- Globalisation increases competition, forcing firms to improve efficiency, reduce costs, and enhance quality.
- It helps developing countries by attracting foreign capital and technology, increasing exports, and improving productivity.
- It creates more employment opportunities and improves the efficiency of banking and financial sectors.
- However, it causes structural adjustments and redistribution of economic and political power, which may create instability.
- Globalisation may also expose economies to global downturns, protectionism, and challenges like high costs, infrastructure problems, and lack of international experience.
Definitions [1]
Definition: Globalisation
Integration of national economies and societies through cross-country flows of information, ideas, technologies, goods, services, capital, finance, and people.
Key Points
Key Points: Globalisation
- Globalisation = integration of the domestic economy with the world economy through free flow of goods, services, capital, information, and people.
- It differs from mere internationalisation - it involves deeper economic integration and global governance.
- India's key measures for globalisation include removal of quantitative restrictions, foreign capital inflows, rupee convertibility, trade policy reforms, and SEZs.
- Forms of globalisation include foreign trade reforms, export promotion, tariff reduction, repatriation, and open competition.
- Outsourcing is a key outcome - Indian firms like ONGC Videsh, Tata Steel, HCL, and Dr. Reddy's expanded globally.
- Positive impacts include foreign capital inflow, technology access, export growth, and greater consumer choice.
- Globalisation is closely linked to Liberalisation and Privatisation as part of the New Economic Policy framework.
Key Points: Nature of Globalisation
- Globalisation involves liberalisation of trade by reducing tariffs, quotas, and other trade barriers.
- It encourages free trade agreements and economic reforms to promote investment and economic growth.
- Businesses operate through global supply chains and expanded market access across countries.
- It leads to financial integration, foreign direct investment (FDI), and transfer of technology worldwide.
- Globalisation increases labour mobility and political interdependence, but may also create economic disparities among nations.
Key Points: Opportunities and Threats of Globalisation
Key Points: Transformation of Business by Globalisation
- Globalisation has led to the dominance of multinational companies in many industries worldwide.
- Countries have liberalised foreign investment policies, encouraging foreign direct investment (FDI).
- Competition has increased globally, leading companies to grow through mergers and acquisitions.
- Markets have become global, and companies now treat the entire world as a single market.
- Production has become global, with different stages of manufacturing located in different countries to reduce costs.
- Modern communication technologies, such as video conferencing and email, help firms manage global operations effectively.
