Module 2 - Globalization

• Features of Globalisation
• The Advantages of Globalization
• The Disadvantages Of Globalization.
• Internal reform process for Globalisation.
 Globalization
• Globalization is probably the most frequent emerging word in
the news today. Concerning about what is globalization, it
reminds about Princess Diana’s death in 1997.
• Princess Diana’s death is claimed to be a symbol of
globalization – HOW?
It is an English princess with an Egyptian boyfriend crashes
in a French tunnel, driving a German car with a Dutch
engine, driven by a Belgian who was drunk on Scottish
whisky, followed closely by Italian Paparazzi
(photographers), on Japanese motorcycles; -- She is
treated by an American doctor, using Brazilian medicines. –
This is sent to you by an American, using Bill Gates's
technology, and you're reading this on your projector
which is Japanese owned company, uses Taiwanese chips,
assembled by Bangladeshi workers in a Singapore
plant, transported by Qatar Airways to china, sold form
Alibaba to Indian importer and he sold in American based
Amazon and purchased by this institute.!!!!!!!!!!!
 Globalization
• Globalization is a process of interaction and integration among
the people, companies, and governments of different nations.
 Features of Globalisation
• International trade flows – goods and services
• International financial flows – Cash, digital Currency,
• International investment flows – Capital, Infrastructure, R and
D, FDI
• Transfers of technology – Related to IT.(Catia/UG)
• Labour migration.
• Exchange of Information. – email, operations, News.
• People may have assets globally.
 The Advantages of Globalization
1. Education
2. Employment
3. Cheaper Price
4. Quality of Product
5. Communication
 The Advantages of Globalization
1. Education – increase In number, improvised in system,
- smart class, easy flow of information, academic
research
2. Employment – replacing labour job to professional job.
3. Cheaper Price - cheaper price due to
competition/reduced monopoly
4. Quality of Product – due to technology sharing and
competition.(ex: Japan)
5. Communication – Internet, news, e mails, voice calls,
ease of business.
 The Advantages of Globalization
1. Education
• Due to globalization, the rate of education is getting higher. People today
have finished their studies and achieved decent jobs. They also learn lots
of things which guide them to live in a wealthy or simple lifestyle.
2. Employment
• Globalization generates employment opportunities for those people who
still don’t have a job. Most companies today move to a well civilized
country in order to give a chance to unemployed workers to gain a job that
suits their abilities and expertise.
3. Cheaper Price
• Most products in the market are offered in a cheaper price due to
competition.
4. Quality of Product
• Through the machines that were produced because of globalization, the
products offered to the people come with great quality.
5. Communication
• The technology today allows the people to achieve clear and continuous
communication with their family or the VIP’s in different countries.
 The Disadvantages Of Globalization
• 1. Loss of Culture
• 2. Health Problems
• 3. Environmental Degradation (humiliation)
• 4. Conflicts
• 5. Uneven Wealth Distribution
 The Disadvantages Of Globalization
• 1. Loss of Culture – every country is losing its culture.
• 2. Health Problems – Arising of new decease due to various
virus.
• 3. Environmental Degradation (humiliation) – Deforestation,
smoke, chemicals in air.
• 4. Conflicts – Due to competition for super power, war,
• 5. Uneven Wealth Distribution - rich become richer poor
become poorer
 The Disadvantages Of Globalization
1. Loss of Culture
• Because entire things today are well built and well advanced, the former
culture and tradition of the people disappeared. Most of the people
choose the well advanced world rather than to live just like the way before.
2. Health Problems
• There are many health illnesses that were developed when globalization
existed. Most health issues that occur are serious.
3. Environmental Degradation (humiliation)
• The business revolution really altered the outlook and level of economy.
Because most companies today are utilizing the natural resources,
deforestation arises. They often destroy the land which often contains lots
of minerals and resources.
4. Conflicts
Every economy wants to be at the top spot and be the leader. The
fast-paced economies, that is the developed countries are fighting to
be the supreme power. It has given rise to terrorism and other forms
of violence. Such acts not only cause loss of human life but also huge
economic losses.
5. Uneven Wealth Distribution
It is said that the rich are getting richer while the poor are getting
poorer. In the real sense, globalization has not been able to reduce
poverty. Instead it has led to the accumulation of wealth and power in
the hands of a few developed economies.
 Four Stages of Globalization
Domestic stage:
market potential is limited to the home country.
production and marketing facilities located at home.
International stage:
exports increases.
company usually adopts a multi-domestic approach of particular country.
Multinational stage:
marketing and production facilities located in many countries.
more than 1/3 of its sales outside the home country.
Global (or stateless) stage:
Production and sales is spread in more many countries,
making sales and acquiring resources in any country , who offers the best
opportunities.

13
 Globalization And India
• By 1985, India had started having balance of
payments problems. By the end of 1990, it was in a serious
economic crisis.
• Fiscal imbalances over the 1980.
 Internal reform process for Globalisation.
1. Reducing the Fiscal Deficit -fiscal deficit was reduced from 8.3% (1990-
91) to 5.9%(1991-92).
So India needs to borrow approx. Rs.(3.3%) Rs 3,66,157 crore.
for the coming 2019–2020.
2. reducing expenditure – new projects, development etc.
3. Increased tax - 51.75% to 57.5% in 1991-92
4. Removed Controls on Private Investment.– Size, Output.
5. Opened the Economy to Foreign Trade – can import any item, can
export any item.
6. Dismantled Quantitative Restrictions- Imports of finished consumer
goods , raw materials, capital goods .
7. Reducing Tariffs - Customs duties were steadily reduced in the first five
years since 1991.
• 8. Currency Exchange Flexibility- removed rigidity, ease of rules, (June 1991-March
1993 the currency depreciated from $1=Rs.20 to $1=Rs.31, a depreciation of 35% in
Indian Rs)
• 9. Policy towards Foreign Investment. - FDI upto 51% foreign equity in 48 industries.
FFI allowed to invest in Indian equity.
• 10. Reducing Price Controls -, iron and steel, coal, phosphatic and potassic fertilisers,
newsprint, lubricating oils and molasses.
• 11. Labour Market Controls – New labour law, Minimum salary, no. of working hours.
etc
• 12 - Public Sector Reforms-9 public sector - financial power to make investments,
enter into strategic alliances, raise capital from the capital markets, etc. without
seeking government approval
• 13. Private Investment in Infrastructure - power generation, telecommunications
services, ports and roads.
• 14. Banking Sector Reforms- interest rate liberalisation, increasing competition in the
banking sector. New licence for banks-ICICI,Axis.
 Internal reform process for Globalisation.
• India’s economic reforms began in 1991
1. Reducing the Fiscal Deficit -at the start of the reforms, fiscal
deficit was reduced from 8.3% of GDP in 1990-91 to 5.9% in
1991-92,
2. reducing expenditure - reduction in expenditure reduces the
fiscal deficits.
3. Increased tax - The rate of corporation tax on Indian
companies, which varied from 51.75% to 57.5% in 1991-92.
 Structural Reforms
4. Removed Controls on Private Investment. - Reducing controls
was essential to create a more competitive industrial
environment and this part of the reform agenda.
5. Opened the Economy to Foreign Trade - Opening the economy
to trade and foreign investment was an important objective of
the reforms aimed at obtaining the potential benefits from
greater integration with the world economy.
6. Dismantled Quantitative Restrictions- Imports of finished
consumer goods were simply not allowed and even inputs into
production such as raw materials, components and capital goods
were subject to Quantitative restrictions.
7. Reducing Tariffs - Customs duties were steadily reduced in the
first five years since 1991. Duties continued to be lowered on a
number of items in 1996 and 1997 .
• 8. Currency Exchange Flexibility- The rupee was devalued in July
1991 by 24%. Exchange rate management has avoided the danger
of excessive rigidity with the other countries
• 9. Policy towards Foreign Investment. - Approval of FDI upto 51%
foreign equity in a defined list of 48 industries.
• In 1993 Foreign Institutional Investors (FIIs) meeting certain
minimum standards were allowed to invest in Indian equity.
• 10. Reducing Price Controls - Price control was abolished at an
early stage of the reforms in some key industries, viz., iron and
steel, coal, phosphatic and potassic fertilisers, newsprint,
lubricating oils and molasses.
• 11. Labour Market Controls – labour law made good compromised
between Owner of the factory and Workers. Minimum salary, no.
of working hours. etc
• 12 - Public Sector Reforms- In 1990s public sector reform focussed
on increasing the functional autonomy of public sector
organisations to improve their efficiency.
• Nine of the best performing public sector units have been given
special status, with greater delegation of financial power to make
investments, enter into strategic alliances, raise capital from the
capital markets, etc. without seeking government approval
• 13. Private Investment in Infrastructure - new policies were
announced to encourage private investment (including foreign
investment) in power generation, telecommunications services,
ports and roads.
• 14. Banking Sector Reforms- Banking sector reforms were first
initiated in 1992, first stage focussed on interest rate liberalisation,
improvement in prudential norms and standards, strengthening
supervision, and increasing competition in the banking sector.
• New private sector banks have been given licenses and foreign
banks have been allowed to expand much more liberally than in
the past.