Class 10 Economics – Chapter 4: Globalisation and the Indian Economy Social Science

Exercises

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

Answer

Globalisation means integrating the economy of a country with the economies of other
countries under conditions of free flow of trade, capital and movement of persons across
borders. It includes
(i) Increase in foreign trade

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(ii) Export and import of techniques of production.
(iii) Flow of capital and finance from one country to another
(iv) Migration of people from one country to another.

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

Answer

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The Indian government had put barriers to foreign trade and foreign investment to protect
domestic producers from foreign competition, especially when industries had just begun to
come up in the 1950s and 1960s. At this time, competition from imports would have been a
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death blow to growing industries. Hence, India allowed imports of only essential goods.

In New Economic Policy in 1991, the government wished to remove these barriers because
it felt that domestic producers were ready to compete with foreign industries. It felt that
foreign competition would in fact improve the quality of goods produced by Indian
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industries. This decision was also supported by powerful international organisations.

3. How would flexibility in labour laws help companies?

Answer
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Flexibility in labour laws will help companies in being competitive and progressive. By easing
up on labour laws, company heads can negotiate wages and terminate employment,
depending on market conditions. This will lead to an increase in the company’s
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competitiveness.

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

Answer

Multinational Corporations (MNCs) set up their factories or production units close to

markets where they can get desired type of skilled or unskilled labour at low costs along
with other factors of production. After ensuring these conditions MNCs set up production
units in the following ways :
Class 10 Economics – Chapter 4: Globalisation and the Indian Economy Social Science

 Jointly with some local companies of the existing country.

 Buy the local companies and then expand its production with the help of modern
technology.
 They place orders for small producers and sell these products under their own brand
name to the customers worldwide.

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?

Answer

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Developed countries want developing countries to liberalise their trade and investment
because then the MNCs belonging to the developed countries can set up factories in less-
expensive developing nations, and thereby increase profits, with lower manufacturing costs

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and the same sale price.

In my opinion, the developing countries should demand, in return, for some manner of
protection of domestic producers against competition from imports. Also, charges should be

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levied on MNCs looking to set base in developing nations.

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

“The impact of globalisation has not been uniform”. It has only benefitted skilled and
professional person in urban not the unskilled persons. The industrial and service sector has
much gained in globalisation than in agriculture. It benefitted MNCs on domestic producers
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and the industrial working class. Small producers of goods such as batteries, capacitors,
plastics, toys, tyres, dairy products and vegetable oil have been hit hard by competition
from cheaper imports.

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

Liberalisation of trade and investment policies has helped the globalisation process by
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making foreign trade and investment easier. Earlier, several developing countries had placed
barriers and restrictions on imports and investments from abroad to protect domestic
production. However, to improve the quality of domestic goods, these countries have
removed the barriers. Thus, liberalisation has led to a further spread of globalisation
because now businesses are allowed to make their own decisions on imports and exports.
This has led to a deeper integration of national economies into one conglomerate whole.

8. How does foreign trade lead to integration of markets across countries? Explain with an
example.
Class 10 Economics – Chapter 4: Globalisation and the Indian Economy Social Science

Answer

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. Competition
among producers of various countries as well as buyers prevails. Thus foreign trade leads to
integration of markets across countries.

For example, during Diwali season, buyers in India have the option of choosing between
Indian and Chinese decorative lights and bulbs. So this provides an opportunity to expand
business.

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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.

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Answer

After twenty years, world would undergo a positive change which will possess the following
features— healthy competition, improved productive efficiency, increased volume of

and modern technology.

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output, income and employment, better living standards, greater availability of information

Reason for the views given above : These are the favourable factors for globalisation :
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 Availability of human resources both quantity wise and quality wise.
 Broad resource and industrial base of major countries.
 Growing entrepreneurship
 Growing domestic market.
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10. Supposing you find two people arguing: One is saying globalisation has hurt our
country’s development. The other is telling, globalisation is helping India develop. How
would you respond to these organisations?

Answer
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Benefits of globalisation of India :

 Increase in the volume of trade in goods and services

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 Inflow of private foreign capital and export orientation of the economy.

 Increases volume of output, income and employment.

Negative Impact / Fears of Globalisation.

 It may not help in achieving sustainable growth.
 It may lead to widening of income inequalities among various countries.
 It may lead to aggravation of income inequalities within countries.

Whatever may be the fears of globalisation, I feel that it has now become a process which is
catching the fancy of more and more nations. Hence we must become ready to accept
globalisation with grace and also maximise economic gains from the world market.
Class 10 Economics – Chapter 4: Globalisation and the Indian Economy Social Science

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.

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Answer

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

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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 cheaper production costs. While consumers
have more choices in the market, the effect of rising demand and purchasing power has

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meant greater competition among the producers.

12. Match the following.

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(i) MNCs buy at cheap rates from small producers (a) Automobiles

(ii) Quotas and taxes on imports are used to regulate (b) Garments, footwear,

trade sports items

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(iii) Indian companies who have invested abroad (c) Call centres

(iv) IT has helped in spreading of production of services (d) Tata Motors, Infosys,
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Ranbaxy

(v) Several MNCs have invested in setting up factories in (e) Trade barriers
Aa

India for production

Answer

(i) MNCs buy at cheap rates from small producers (b) Garments, footwear,

sports items

(ii) Quotas and taxes on imports are used to regulate (e) Trade barriers
Class 10 Economics – Chapter 4: Globalisation and the Indian Economy Social Science

trade

(iii) Indian companies who have invested abroad (d) Tata Motors, Infosys,

Ranbaxy

(iv) IT has helped in spreading of production of services (c) Call centres

(v) Several MNCs have invested in setting up factories in (a) Automobiles

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India for production

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13. Choose the most appropriate option.

(i) The past two decades of globalisation has seen rapid movements in

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(a) goods, services and people between countries.
(b) goods, services and investments between countries.
(c) goods, investments and people between countries.
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(b) goods, services and investments 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.
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(c) form partnerships with local companies.

(b) buy existing local companies.

(iii) Globalisation has led to improvement in living conditions

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(a) of all the people

(b) of people in the developed countries
(c) of workers in the developing countries
(d) none of the above
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(d) none of the above