Question

Distinguish between the following.

Globalization and Liberalization.

Answer 1

Sr no.	Aspect		Globalization	Liberalization
1.	Meaning		It refers to the integration of the national economy and societies through cross-country flows of information, ideas, technologies, goods, services, capital, finance, and people.	It refers to the process of eliminating unnecessary controls and restrictions for the smooth functioning of the business.
2.	Aim		It aims at promoting world trade and economic growth by integrating technologies, goods, services, people, etc.	It aims to bring flexibility in business operations by creating an environment for growth and expansion.
3.	Need		To overcome the problem of declining domestic demand and to ensure free trade.	To reduce taxation, controls on foreign exchange, attracting foreign investment, etc., thereby competing with other companies at the international level.
4.	Measures adopted		Allowing Foreign Direct Investment, approving foreign technology, amendment of patent laws, etc.	Reduction in tariffs, reformation of the financial system, abolishing the industrial licensing system, etc.
5.	Benefits to host company		Its result is the expansion of investment. It promotes foreign trade and brings foreign exchange.	It results in a high growth rate, easy availability of goods at competitive rates, good industrial relations, etc.
6.	Benefits to consumers traders		Consumers get a variety of goods as an option to be purchased. Foreign technology is adopted by traders, thereby increasing the growth of production.	Optimum use of resources available at a global level and easy availability of goods at competitive rates.
7.	Positive effect		It results in an increase in foreign trade, the inflow of foreign trade, the inflow of foreign technology, and capital, which increases employment opportunities, business growth, etc.	Removing the restriction on taxation, abolishing the industrial licensing system leads to the expansion and growth of new business opportunities.
8.	Adverse effect		It leads to exploitation of the home market by foreign companies. Capital-intensive techniques lead to a reduction in job opportunities.	It leads to social problems like urbanization and industrialisation, closure of domestic firms due to liberalised imported products, etc.
9.	Interrelationship		Globalisation includes liberalisation and privatisation.	Liberalisation leads to privatisation and globalisation.

Answer 2

Globalization

1. Globalization means integration of the economy with other countries.
2. It increases international trade and foreign investment.
3. It allows free flow of goods, services, capital and technology across countries.
4. It connects domestic markets with global markets.
5. It promotes economic interdependence among nations.

Liberalization

1. Liberalization means removal or relaxation of government restrictions in the economy.
2. It reduces controls like licenses, quotas and high tariffs.
3. It gives more freedom to private sector businesses.
4. It encourages competition within the country.
5. It makes the economy more market-oriented