GLOBALISATION AND THE INDIAN ECONOMY................Part I

SUMMARY OF THE TOPICS  ON WHICH QUESTIONS AND ANSWERS ARE GIVEN:

PRODUCTION ACROSS COUNTRIES
INTERLINKING PRODUCTION ACROSS COUNTRIES
FOREIGN TRADE AND INTEGRATION OF MARKETS
WHAT IS GLOBALISATION?
FACTORS THAT HAVE ENABLED GLOBALISATION
WORLD TRADE ORGANISATION
IMPACT OF GLOBALISATION IN INDIA
THE STRUGGLE FOR A FAIR GLOBALISATION 


I. Answer the following questions : 

Q1. What is a Multinational Corporation?

1. A Multinational Corporation is a company that owns or controls production in more than one nation.
2. MNCs set up offices and factories for production in regions where they can get cheap labour and other resources.
3. This is done so that the cost of production is low and the MNCs can earn greater profits. 

Q2. Explain the conditions that determine MNCs setting up production in other countries.

MNCs set up production units:- 

1. Where there is skilled and unskilled labour available at low costs. 
2. Where  it is close to the markets .
3. Where government policies look after their interests .

Q3. What is foreign investment?

1. MNCs set up factories and offices for production and they spend money to buy assets such as land, building, machines and other equipment is called investment.
2. This investment made by MNCs is called foreign investment.

Q4. Explain the ways in which multinational corporations have spread their production and interaction with local producers in various countries across the globe.

1. MNCs spread their production and interaction by directly setting up the factories and offices.
2. MNCs set up production jointly with some of the local companies and as a result it benefits the local company by providing money for additional investments, like buying new machines for faster production and also bring with them the latest technology for production.
3. MNCs  buy up local companies and then  expand production as they have huge wealth. For example, Cargill Foods, a very large American MNC, has bought over smaller Indian companies such as Parakh Foods.
4. MNCs in developed countries place orders for production with small producers. For example:- garments, footwear and sports items.

Q5. What was the main channel connecting countries in the past? 

1. Foreign trade was the main channel connecting countries.
2. The trade routes connected India and South Asia to markets both in the East and West and the extensive trade took place along these routes. 
3. The trading interests also attracted various trading companies such as the East India Company to India.

Q6. How does foreign trade lead to integeration of the markets across countries? Explain with example.

1. Foreign trade creates an opportunity for the producers to reach beyond the domestic markets, i.e., markets of their own countries. 
2. 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. 
3. For the buyers, import of goods produced in another country expands the choice of goods beyond what is domestically produced.
4. With the opening of trade, goods travel from one market to another. Choice of goods in the markets rises. 
5. Prices of similar goods in the two markets tend to be come equal. 
   Foreign trade thus lead to integration of markets in different countries. For example:- Indians can choose between the Chinese products and Indian produced goods as both are available in the markets such as toys, decorative lights etc.