Globalisation and the Indian Economy — Practice

Question 1

What is a multinational corporation (MNC)?

Accepted Answer

A company that owns or controls production in more than one country.

✦ Answer: a firm producing in multiple countries.

Question 2

In which year did India begin major liberalisation of its economy?

Accepted Answer

In 1991.

✦ Answer: 1991.

Question 3

Define globalisation.

Accepted Answer

The rapid integration of countries through greater foreign trade and foreign investment.

✦ Answer: integration of economies via trade and investment.

Question 4

In what ways do MNCs spread their production?

Accepted Answer

Step 1 — By setting up joint production with local firms, or buying up local companies.

Step 2 — By placing orders with small producers who make goods under the MNC's brand.

✦ Answer: joint ventures/acquisitions and outsourcing orders to local producers.

Question 5

How has technology enabled globalisation?

Accepted Answer

Step 1 — Faster, cheaper transport (containers, air cargo) moves goods quickly.

Step 2 — Information technology (telecom, internet) lets firms coordinate production and services worldwide instantly.

✦ Answer: better transport and ICT connect global production and services.

Question 6

How does foreign trade integrate markets?

Accepted Answer

Step 1 — Producers can sell beyond their home market and buyers get more choice.

Step 2 — Competition across countries tends to equalise the prices of similar goods.

✦ Answer: it links markets, widens choice and tends to equalise prices.

Question 7

What is liberalisation, and why did India adopt it in 1991?

Accepted Answer

Step 1 — Liberalisation means removing government-imposed barriers to trade and investment.

Step 2 — Earlier barriers protected Indian industries; by 1991 the government decided Indian producers were ready to compete.

Step 3 — So it opened the economy to imports and foreign investment, integrating India globally.

✦ Answer: removing trade barriers; adopted in 1991 to integrate India with the world economy.

Question 8

Discuss the positive and negative impacts of globalisation on India.

Accepted Answer

Step 1 — Positive: more choice and cheaper, better goods; new jobs, investment and technology; growth of IT and Indian MNCs.

Step 2 — Negative: small producers faced tough competition (many closed); workers face insecurity and low wages.

Step 3 — Benefits have been uneven across groups.

✦ Answer: gains in choice/jobs/technology but losses for small producers and workers — uneven benefits.

Question 9

What can the government do to make globalisation fairer?

Accepted Answer

Step 1 — Enforce labour laws and support small producers to compete.

Step 2 — Negotiate fairer WTO rules and align trade with the interests of all people.

✦ Answer: protect workers/small firms and press for fairer trade rules.

Practice — Globalisation and the Indian Economy

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