Globalisation and the Indian Economy: TBSE Class 10 Economics

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Get here the notes, questions, answers, textbook solutions, summary, additional/extras, and PDF of TBSE (Tripura Board) Class 10 madhyamik Social Science (Economics/Understanding Economic Development) Chapter “Globalisation and the Indian Economy.” However, the provided notes should only be treated as references, and the students are encouraged to make changes to them as they feel appropriate.

a woman counting her money, illustrating the chapter Globalisation and the Indian Economy


In the past few decades, there has been a significant increase in the availability of a wide variety of goods in the market. This is due to the emergence of multinational corporations (MNCs) that own or control production in more than one nation. These companies set up offices and factories in regions where they can get cheap labor and resources, which allows them to produce goods at a lower cost and earn greater profits. As a result, the production process is divided into smaller parts and spread out across the globe. For example, China is a cheap manufacturing location, Mexico and Eastern Europe are useful for their proximity to markets in the US and Europe, and India has highly skilled engineers and educated English-speaking youth who can provide customer care services. All of these factors contribute to cost-savings of around 50-60% for MNCs.

This trend is a relatively recent phenomenon, as until the middle of the 20th century, production was mainly organized within countries, and trade was the main channel connecting distant countries. Colonies such as India exported raw materials and foodstuff and imported finished goods. However, with the emergence of MNCs, the production process has become increasingly complex and spread out globally. This has led to a wider range of goods and services being available to consumers worldwide.

Multinational corporations (MNCs) establish production facilities close to markets with low-cost skilled and unskilled labor and an assurance of the availability of other production factors. Additionally, MNCs seek government policies that align with their interests. Investment in assets such as land, buildings, machines, and equipment is made by MNCs to set up factories and offices for production, which is called foreign investment. MNCs may collaborate with local companies by setting up joint production facilities, bringing in new technology, and providing additional investments. However, the most common method is to acquire local companies and expand production. MNCs have enormous wealth, which gives them considerable power and influence. Developed country-based MNCs place orders for production with small producers in industries such as garments, footwear, and sports equipment. These products are then sold under the MNCs’ brand names to consumers worldwide, allowing them to determine price, quality, delivery, and labor conditions for small producers. Overall, MNCs are spreading their production and interacting with local producers in various countries, resulting in an interlinked production system across the world.

Foreign trade has been a significant channel for connecting countries throughout history, allowing producers to reach beyond their domestic markets and compete globally while buyers can expand their choices. As a result, foreign trade leads to the integration of markets in different countries, with prices of similar goods tending to become equal. In recent decades, multinational corporations (MNCs) have been looking for locations worldwide that are cheap for their production, leading to increased foreign investment and trade, resulting in greater integration of production and markets across countries known as globalisation. MNCs are playing a significant role in this process, with most of the foreign trade being controlled by them. In addition to the movement of goods, services, investments, and technology, countries can also be connected through the movement of people between them. However, in recent decades there has not been much increase in the movement of people between countries due to various restrictions. Furthermore, the development of information and communication technology has brought significant changes, with telecommunication facilities such as mobile phones and the internet enabling people to connect globally and obtain and share information on almost anything they want to know.

Governments can use trade barriers to regulate foreign trade, but it can also protect domestic producers from foreign competition. India, after Independence, had put up barriers to foreign trade and foreign investment to protect local industries, but starting around 1991, the government decided to remove most of these barriers. Liberalisation of trade means businesses are allowed to make decisions freely about what they wish to import or export, and the government imposes much fewer restrictions than before.

Foreign trade and investment liberalisation in India has been supported by international organizations, such as the WTO, which aim to establish rules for international trade. However, developed countries have unfairly retained trade barriers while forcing developing countries to remove them. globalisation has benefited urban consumers with greater choice, improved quality, and lower prices, but its impact on producers and workers has been uneven. MNCs have invested in industries that serve well-off buyers, creating new jobs and prosperity for local suppliers. Some Indian companies have benefited from increased competition and invested in new technology and production methods. globalisation has also created new opportunities for Indian companies providing services such as IT, data entry, and engineering.

Globalisation has not benefited everyone equally. While people with education, skills, and wealth have taken advantage of new opportunities, others have not shared in these benefits. To make globalisation more fair, governments must implement policies that protect the interests of all people, not just the rich and powerful. Possible steps include ensuring labor laws are properly enforced, supporting small producers to improve their performance, and using trade and investment barriers if necessary. Governments can negotiate for fairer rules at the World Trade Organization (WTO) and align with other developing countries to fight against domination by developed countries. People’s organizations have also played an important role in influencing decisions related to trade and investment at the WTO. Overall, fair globalisation would create opportunities for everyone and ensure that the benefits are shared more equally.

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Textual questions and answers

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

Answer: Globalisation is the process of increasing interconnectedness and interdependence among countries, economies, and people around the world. It involves the integration of markets, trade, investment, technology, and culture across national borders. Globalisation has been facilitated by advancements in transportation, communication, and technology, which have made it easier and faster to move goods, services, and information across the world. While globalisation has brought many benefits, such as increased economic growth and cultural exchange, it has also created challenges, such as rising inequality and environmental degradation.

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

Answer: The Indian government put barriers to foreign trade and foreign investment after Independence 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. 

However, starting around 1991, some far-reaching 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. 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.

3. How would flexibility in labour laws help companies?

Answer: Flexibility in labour laws would help companies by allowing them to hire workers on a short-term or temporary basis, which would reduce the cost of labour for the company. This would enable companies to adjust their workforce according to the demand for their products or services, without having to worry about the long-term commitment of hiring permanent workers. Additionally, flexibility in labour laws would allow companies to easily terminate workers when they are no longer needed, which would reduce the cost of layoffs and severance pay. This would make it easier for companies to operate in a more efficient and cost-effective manner, which would ultimately benefit their bottom line.

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

Answer: MNCs set up, control, or produce in other countries in various ways. One common way is to set up production facilities in countries where there is skilled and unskilled labor available at low costs, and where the availability of other factors of production is assured. MNCs might also look for government policies that look after their interests. Another way is to buy up local companies and then expand production. MNCs with huge wealth can quite easily do so. Additionally, MNCs might design their products in research centers in one country, have the components manufactured in another country, and then assemble the finished products in yet another country. This allows MNCs to take advantage of the different strengths and resources of different countries, and to produce goods at a lower cost.

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: Developed countries want developing countries to liberalize their trade and investment policies because it would create new markets for their goods and services, and also provide them with access to cheaper labor and raw materials. This would help their companies to expand their operations and increase their profits. In return, developing countries should demand that developed countries provide them with access to their markets, and also provide them with financial and technical assistance to help them build their own industries. Developing countries should also demand that developed countries respect their sovereignty and not interfere in their internal affairs. Additionally, developing countries should demand that developed countries reduce their subsidies to their own farmers and industries, which distort global trade and make it difficult for developing countries to compete.

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

Answer: The statement “The impact of globalisation has not been uniform” means that the effects of globalisation have not been the same for all countries, regions, or people. While some countries and people have benefited from globalisation, others have suffered as a result of the rising competition. For example, developed countries with advanced technology and skilled labor have been able to take advantage of globalisation by expanding their markets and increasing their profits. On the other hand, developing countries with weaker economies and less skilled labor have struggled to compete with the developed countries, and have often been left behind in the global economy. Similarly, within countries, the impact of globalisation has not been uniform. While some people have benefited from new job opportunities and increased wages, others have lost their jobs or have seen their wages decrease due to increased competition from foreign companies. Overall, the impact of globalisation has been complex and varied, and has affected different countries, regions, and people in different ways.

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

Answer: liberalisation of trade and investment policies has helped the globalisation process in several ways. Firstly, it has allowed for the free flow of goods and services across borders, which has increased competition and lowered prices for consumers. This has also allowed companies to access new markets and expand their businesses globally. Secondly, liberalisation has encouraged foreign investment, which has brought in new capital and technology to developing countries. This has helped these countries to modernize their economies and improve their infrastructure, leading to increased economic growth and development. Thirdly, liberalisation has led to the formation of regional trade agreements and economic blocs, such as the European Union and NAFTA, which have further facilitated the flow of goods and services across borders. However, it is important to note that liberalisation has also had some negative effects, such as increased inequality and job losses in certain sectors. Therefore, it is important to ensure that the benefits of liberalisation are shared more equitably and that policies are in place to support those who are negatively affected by it.

8. How does foreign trade lead to integration of markets across countries? Explain with an example other than those given here.

Answer: Foreign trade leads to the integration of markets across countries by connecting producers and consumers in different countries. When countries engage in foreign trade, they are able to access a wider range of goods and services than what is available in their domestic markets. This leads to increased competition, which can result in lower prices and higher quality products for consumers. 

For example, let’s consider the case of coffee production in Ethiopia. Ethiopia is one of the largest coffee producers in the world, and its coffee is highly sought after by consumers in other countries. When Ethiopian coffee is exported to other countries, it creates an opportunity for Ethiopian coffee producers to reach beyond their domestic market and sell their coffee to consumers in other countries. This, in turn, creates an opportunity for consumers in other countries to expand their choice of coffee beyond what is domestically produced. As a result of this foreign trade, the markets for coffee in Ethiopia and other countries become integrated. Ethiopian coffee producers are now competing with coffee producers in other countries, and consumers in other countries are now able to choose between Ethiopian coffee and coffee produced in other countries. This integration of markets can lead to increased efficiency, as producers are forced to become more competitive in order to survive in the global market.

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.

Answer: It is difficult to predict exactly what the world will be like twenty years from now, but it is likely that globalisation will continue to play a significant role in shaping the global economy. Here are some possible reasons why: 

i. Technological advancements: The rapid pace of technological advancements is likely to continue, making it easier and cheaper for people and businesses to connect and communicate across borders. This could lead to even greater integration of markets and increased competition.
ii. Emerging markets: Emerging markets such as China, India, and Brazil are likely to continue to grow and become more integrated into the global economy. This could lead to increased trade and investment flows between these countries and the rest of the world.
iii. Climate change: Climate change is likely to continue to be a major global challenge, and addressing it will require international cooperation and coordination. This could lead to increased collaboration between countries on issues such as renewable energy, carbon pricing, and emissions reduction.
iv. Political developments: The political landscape is always changing, and it is difficult to predict how it will evolve over the next twenty years. However, it is likely that globalisation will continue to be a contentious issue, with some countries and groups advocating for greater protectionism and others pushing for more open markets.

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 arguments?

Answer: It is important to note that the impact of globalisation on a country’s development is complex and multifaceted. While globalisation has brought about opportunities for economic growth and development, it has also led to challenges such as increased competition and inequality. Therefore, it is difficult to make a blanket statement about whether globalisation has helped or hurt a country’s development. Instead of taking a one-sided approach, it is important to consider both the positive and negative impacts of globalisation on a country’s development. This requires a nuanced understanding of the specific context and circumstances of the country in question. It is also important to consider the distributional effects of globalisation, and whether the benefits are being shared equitably across different segments of society. In summary, the impact of globalisation on a country’s development is complex and multifaceted, and it is important to consider both the positive and negative impacts in a nuanced manner.

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.

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 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 the country’s large and growing market, availability of skilled labor, and favorable government policies). While consumers have more choices in the market, the effect of rising (competition and globalisation) has meant greater (competition) among the producers.

12. Match the following.

(i) MNCs buy at cheap rates from small producers(a) Automobiles
(ii) Quotas and taxes on imports are used to regulate trade(b) Garments, footwear, sports items
(iii) Indian companies who have invested abroad (c) Call centres
(iv) IT has helped in spreading of production of services(d) Tata Motors, Infosys, Ranbaxy
(v) Several MNCs have invested in setting up factories in India for production(e) Trade barriers 

Answer: (i) – (b)
(ii) – (e)
(iii) – (d)
(iv) – (c)
(v) – (a)

13. Choose the most appropriate option.

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

(a) goods, services and people between countries.
(b) goods, services and investments between countries.
(c) goods, investments and people between countries.

Answer: (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.
(c) form partnerships with local companies.

Answer: (b) buy existing local companies.

(iii) Globalisation has led to improvement in living conditions

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

Answer: (c) of workers in the developing countries.

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