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Globalisation and Indian Economy topic is part of Social Science portion of MRSAFPI (Maharaja Ranjit Singh Armed Forces Preparatory Institute) Examination. This is the new section introduced in the year 2021-22 by the Maharaja Ranjit Singh Academy as a part of entrance exam for the NDA (National Defence Academy). In this post, you will study about the Globalisation and Indian Economy topic and the Multiple-Choice Questions for the Maharaja Ranjit Singh Armed Forces Preparatory Institute Examination.
GLOBALISATION AND INDIAN ECONOMY
PRODUCTION ACROSS COUNTRIES
The main mode of communication between distant countries was trade. Large corporations, now known as Multinational Corporations (MNCs), play a significant role in trade.
- A multinational corporation (MNC) is one that owns or controls production in more than one country.
- MNCs locate production headquarters and factories in areas where labor and other resources are cheap. This is done to keep production costs down and allow MNCs to make more money.
- MNCs locate production near markets, where skilled and unskilled labour is readily available at low rates, and where the availability of other production elements is ensured.
- Furthermore, MNCs may seek government measures that protect their interests.
INTERLINKING PRODUCTION ACROSS COUNTRIES
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Interlinking Production Across Countries
- Investment refers to money spent on assets such as land, buildings, machineries, and other equipment.
- MNC investment is referred to as foreign investment. Any investment is made in the hopes of profiting from the assets.
MNCs are spreading their production and interacting with local producers in numerous nations throughout the world in a variety of methods, as listed below:
- Joint Production: MNCs partner with an existing local company in joint production or partnership. The investment enables local producers to obtain new and improved assets as well as cutting-edge technologies.
- Acquisition of Local Companies: MNCs purchase large established local enterprises with vast networks in order to grow their production.
- Controlled Production: MNCs source materials and make orders with local companies who create goods, resulting in controlled production. The MNC’s brand name is used to market the products.
- MNCs collaborate with local businesses to set up production, which benefits local businesses in the following ways:
1. MNCs can give funds for extra investments, such as the purchase of new machines to increase production speed.
2. Multinational corporations may bring cutting-edge manufacturing technology with them.
FOREIGN TRADE AND INTEGRATION OF MARKETS
Foreign Trade and Integration of Markets
- Foreign trade allows producers to expand their reach beyond their home markets, i.e. markets within their own countries.
- Producers have the option of selling their products not only in domestic markets, but also in marketplaces around the world.
- Similarly, importing items manufactured in another country is one way for purchasers to increase their options beyond what is offered domestically.
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GLOBALISATION
The term “globalisation” refers to the process of integrating a country’s economy with the global economy. It’s a multifaceted problem. It is the culmination of a number of initiatives aimed at converting the world into one of greater interconnectedness and integration.
It entails the establishment of networks and endeavours aimed at breaking down social, economic, and geographic barriers. Globalisation aims to create connections such that events in India can be influenced by events taking place thousands of miles away. To put it another way, globalisation is the process of people, corporations, and governments all over the world interacting and uniting.
FACTORS ENABLING GLOBALISATION
1. Technology:
- One of the primary factors that has accelerated the globalisation process is rapid technological advancement. This has allowed for considerably speedier and more cost-effective distribution of commodities over great distances.
- Information is now readily accessible because of advancements in information and communication technologies.
- These advancements enabled India’s IT revolution by allowing workers to be located in different regions while yet being integrated into a virtual workspace.
- Automation and precise control of production, as well as homogeneity, have been made possible thanks to advanced computing facilities.
2. Trade Liberalisation:
- Government-imposed trade restrictions are known as trade barriers. The government can employ trade barriers to control or enhance international trade, as well as decide what sorts of goods and how much of each should be imported. Import taxes are an example of a trade barrier.
- Liberalization is the process of removing government-imposed trade obstacles or limitations. The government is said to be more liberal when it imposes fewer restrictions than before.
- In a developing economy, trade restrictions can help to boost growth and productivity. It can, however, be harmful after a certain level of development.
- India liberalized its trade in 1991, allowing companies to freely import and export materials and goods. This was backed up by organizations like the World Bank.
3. Foreign Investment Policy:
- A company’s considerable investments in a foreign enterprise are known as foreign direct investments (FDI).
- The investment could be used to acquire a material source, expand a company’s territory, or establish an international presence.
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WTO (WORLD TRADE ORGANIZATION)
- The World Trade Organization (WTO) arose from the 1947 General Agreement on Tariffs and Trade (GATT).
- The World Trade Organization (WTO) is a global organization with 164 member countries that regulates international trade rules.
- The World Trade Organization’s purpose is to keep trade flowing as smoothly and predictably as feasible.
- If a trade dispute arises, the World Trade Organization (WTO) tries to resolve it.
IMPACT OF GLOBALISATION IN INDIA
MNCs have expanded their investments in India during the last 20 years, indicating that investing in India has shown to be profitable.
- MNCs have shown an interest in urban industries such as cell phones, autos, electronics, soft drinks, fast food, and banking.
- There are a lot of wealthy people who buy these things. New employment has been created in these industries and services. Local businesses that supply these sectors with raw materials and other necessities have also prospered.
Second, increased competition has benefited a number of prominent Indian firms.
- They have increased their production standards by investing in modern technologies and production methods.
- Successful relationships with international enterprises have benefited some.
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STRUGGLE OF FAIR GLOBALISATION
Fair globalization provides possibilities for everyone while also ensuring that the advantages of globalization are distributed more evenly. The government has a significant role to play in making this happen.
Some of the steps that the government can take are:
1. It has the potential to help small producers boost their output.
2. It can ensure that labor rules are followed and that workers’ rights are protected.
3. The government can deploy trade and investment obstacles if required.
4. It can negotiate for “fairer rules” in the WTO.
5. It can also band together with other developing countries with similar interests to combat the WTO’s hegemony of developed countries.
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Table of Contents
GLOBALISATION IN ECONOMICS MCQs FOR MRSAFPI
- MNC stands for
A. Multinational Corporation
B. Multination corporation
C. Multinational Cities
D. Multinational council
Answer: A
2. Investment made by MNCs is called
A. Investment
B. Foreign trade
C. Foreign Investment
D. Disinvestment
Answer: C
3. Process of integration of different countries is called
A. Liberalization
B. Privatisation
C. Globalisation
D. None of the above
Answer: C
4.This helps to create and opportunity for the producers to reach beyond the domestic market:
A. Foreign trade
B. Domestic trade
C. Internal trade
D. Trade barriers
Answer: A
5.Production of services across countries has been facilitated by:
A. Money
B. Machine
C. Labour
D. Information and communication technology
Answer: D
6.Tax on imports is an example of
A. Investment
B. Disinvestment
C. Trade barrier
D. Privatisation
Answer: C
7.WTO stands for
A. World Tennis Organisation
B. World Trade Organisation
C. World Trade Centre
D. World Trade Office
Answer: B
8. Which one of the following is incorrect about the MNCs?
A. MNCs acquire small companies to expand production.
B. MNCs enter into joint venture to enter into foreign markets.
C. MNCs offer subsidy to the small scale industries.
D. MNCs set up own production centre in foreign countries.
Answer: C
9.Small scale industries face competition from
A. Rising prices
B. Cheap imports
C. Exports
D. Subsidy
Answer: B
10. Why do MNCs set up offices and factories for production in different region of the world?
A. Due to climate conditions
B. To minimize the production cost
C. Due to favourable conditions
D. All of the above
Answer: B
ALSO VISIT :- I. MCQs ON MONEY AND CREDIT
II. DEVELOPMENT MCQ FOR MRSAFPI
III. SECTORS OF INDIAN ECONOMY
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