NCERT Class 10 Economics Chapter 4: Globalization & Indian Economy YouTube Lecture Handouts

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Chapter 4: Globalization & Indian Economy

MNCs

  • Owns or controls production in more than one nation (cheap labor & resource, low cost, more profit)

  • NOT selling globally but producing globally (complex way)

  • Cheap production – China

  • Closeness to market – Mexico & Eastern Europe

  • Skilled Engineers – India

  • English speaking – Customer care

  • Favorable govt. policies

  • Save 50-60% cost of MNC

Interlinking Production

  • Investment – money to buy land, machine & building

  • Foreign Investment – made by MNC – to earn profit

  • MNC brings latest technology for production

  • MNC provides money for investment (huge wealth)

  • Cargill foods bought Indian Parakh foods – now Cargill (largest edible oil producer in India with 5 million pouches daily)

  • MNC place order with small producers – garment, footwear – determine price, quality, delivery, and labor conditions

  • With dispersed production locations are interlinked

Foreign Trade

  • Producer reach beyond domestic market

  • Buyers expand choice of goods beyond what is produced domestically

  • Chinese toys in India – cheaper, competitive, replaced Indian market

  • Choice for goods arises – price stabilizes

  • It connects and integrates market.

Globalization

  • Ford – manufactures for India and exports

  • More trade + more investment + more integration or interconnection

  • What moves? Goods, services, investment & technology

  • Why people move? Job, education & income

Globalization

  • Interdependence of world’s economies

  • Globalization + Connectivity & Digitization = Innovation & Value Creation

  • Prior – Trade (export of raw material & import of finished product)

Technology – Enabled Globalization

  • Containers for transport

  • Movement of goods and services

  • ICT – telecom, computers, internet (e-mail or voice talk – negligible cost), satellite devices

  • Payment wallets and e-banking (upcoming)

Liberalization

  • What if taxes on import of toys from China?

  • Trade barrier – taxes on import – govt. use to foreign trade

  • Quota – limit number of goods imported

  • India had trade restrictions till 1950-60s to protect local artisans

  • Only essential item imports were allowed (fertilizer, petroleum)

  • 1991- policy changes – LPG – compete globally to improve performance

  • No barrier on foreign trade – easy imports and exports – removing barriers - liberalization

WTO

  • Free trade and liberalize trade – WTO

  • Formed - 1st Jan 1955

  • Headquarters – Geneva, Switzerland

  • Members – 164 states

  • Under Marakkesh Agreement – replaced GATT (General Agreement on Tariffs & Trade)

  • Focus on Doha rounds – for developing nations

  • Developed nations – unfairly retained trade barriers

  • Forced developing nations to remove trade barriers (US farmers paid huge sum of money by govt. – bring in cheap produce & is unfair)

Impact on India

  • Customers – Greater choice, improved quality & low price

  • Investment of MNCs increased – cell phone, automobile, electronics

  • Creation of new jobs

  • SEZs – with world class facilities to attract investors

  • Flexibility in labor laws – hire for short period when more work pressure

  • Investment in new technology and higher production standards

  • Indian companies as MNCs - Tata Motors (automobiles), Infosys (IT), Ranbaxy (medicines), Asian Paints (paints), Sundaram Fasteners (nuts & bolts)

  • Host of services like data entry, accounting, administrative tasks, engineering

Negative Impact on India

  • Lesser job security

  • Workers employed flexibly

  • Long work hours & night shifts

What is the AIM?

  • Fair globalization – opportunity for all

  • Proper implementation of labor laws