Important Questions on Globalisation

Q . How is information technology connected with globalisation?

Ans.

• Information and communication technology is closely connected with globalisation.
• In recent times, technology in the areas of telecommunications, computers, internet has been changing rapidly.
• Telecommunications facilities such as telegraph, telephone including mobiles, fax have brought the world closer. Now people can contact around the world easily
• These developments are used to access the information instantly and communicate in the remote areas.
  • Computer and internet have entered in almost all the fields. Internet allows one to share information on almost everything.
  • We can send instant e-mail and talk through voice-mail across the world at almost negligible cost

Liberalisation of foreign trade and foreign investment policy

• Tax on imports is an example of trade barrier.
• It is called a barrier because some restriction has been set up.
• Governments can use trade barriers to increase or decrease (regulate) foreign trade and to decide what kinds of goods and how much of each, should come into the country.
• The Indian government, after Independence, had put barriers to foreign trade and foreign investment.
• This was considered necessary to protect the producers within the country from foreign competition.
• Industries were just coming up in the 1950s and 1960s, and competition from imports at that stage would not have allowed these industries to come up.
• Thus, India allowed imports of only essential items such as machinery, fertilisers, petroleum etc.
• Note that all developed countries, during the early stages of development, have given protection to domestic producers through a variety of means.
• Starting around 1991, some far reaching changes in policy were made in India.
• The government decided that the time had come for Indian producers to compete with producers around the globe.
• It felt that competition would improve the performance of producers within the country since they would have to improve their quality.
• This decision was supported by powerful international organisations.
• Thus, barriers on foreign trade and foreign investment were removed to a large extent.
• This meant that goods could be imported and exported easily and also foreign companies could set up factories and offices here.
• Removing barriers or restrictions set by the government is what is known as liberalisation.
• With liberalisation of trade, businesses are allowed to make decisions freely about what they wish to import or export.
• The government imposes much less restrictions than before and is therefore said to be more liberal.

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

Ans.

• Let us observe the impact of MNCs on domestic producers and the industrial working class to verify the truth behind this statement.
• Small producers of goods such as barriers, capacitors, plastic toys, tyres, dairy products and vegetable oil have been hit hard by the competition from cheaper imports.
• Also, due to the growing competition, the workers are hired on flexible wages.
• This has reduced their job security.
• Though efforts are there now to make globalisation ‘fair’ for all since it has become a worldwide phenomenon.

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

Ans.

• Earlier, several developing countries had placed barriers and restrictions on imports and investments from abroad to protect domestic production.
• Nevertheless, to improve the quality of domestic goods, these countries have therefore removed those barriers.
• Thus, Liberalisation is leading to a further spread of globalisation because now business companies are allowed to make their own decisions on imports and exports.
• This has led to a deeper integration of national economies into one business as a whole.

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

• Ans. Foreign trade provides opportunities for both producers and buyers to reach beyond the markets of their own countries.
• Goods travel from one country to another which creates competition among producers of various countries as well as options for buyers.
• Thus foreign trade leads to integration of markets across countries.