Question

Explain how liberalisation has helped the globalisation process.

“Globalisation is the outcome of liberalisation.” Comment.

Answer 1

1. Removal of trade barriers (tariffs, quotas) made imports/exports easier and cheaper, expanding cross‑border trade.
2. Relaxation of FDI and investment rules allowed MNCs to set up factories, offices, and joint ventures abroad, increasing cross‑border production and capital flows.
3. Easing of capital‑account / foreign‑exchange controls encouraged foreign investment, portfolio flows, and currency transactions across countries.
4. Regulatory and tax reforms (tax breaks, SEZs, more straightforward rules) attracted global firms and integrated the domestic market with world supply chains.
5. Market liberalisation and competition improved efficiency, lowered prices, and incentivised firms to access larger international markets.
6. Financial sector opening foreign banks, services, and capital market linkages deepened international financial integration.
7. Technological advances in transport and communication, along with the rise of MNCs, have played a crucial role in enabling global production, faster information flows, and the expansion of international markets.