Notes For All Chapters Economics Class 10 CBSE
Introduction
In today’s world, consumers have access to a wide variety of goods and services — from mobile phones, cars, and clothes to processed food. This change in Indian markets, where we now see products from across the world, is due to globalisation.
This chapter explains:
- What globalisation is,
- How it occurs,
- The role of MNCs (Multinational Corporations),
- Factors enabling globalisation,
- And its impact on India.
Production Across Countries
Multinational Corporations (MNCs)
- An MNC is a company that owns or controls production in more than one country.
- MNCs set up offices and factories in regions where they can get:
- Cheap labour,
- Low cost of production,
- Availability of resources, and
- Large markets.
Example of Spreading Production
A large MNC may:
- Design products in the USA,
- Manufacture components in China,
- Assemble in Mexico or Europe, and
- Provide customer care from India.
This shows that production is spread across many countries.
Interlinking Production Across Countries
MNCs link production across nations in several ways:
1. Joint ventures – MNCs partner with local companies.
- Benefit to local companies:
- Investment from MNCs,
- Latest technology transfer.
2. Buying out local companies – MNCs purchase existing companies and expand.
- Example: Cargill Foods (USA) bought Parakh Foods (India) and became India’s largest edible oil producer.
3. Contract production – MNCs give production orders to small producers.
- Examples: Garments, footwear, sports goods.
- MNCs control price, quality, and delivery, showing their huge influence.
Foreign Trade and Integration of Markets
Meaning of Foreign Trade
Foreign trade connects markets across countries.
- Producers: Can sell beyond domestic markets.
- Consumers: Get a wider choice of goods at better prices.
Example: Chinese Toys in India
- Chinese toys entered Indian markets at cheaper rates.
- Result:
- Indian consumers benefited from lower prices and variety.
- Indian toy makers suffered losses.
- Indian and Chinese markets became connected.
Integration of Markets
Foreign trade leads to:
- Movement of goods between countries,
- Equalisation of prices,
- Global competition.
Hence, foreign trade integrates markets of different nations.
What is Globalisation?
Definition
Globalisation is the process of rapid integration or interconnection between countries through:
- Foreign trade,
- Foreign investment,
- Technology,
- And the movement of people.
Role of MNCs
MNCs play a major role by:
- Spreading production,
- Trading across countries,
- Investing large amounts,
- And transferring technology.
Globalisation has connected almost every region of the world.
Factors That Have Enabled Globalisation
(i) Rapid Improvement in Technology
- Improved transport → Faster and cheaper delivery of goods.
- Containerisation → Easier and cheaper handling of exports.
- Air transport → Faster movement of goods and people.
(ii) Information and Communication Technology (ICT)
- Technology in telecommunication, computers, and the Internet allows instant communication worldwide.
- Example:
A magazine printed in Delhi for a London publisher through email, design software, and online payment. - ICT enables outsourcing of services like data entry, call centres, and software development.
(iii) Liberalisation of Trade and Investment Policies
- Trade barriers (like import taxes and quotas) were earlier used to protect domestic industries.
- After 1991, India liberalised trade:
- Removed most barriers,
- Allowed free import/export,
- Encouraged foreign investment.
- This process is called Liberalisation.
(iv) Role of WTO (World Trade Organisation)
- Established by developed countries to promote free trade globally.
- Over 160 countries are members.
- WTO sets rules of international trade.
- However, it is criticised because:
- Developed nations often keep barriers, while
- Developing nations are forced to remove theirs.
- Example: US farmers receive subsidies, making competition unfair.
Impact of Globalisation in India
Positive Impacts
1. Consumers benefit
- More choices, better quality, lower prices.
- Higher living standards (especially in cities).
2. Growth of MNC investment
MNCs have invested heavily in India in sectors like:
- Automobiles,
- Electronics,
- Fast food,
- Banking, etc.
This created new jobs and supported local suppliers.
3. Growth of Indian Companies
- Many Indian companies benefited from competition and technology upgrades.
- Some became MNCs themselves:
- Tata Motors, Infosys, Ranbaxy, Asian Paints, Sundaram Fasteners.
4. Growth in Service Sector
- IT and communication services expanded.
- Examples: Call centres, software services, data processing for foreign clients.
Negative Impacts
1. Challenges for Small Producers
- Small industries (toys, plastics, batteries, etc.) faced heavy losses due to cheap imports.
- Many small factories shut down.
2. Uncertain Employment
- Employers prefer temporary/flexible workers to reduce costs.
- Workers lose job security and benefits.
- Example: Sushila, a garment worker, lost her permanent job and now works under poor conditions.
3. Unequal Benefits
- Educated and skilled people benefit more.
- Poor and unskilled workers are left behind.
Steps to Attract Foreign Investment
The Indian government established Special Economic Zones (SEZs) with:
- Better infrastructure (roads, electricity, transport),
- Tax benefits for companies,
- Easier laws for business.
Labour law flexibility was also introduced to attract investors.
The Struggle for a Fair Globalisation
To make globalisation fair:
- Government should:
- Protect small producers and workers.
- Ensure proper labour laws.
- Support industries with credit, technology, and infrastructure.
- Negotiate fair trade rules in WTO.
- Employers and MNCs should:
- Provide fair wages and job security.
- Workers and organisations can:
- Unite to demand fair treatment and equal opportunities.
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