Globalisation-2 Flashcards
how do mnc control trade
more
and more MNCs have been looking for
locations around the world which
would be cheap for their production.
Foreign investment by MNCs in these
countries has been rising. At the same
time, foreign trade between countries
has been rising rapidly. A large part
of the foreign trade is also controlled
by MNCs. For instance, the car
manufacturing plant of Ford Motors
in India not only produces cars for the
Indian markets, it also exports cars
to other developing countries and
exports car components for its many
factories around the world. Likewise,
activities of most MNCs involve
substantial trade in goods and also
services.
define globalisation
The result of greater foreign
investment and greater foreign trade
has been greater integration of
production and markets across
countries. Globalisation is this
process of rapid integration or
interconnection between countries.
MNCs are playing a major role in
the globalisation process.More
and more goods and services,
investments and technology are
moving between countries.
how can people connecttwo countries
Besides the movements of goods,
services, investments and technology,
there is one more way in which the
countries can be connected. This is
through the movement of people
between countries. People usually
move from one country to another in
search of better income, better jobs or
better education. In the past few
decades, however, there has not been
much increase in the movement of
people between countries due to
various restrictions.
how has transportation tech enabled globalisation
Rapid improvement in technology has been one major factor that has
stimulated the globalisation process. For instance, the past fifty years have
seen several improvements in transportation technology. This has made much
faster delivery of goods across long distances possible at lower costs.
explain the role of containers in transportation
Goods are placed in containers
that can be loaded intact onto
ships, railways, planes and trucks.
Containers have led to huge
reduction in port handling costs
and increased the speed with
which exports can reach markets.
Similarly, the cost of air transport
has fallen. This has enabled much
greater volumes of goods being
transported by airlines.
explain devlpment in commincatuon and information tech
Even more remarkable have been
the developments in information and
communication technology. In
recent times, technology in the areas
of telecommunications, computers,
Internet has been changing rapidly.
Telecommunication facilities (telegraph, telephone including mobile
phones, fax) are used to contact one
another around the world, to access
information instantly, and to
communicate from remote areas. This
has been facilitated by satellite
communication devices. As you
would be aware, computers have now
entered almost every field of activity.
You might have also ventured into theamazing world of internet, where you
can obtain and share information on
almost anything you want to know.
Internet also allows us to send instant
electronic mail (e-mail) and talk
(voice-mail) across the world at
negligible costs.
what is a trade barrier
Tax on imports is an example of
trade barrier. It is called a barrier
because some restriction has been set
up. Governments can use trade
barriers to increase or decrease
(regulate) foreign trade and to decide
what kinds of goods and how much
of each, should come into the country
why did indian govt put trade barrier?
The Indian government, after
Independence, had put barriers to
foreign trade and foreign investment.
This was considered necessary to
protect the producers within the
country from foreign competition.
Industries were just coming up in the
1950s and 1960s, and competition
from imports at that stage would not
have allowed these industries to come
up. Thus, India allowed imports of only essential items such as
machinery, fertilisers, petroleum
etc. Note that all developed
countries, during the early stages of
development, have given protection to
domestic producers through a variety
of means.
when was india ready for free trade?
Starting around 1991, some farreaching changes in policy were made
in India. The government decided that
the time had come for Indian
producers to compete with producers
around the globe. It felt that
competition would improve the
performance of producers within the
country since they would have to
improve their quality. This decision
was supported by powerful
international organisations.
what policy changes were made?
Thus, barriers on foreign trade and
foreign investment were removed to a
large extent. This meant that goods
could be imported and exported
easily and also foreign companies
could set up factories and offices
here.
what is liberalisation
Removing barriers or restrictions
set by the government is what is
known as liberalisation. With
liberalisation of trade, businesses are
allowed to make decisions freely
about what they wish to import or
export. The government imposes
much less restrictions than before
and is therefore said to be more
liberal.
what do the international orhanisation do
These
organisations say that all barriers to
foreign trade and investment are
harmful. There should be no barriers.
Trade between countries should be
‘free’. All countries in the world should
liberalise their policies.
what is wto
World Trade Organisation (WTO) is
one such organisation whose aim is
to liberalise international trade.
Started at the initiative of the
developed countries, WTO establishes rules regarding international trade,
and sees that these rules are obeyed.
Nearly 164 countries of the world are
currently members of the WTO
is wto fair or unfair?
Though WTO is supposed to allow
free trade for all, in practice, it is seen
that the developed countries have
unfairly retained trade barriers. On
the other hand, WTO rules have forced
the developing countries to remove
trade barriers. An example of this is
the current debate on trade in
agricultural products.
