Please see Globalisation and the Indian Economy Class 10 Social Science Revision Notes provided below. These revision notes have been prepared as per the latest syllabus and books for Class 10 Social Science issues by CBSE, NCERT, and KVS. Students should revise these notes for Chapter 4 Globalisation and the Indian Economy daily and also prior to examinations for understanding all topics and to get better marks in exams. We have provided Class 10 Social Science Notes for all chapters on our website.
Chapter 4 Globalisation and the Indian Economy Class 10 Social Science Revision Notes
Production across Countries
• Trade was the main channel connecting distant countries before large companies called multinational corporations (MNCs) emerged.
• Cost of production is low and the MNCs can earn greater profits.
• Production is organised in increasingly complex ways and the production process is divided into small parts and spread out across the globe.
Interlinking Production across Countries
• There are a variety of ways in which the MNCs spread their production and interact with local producers in various countries across the globe:
o They set up partnerships with local companies, by using the local companies for supplies.
o They closely compete with the local companies or buy them up.
o MNCs exert a strong influence on production at distant locations resulting in production in these widely dispersed locations getting interlinked.
Foreign Trade and Integration of Markets
• With the opening of trade, goods travel from one market to another and choice of goods in the markets rises.
• Producers can sell their produce not only in markets located within the country but can also compete in markets located in other countries of the world.
• Similarly, import of goods produced in another country is one way of expanding the choice of goods for buyers beyond what is domestically produced.
What is Globalisation?
• The process of rapid integration or interconnection between countries is called globalisation.
• MNCs play a major role in the globalisation process as more goods and services, investments and technology move between countries.
Factors that have enabled Globalisation
Technology
• The globalisation process has majorly been stimulated by rapid improvement in technology.
Liberalisation of foreign trade and foreign investment policy
• Governments can use trade barriers to regulate foreign trade and to decide the kind of goods and quantity that would come into the country.
• Liberalisation is removing barriers or restrictions set by the government, so that businesses are allowed to make decisions freely about what they wish to import or export.
World Trade Organisation
• World Trade Organisation (WTO) is an organisation whose aim is to liberalise international trade.
• Nearly 165 Countries of the world are currently members of the WTO as on July 2016.
Impact of Globalisation in India
• The benefit is particularly to the well-off sections in the urban areas that have greater choice and enjoy improved quality and lower prices for several products.
• The impact of globalisation has not been uniform among producers and workers.
Steps to Attract Foreign Investment
• The central and state governments in India are recently taking special steps to attract foreign companies to invest in India by setting up industrial zones, called Special Economic Zones (SEZs).
• Government has also allowed flexibility in the labour laws to attract foreign investment by the following:
• Foreign companies are still not satisfied and demand more flexibility in labour laws.
Small producers: Compete or perish
• Industries like those of batteries, capacitors, plastics, toys, tyres, dairy products, and vegetable oil are some examples where the small manufacturers have been hit hard due to competition.
Competition and Uncertain Employment
• The lives of workers have been substantially changed globalisation and the pressure of competition leading to most employers preferring to employ workers ‘flexibly’.
The Struggle for a Fair Globalisation
• Fair globalisation would create opportunities for everyone, and also ensure that the benefits of globalisation are shared better.
• The government can play a major role by making policies to protect the interests of all the people in the country:
o By ensuring that labour laws are properly implemented and the workers get their rights, it can support small producers to improve their performance till they become strong enough to compete.
o The government can use trade and investment barriers, wherever necessary and negotiate at the WTO for ‘fairer rules’.
o Further, it can align with other developing countries with similar interests to fight against the domination of developed countries in the WTO.
o Massive campaigns and representation by people’s organisations have influenced important decisions relating to trade and investments at the WTO in the past few years have demonstrated the same.
Very Short Answer Type Questions
Question. Due to what reason are the latest models of different items available within our reach?
Answer : Globalisation
Question. What is Multinational Corporation?
Answer : A multinational corporation is a company that owns or controls the production of its goods in more than one country.
Question. Differentiate between investment and foreign investment.
Answer : The money that is spent to buy assets such as land, building, machines etc. is called investment whereas investment made by a MNC to buy such assets is called foreign investment.
Question. What is meant by trade barrier?
Answer : It refers to the various restrictions which are used by the government of a country to increase or decrease foreign trade such as tax on imports.
Question. Give the meaning of globalisation.
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.
Question. Why did the Indian government remove barriers to a large extent on foreign trade and foreign investment?
Answer : The Indian government realised that its domestic industries had established themselves and it was the proper time to face competition and improve the quality of production. So, barriers on foreign trade and investment were removed
Question. Why do MNCs set up their offices and factories in those regions where they get cheap labour and other resources?
Answer : MNCs set up their offices and factories in those regions where they get cheap labour and other resources because they bring down the cost of production and ensure more profits for themselves.
Question. In which two different forms do we participate in the market?
Answer : We participate in the market as producers and consumers.
Question. Why had the Indian Government put barriers to foreign trade and foreign investment after independence? State any one reason.
Answer : To protect the producers within the country from foreign competition.
Short Answer Type Questions
Question. How do large companies manipulate the market? Explain with examples.
Answer : The large companies manipulate the market in the following ways:
• Sometimes false information is passed on through media and other sources to attract consumers.
For example, a company selling powder milk for babies as the most scientific product claiming it to be better than mother’s milk which although was a false claim.
• Some food items were consumed in India for many years although it is very harmful for the health of people. But through attractive and convincing advertisements in media, it was able to control the market such as Maggie noddles manufactured by Nestle was found harmful after testing in India in May 2015.
• They may also hide the essential information about the product like expiry date, contents, terms and conditions etc. to keep the consumers in dark.
• Sometimes, the expired products are packed in a new packing and again released in the market.
• It has also been evident that artificial scarcity is created by the producers and the product is hoarded for sale in future at a high price.
Question. Why had the Indian government put barriers to foreign trade and foreign investment after independence? Analyse the reasons.
Answer : The Indian government put barriers on foreign trade and foreign investment after independence because:
(a) It was considered necessary to protect the producers within the country from foreign competition.
(b) In 1950s and 1960s, the industries were in nascent stage and competition from imports at that stage would not have allowed these industries to develop.
(c) Therefore, India allowed the imports of only essential items like machinery, fertilizers, petroleum etc.
Question. Explain the role of government in- making globalisation fair.
Answer : Government can play an important role in making globalisation fair in the following ways:
• Policies should be made in such a way that they protect the interests of not only the rich and prosperous producers but also the workers.
• Labour laws should be properly implemented favouring the workers so that their basic rights like sustainable wages, better working conditions, health etc. are not hampered.
• Efforts should be made to protect the small producers from international competition and prepare a stage for their survival.
Question. Explain by giving examples how Multinational Corporations (MNCs) are spreading their products in different ways.
Answer : Multinational Corporations (MNCs) are spreading their production in different ways. Some of them are:
By buying local companies and, then expanding production. For example, Cargill Foods, a very large American MNC, purchased small Indian company, Parakh foods. Cargill Foods is, now, the largest producer of edible oil in India with a capacity making 5 million pouches daily.
By placing orders for production with small producers. Garments, footwears, sports items are examples where production is carried out by small producers for large MNCs around the world.
By producing jointly with some of the local companies. It benefits the local company in two ways.
1. A MNC can provide money for additional investments.
2. A MNC can bring latest technology for production.
For example, Ford Motors set up a large plant near Chennai, in collaboration with Mahindra and Mahindra, a major Indian manufacturer of jeeps and trucks.
Question. ‘Barriers on foreign trade and foreign investment were removed to a large extent in India since 1991.’ Justify the statement.
Answer : In 1991, the Indian government decided that the time has come for Indian producers to compete with producers around the world. It felt that foreign competition would improve the quality of goods produced by Indian producers within the country.
Thus, barriers on foreign trade and foreign investment were removed to a large extent. It meant goods could be imported or exported easily and foreign companies could set up factories and offices in India.
Question. How does foreign trade integrates the markets of different countries? Explain with examples.
Answer : Foreign trade integrates the markets of different countries as:
(a) It provides an opportunity for both producers and consumers to reach beyond the markets of their own country.
(b) Producers now compete with markets located in other countries.
(c) There is an expansion of choice of goods beyond the domestic market.
(d) For example, during the Diwali season, buyers in India have the option of buying either Indian or Chinese decorative lights and bulbs. The Chinese manufacturers get the opportunity to expand their business.
Question. Explain any three conditions that determine MNCs setting up production in other countries.
Answer : The factors that MNCs take into consideration to set up their production units in a particular place are:
• where it is close to the markets.
• where the skilled and unskilled labour at low costs is available.
• where the favourable government policies looking after their interest are , present.
• where the other factors of production such as raw materials, water, electricity and transport are available.
• where there are standard safety measures for assured production.
Question. “Globalisation and greater competition among producers has been of advantageous to consumers.” Justify the statement with examples.
OR
“A wide ranging choice of goods are available in the Indian markets.” Support the statement with examples in context of globalisation.
Answer : Globalisation and greater competition among producers has been of advantageous to consumers in the following ways:
• Consumers in today’s world have a wide variety of goods and services to choose from. The latest models of digital cameras, mobile phones and televisions made by the leading manufacturers are available to them.
• Consumers now enjoy better and improved quality at lower prices.
• It has resulted in higher standards of living.
• There has been a varying impact on producers and workers.
• Many top Indian companies have been able to establish themselves as multi¬national corporations.
• Latest technology and production methods have raised production standards.
Question. “Information and communication technology has played a major role in spreading out production of services across countries”. Justify the statement with examples.
Answer : Information and communication technology has played a major role in spreading out products and services across countries. In recent years, technology in the areas of telecommunication facilities (telegraph, telephone including mobile phone) are used to contact one another around the world. For example, a news magazine published for London readers is to be designed and printed in India. The text is sent through the internet to Delhi office. Design of the magazine is also sent to Delhi from London office using telecommunication facilities. The design is done on a computer. After printing, the magazines are sent to London by air. The payment for the services from London to Delhi is done instantly through the internet (e-banking).
Question. How have our markets been transformed? Explain with examples.
Answer : The advent of globalisation and the policy of liberalization have opened the market to the world players. It has given rise to wide choice of goods and services to the consumer. MNCs have played a vital role in the world market. Foreign trade and investment in’the country has increased. It has also resulted in exchange of technology between countries. In recent times, technology in the areas of telecommunications, computers and internet has been changing rapidly. Globalisation has also created new opportunities for companies providing services, particularly those involving in IT. Better job opportunities for people have given rise to migration. Globalisation has also enabled some large Indian companies to emerge as multinationals For example, Tata Motors, Infosys, Ranbaxy have expanded their operations around the world.
Long Answer Type Questions
Question. Describe any five factors that promote the Multinational Corporations (MNCs) to set up their production units in a particular place.
Answer : The factors that MNCs take into consideration to set up their production units in a particular place are:
• Where it is close to the markets.
• Where the skilled and unskilled labour at low costs is available.
• Where the favourable government policies looking after their interest are , present.
• Where the other factors of production such as raw materials, water, electricity and transport are available.
• Where there are standard safety measures for assured production.
Question. What has been the impact of globalisation on India? Explain.
Answer : The impact of globalisation on Indian economy is as follows:
• It has created competition among producers, both local and foreign, which is advantageous to the consumers, particularly the well off. Now, there is a greater choice of goods before the consumers.
• It has enabled many Indian companies to become multi-national companies such as Tate Motors, Infosys and Ranbaxy.
• It has created new employment opportunities for companies providing services specially information technology. A lot of services such as data entry, accounting, and administrative tasks are done cheaply in India and exported to other countries.
• New jobs are created in industries such as electronics, cell phones, automobiles and fast food.
• It had a negative impact on small manufacturers. Due to competition, some industries has been hit hard such as batteries, capacitors, plastic toys, vegetable oil etc. A number of units have shut down and a lot of workers have become jobless.
Question. Describe the major problems created by the globalisation for a large number of small producers and workers.
Answer : The major problems created by the globalisation for a large number of small producers and workers are:
• The small producers or workers either have to compete or perish.
• Small scale industries like batteries, capacitors, plastic toys etc. have been hit hard due to global products and have suffered great losses in their businesses.
• Several small factory units are forced to shut down.
• Millions of workers have gone jobless and jobs are no longer secure.
• It has increased income inequalities among various countries.
• Unorganised sector has expanded. {any five)
Question. What is globalisation? Describe the role of Multinational Corporations (MNCs) in promoting globalisation process.
Answer : Globalisation means: integrating the economy of a country with the economies of other countries under conditions of free flow of trade and capital and movement of persons across borders.
MNCs play an important role in promoting globalisation process in the following ways:
• They serve as agents for the transfer of superior technology. They have provided advanced technology, manufacturing process and improved skills to underdeveloped countries.
• They help in the transfer of capital from countries where it is abundant to where it is scarce.
• They help in building up knowledge base and development of human resources. They help in creating large scale employment opportunities by setting up their branches and subsidiaries.
• The operations of MNCs have a favorable effect on the balance of payments account of the host country.
Question. Explain the role of information technology in globalisation.
Answer : Information and communication technology has stimulated the globalisation process as:
• In recent years, technology in the areas of computers, telecommunication and internet has been changed rapidly.
• Telecommunication facilitates including telegraph, telephone, mobile phone, fax are used to contact one another around the world and to get information instantly and to communicate from remote areas.
• All this has been facilitated by satellite communication devices.
• Computers and internet have enabled people to obtain and share information on any subject.
Question. How do large companies often manipulate the markets? Explain with an example.
Answer : The large companies manipulate the market in the following ways:
• Sometimes false information is passed on through media and other sources to attract consumers. For example, a company selling powder milk for babies as the most scientific product claiming it to be better than mother’s milk which although was a false claim.
• Some food items were consumed in India for many years although it is very harmful for the health of people. But through attractive and convincing advertisements in media, it was able to control the market such as Maggie noddles manufactured by Nestle was found harmful after testing in India in May 2015.
• They may also hide the essential information about the product like expiry date, contents, terms and conditions etc. to keep the consumers in dark.
• Sometimes, the expired products are packed in a new packing and again released in the market.
• It has also been evident that artificial scarcity is created by the producers and the product is hoarded for sale in future at a high price.
Question. What is trade? Explain the importance of international trade.
Answer : The exchange of goods among people, states and countries is referred to as trade.
The international trade is important because:
• It helps in exchange of surplus goods with those of deficit countries through foreign trade.
• It helps in improving the quality of domestic goods.
• It contributes to the economic growth of the country by raising income level of the people and increasing foreign exchange reserves.
• It enables a country to import advanced technology of other countries to improve its own production.
Question. Explain with three examples how top Indian companies have benefitted from globalisation.
Answer : The top Indian companies have benefitted from globalisation in the following ways:
• They have been able to survive in the international competition.
• They have invested in newer technology and production methods and raised their production standards.
• They also have gained from successful collaborations with foreign companies.
• Many of them have emerged as multinationals themselves such as Tata Motors and Asian Paints.
• It has provided them new opportunities for expansion and value addition of their services.
Question. How are Multinational Corporations (MNCs) controlling and spreading their productions across the world? Explain.
Answer : The ways in which MNCs controlling and spreading their productions across the world are:
• By directly setting up factories and offices for production.
• By setting up production jointly with some of the local companies of other countries.
• By buying up local companies and then expand production.
• By placing orders for production with small producers of the countries such as garments, footwear.
• By buying mass produced goods of domestic industries and, then sell it under their own brand name at much higher rates in foreign countries.
CASE BASED STUDY QUESTION
Ford Motors, an American company, is one of the world’s largest automobile manufacturers with production spread over 26 countries of the world. Ford Motors came to India in 1995 and spent Rs. 1700 crore to set up a large plant near Chennai. This was done in collaboration with Mahindra and Mahindra, a major Indian manufacturer of jeeps and trucks. By the year 2004, Ford Motors was selling 27,000 cars in the Indian markets, while 24,000 cars were exported from India to South Africa, Mexico and Brazil. The company wants to develop Ford India as a component supplying base for its other plants across the globe.
1. Would you say Ford Motors is a MNC? Why?
Answer : Ford Motors has production facilities spread over 26 countries of the world. Hence, it can be termed an MNC.
2. What is foreign investment? How much did Ford Motors invest in India?
Answer : The investment which comes from abroad is called foreign investment. Ford Motors had invested Rs. 1700 crore.
3. By setting up their production plants in India, MNCs such as Ford Motors tap the advantage not only of the large markets that countries such as India provide, but also the lower costs of production. Explain the statement.
Answer : The cost of labour is cheaper in India; compared to the developed countries. This means that an MNC can save lot of money on wages and salaries by setting up production plants in India. This helps in lowering the cost of production. India itself is a large market with sizeable population of middle class and upper class and hence provides a big market for many products.
4. Why do you think the company wants to develop India as a base for manufacturing car components for its global operations? Discuss the following factors:
(a) Cost of labour and other resources in India
Answer : Wages and salaries are much lower in India compared to in developed countries. Moreover, raw materials and power is also cheaper. This is a definite advantage which India offers as a production base.
(b) The presence of several local manufacturers who supply autoparts to Ford Motors
Answer : There are many companies which manufacture various auto-parts; like Sundaram Fasteners. Because of their lower cost of operation, these companies supply various parts at less price than price in the developed countries.
(c) Closeness to a large number of buyers in India and China
Answer : India and China together comprise about 30% of the world population and thus they provide a huge market for various companies. Making a production base in India provides easy access to these two markets.
