What is globalization?
- Today, most regions and countries of the world are getting interconnected( for example, recently RECP trade group) interconnection has many dimensions such as cultural, political, social, and economic.
- In economic terms, Globalization can be defined as integration between countries through foreign trade and foreign investment led by Multi-National companies (MNCs). It leads to the integration of production and market.
The following factors facilitate globalization:
- Rapid improvement in technology:
- Improvement in transport and communication. Faster delivery of goods and services at a lower cost.
- Liberalization of trade and investment by removing trade barriers.
- Pressure from the international organization such as WTO( World trade organization)
Impacts of Globalization on the Indian Economy:
- Positive outcomes
- Negative outcomes
The positive outcome of Globalization:
Free flow movement :
- More and more goods and services, investment, and technology movement between the countries.
- More people move for better jobs, health, and education in the countries.
Consumer benefitted:
- Competition between local and foreign companies leads to cheap and good quality goods and services.
- The consumer gets greater choices with goods quality leads to rising in a higher standard of living. For example, in the automobile sector, earlier we had a choice only of Ambassador cars, but now we have many.
- Consumers can get many items that are not produced in India.
Companies benefitted:
- Local companies are able to get new technology and investment from abroad as a joint venture.
- Globalization created new opportunities for Indian companies such as IT, call centers, data entry jobs, administrative work, and engineering.
- Average GD grew above 7 % after LPG reforms
- Increase in forex reserve
Negative sides of globalization on the Indian Economy:
- The gap between the rich and poor increased:
- Not everyone is benefitted from the same. Educated and skilled people benefitted more than other people.
- Increase in the trend of contract workers and reduction of job security
- Many companies shut down which were not able to compete.
- Indian economy now more dependent on the global economy
- Shrinking agriculture sector or agriculture sectors, not attached investment from abroad.
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