Question

What do you understand by globalisation? Explain in your own words.

Answer 1

The process of interconnection between countries or rapid integration between countries is known as Globalization.

• Greater integration of markets and production across countries was the result of greater foreign trade and greater foreign investment.
• There has been a rapid increase in foreign trade between countries.
• Multinational Companies (MNCs) control a large part of the foreign trade.
• The car manufacturing plant of Hyundai Motors in India not only produces cars to meet the requirements of Indian markets, but also exports car components to other factories across the globe and exports cars to markets in other countries.
• There is a greater movement of technology, investments, services and goods between countries.
• When compared to a few decades back, most regions of the world are in closer contact with each other.
• Another way through which countries are connected with each other is through movement of people from one country to another, from one continent to another.
• Better education, better income, and better jobs are the reasons why people usually move from one country to another.

The factor of Globalisation – Liberalisation of foreign trade and foreign investment policy

• Liberalisation means removing restrictions or barriers set by the government.
• An example of a trade barrier is a tax on imports.
• Trade barriers can be used by Governments of any country to regulate foreign trade (i.e. decrease or increase imports). Governments can decide what kind of goods can enter the country.
• After independence, the Indian government had put many barriers to foreign investment and trade.
• In the year 1991, the Indian Government made many changes in policies concerning trade. There were much lesser restrictions imposed by the Government on trade.
• Businesses were free to make decisions on what they needed to export or import. This was the benefit of the liberalization policy introduced by the Government.

Technology – Factors that enabled Globalization

• One of the major factors that led to the stimulation of the globalization process is the massive and rapid improvements made in the field of technology.
• Transportation technology saw massive improvements in the past fifty years, which led to the movement of higher volume goods at a faster speed.
• Improvements in transportation technology have made the transfer of goods at lower costs a reality.
• Advances made in Information and Communication technology are another remarkable development that led to rapid globalization.
• Technological developments in the areas of the Internet, Computers, and telecommunications, have changed rapidly. To contact one another across the globe, to communicate with anyone located in remote areas, accessing information quickly is enabled because of telecommunication and internet technology. Satellites have played a key role in communications.

Factors that enabled Globalization – Powerful International Organizations like World Trade Organization

• Liberalising international trade is the objective of the World Trade Organization (WTO).
• The World Trade Organization was established with the initiative of Developed countries.
• Rules regarding international trade are established by the World Trade Organization (WTO) and these rules have to be obeyed by around 160 countries of the world, that are currently members of WTO.
• WTO believes that trade between countries has to be free and there should be no barriers to international trade.