Telecommunication facilitated by satellite communication devices. Computers have now entered almost every field of activity. you can obtain and share information with help of Internet Internet allows us to send instant electronic mail (e-mail) and talk (voice-mail) across the world at negligible costs. MAH E NDR A P A R E E K

25. Impo r ts of C h i nese t o ys in I n dia. In d ian g o v e r nment pu t s a tax on impo r t of t o y s . Those who wish to import these toys would have to pay tax on this. Now buyers will have to pay a higher price on imported toys. Chinese toys will no longer be as cheap in the Indian markets and i m po r ts f r om C h i na w i l l au t om a tical l y r educ e . Indian t o y - ma k e r s w i l l p r os p e r .

26. T ax on i m po r t s is an exampl e of tra d e ba r r ie r . It is called a ba r r ier beca u se s o m e r est r iction has been s et u p . Governments can use trade barriers to increase or decrease (regulate) fo r ei g n trade T h e In d ian g o v e r n m ent, aft e r I n depen d enc e , had p u t ba r r ie r s to fo r eign trade an d fo r eign i n v estment. This was considered necessary to protect the producers within the cou n t r y f r om fo r ei g n co m peti t io n . India allowed imports of only essential items such as machinery, fertilisers, petroleum etc. MAH E NDR A P A R E E K

27. LIBERLISATION – In 1991 Indian government decided that the time had come for Indian producers to compete with producers around the globe. Indian government felt that competition would improve the perfo r manc e of p r odu c e r s w i thin the count r y s i nce th e y w ould h a v e t o i m p r o v e t he i r qualit y . This decision was supported by powerful international organizations. Thus, barriers on foreign trade and foreign investment w er e rem o v e d to a la r ge extent. MAH E NDR A P A R E E K

28. LIBERLISATION – Now goods could be imported and exported easily and also fo r eign companies could set up f act o r ies an d offices he r e Removing barriers or restrictions set by the government is what is kn o wn a s liberalis a tio n . With liberalisation of trade, businesses are allowed to make decisions freely about what they wish to import or export. The g o v e r nment i m poses m u c h l e ss r est r ictions than befo r e a n d i s the r efo r e said to be mo r e l i bera l .

29. WORLD TRADE ORGANISATION- 29 Th i s de c i s ion of liberali z a ti o n w a s su p p o r ted b y p o w erful inte r n a tional organizations. These org a nis a tio n s s a y th a t all ba r r ie r s to fo r eign trade and i n v estment a r e ha r mful. The r e should be no ba r r ie r s . T rad e bet w een c oun t r ies should be ‘f r ee’. W orld T rad e Orga n is a tion (W T O) is one su c h organis a tion whose ai m is to lib M r E a N li D s R e A P i A n R t E e E r K national trade.

30. WORLD TRADE ORGANISATION- W T O esta b l i s he s r u l es r egar d i n g i n te r n a ti o n a l t r a d e , a n d sees th a t the s e r ul es a r e o b e y ed. A t p r e s e n t 1 6 4 co u nt r ies of th e w o r l d a r e c u r r e n t l y me m b e r s of th e WTO . T h o u gh W T O is s u p p o sed to a l l o w f r ee tra d e f o r all , i n p r acti c e , i t is s een th a t the d e v el o pe d c o u n t r ies h a v e u nfai r l y r etai n ed tra d e barriers. On the other hand,WTO rules have f o r c ed the d e v el o p i ng c o u nt r ies to r em o v e tra de b a r r ie r s . A n e x a m p l e of th is is th e c u r r e n t d e b a te on tra d e in a g r ic u l tu r a l p r o d u c t s . MAH E NDR A P A R E E K

31. Debate on Trade Practices – The agriculture sector provides the bulk of employment and a significant portion of the GDP in India. USA have share of agriculture in GDP at 1% and its share in total employment a tiny 0.5%! This very small percentage of people who are engaged in agriculture in the USA receive massive sums of money from the US government for production and for exports to other countries. Due to this massive money that they receive, US farmers can sell the farm products a t abn o r mal l y l o w p r ice s . The surplus farm products are sold in other country markets at low prices, adversely affec t i n g f a r m e r s in t hese co u nt r ie s . Developing countries are, therefore, asking the developed country governments, “We have reduced trade barriers as per WTO rules. But you have ignored the rules of WTO and have continued to pay your farmers vast sums of money. You have asked our governments to stop supporting our farmers, but you are doing so yourselves. Is t his f r ee an d f ai r t rade? MAH E NDR A P A R E E K

32. IM P A C T O F GLOB A LIS A TI O N I N INDI A - Gl o baliz a tion an d g r e a ter c o mpe t ition amo n g p r o d u c e r s - both local and foreign producers - has been of advantage to consumers, particularly the well-off sections in the urban areas. The r e is g r e a ter c hoi c e be f o r e these c o ns u me r s who n o w enjoy improved quality and lower prices for several products. These people today, enjoy much higher standards of living th a n w a s p o ssi b l e earlie r . Among producers and workers, the impact of globalisation has n o t been u n ifo r m MAH E NDR A P A R E E K

33. Firstly, MNCs have increased their investments in India over the p as t 2 y ea r s, whi c h mean s i n v esting in I n dia has been be n efi c ial for them. MNCs have been interested in various industries These products have a large number of well-off buyers. In these ind u st r ies an d se r vi c es, n e w jo b s h a v e been c r e a te d . Local c o mpa n ies supp l ying r a w m a te r ials, et c . to these in d us t r ies h a v e p r os p e r e d .

34. Steps to attract foreign investments – T he ce n tral a n d st a te g o v e r n m e n ts in I n d i a a r e ta k i n g s pe c i a l step s to a ttract f o r eign com p a n ies to i n v est i n In d ia. I n d u s t r ial zo n e s , c a lled S p e c ial E c onomic Z on e s ( S E Zs ) , ar e being set up. SEZs a r e to h a v e w o r l d cla s s f ac i lit i es: electricity, water, roads, transport, s to r ag e , r ec r e a ti o n a l an d e d u c a ti o n a l facilities. Co m pa n i es who set u p p r o d uc tio n u n its in the SEZ s do n o t h a v e to p a y ta x es f o r a n i n iti a l pe r i o d of fi v e years. MAH E NDR A P A R E E K

35. Steps to attract foreign investments – Government has also allowed flexibility in the labour laws to a ttract fo r eign i n v estment. The g o v e r nment has all o w ed companies to igno r e ma n y l a w s . Instead of hiring workers on a regular basis, companies hire workers ‘flexibly’ for short periods when there is intense p r essu r e of w ork. Th i s is done to r educe the cost of lab o ur f o r the c o mpa n y . fo r eign companies a r e still demanding m o r e flex i bil i ty in labo u r l a w s .

36. S e co n d l y , s e v eral of the t op In d ian c o m p a n ies h a v e b een a b l e t o b e ne f i t f r om the i n c r ea s ed c o m p etiti o n. Gl o b a l i s a ti o n has ena b le d s o m e large I n d i a n c o m p a n ies to e m erge as multinationals themselves! T a ta Mot o r s ( a u to m o b il e s ) , I n f o s ys ( I T ) , R a n b a x y ( me d ic i n e s ) , A s ia n Paints (paints), Sundaram Fasteners (nuts and bolts) are some Indian c o m p a n ies wh i c h a r e s p r ea d i n g the i r o p er a ti o ns w o r l d wi d e Gl o b a l i s a ti o n has als o c r e a ted n e w o p p o r tu n iti es f o r co m p a n i es p r o vi d i n g s e r vice s , p a r tic u la r l y th o s e i n v o l vi n g I T . MAH E NDR A P A R E E K

37. The Indian company producing a magazine for the London based c ompa n y an d call ce n t r es a r e some ex a mple s . T od a y , Most w or k e r s a r e empl o y ed in the u n org a nised sec t o r . Moreover, increasingly conditions of work in the organised sector h a v e c ome to r ese m b l e the u n org a nised sec t o r . W or k e r s in the org a nised sec t or no l o n g er get t he p r o t ec t ion an d benefits th a t th e y enj o y ed ear l ie r .

38. THE STRUGGLE FOR A FAIR GLOBALISATION- Everyone has not benefited from globalisation. People with education, skill and wealth have made the best use of the new opportunities. There are many people who have not shared the benefits.

39. How to make Globalisation more ‘fair’? Fair globalisation would create opportunities for all It also ensure that the benefits of globalisation are shared better. The government policies must protect the interests, not only of the rich and the powerful, but all the people in the country. The government can ensure that labour laws are properly implemented and the workers get their rights. It can support small producers to improve their performance till the time they become strong enough to compete. the government can use trade and investment barriers , If necessary. It can negotiate at the WTO for ‘fairer rules’. It can also align with other developing countries with similar interests to fight against the domination of developed countries in the WTO.

40. BOARD QUESTIONS COMING SOON