AMARCHAND SINGHVI INTERNATIONAL SCHOOL

CLASS X – (2024-25)
ECONOMICS (CH-4: Globalisation and the Indian Economy)
Not to be written in the notebook. These are just for your reading purpose.

Globalisation and the Indian Economy - Summary

Chapter 4 – ‘Globalisation And The Indian Economy’ from NCERT Class 10 Economics book discusses
globalisation across the world. It defines globalisation as the integration between countries through foreign
trade and foreign investments by multinational corporations (MNCs). The impact of globalisation, how
globalisation has contributed to the development of the country, rapid improvement in the field of technology
and liberalisation have also been discussed in this chapter.
Other important topics that the students will read in this chapter include:

1. What is Globalisation?
2. Factors that have enabled Globalisation
3. Significance of role of G20

NCERT Textbook questions and Answers:

1. What do you understand by globalisation? Explain in your own words.
Answer: Globalisation is defined as the integration between countries through foreign trade and foreign
investments by multinational corporations (MNCs). Increase in foreign trade, migration of people from one
country to another, the flow of capital finance from one country to another and private and public investments
from foreign countries all together contribute to globalisation.
2. What was the reasons for putting barriers to foreign trade and foreign investment by the Indian
government? Why did it wish to remove these barriers?
Answer: The main reason for putting barriers to foreign trade and foreign investment by the Indian
government was to protect the interest earned by producers and small industrialists of our country from
foreign competition.
But later it was accepted by the government that foreign competition would encourage Indian industrialists to
improve the quality of their products and removing these barriers would increase trade and quality of products
produced in the country.
3. How would flexibility in labour laws help companies?
Answer: Flexibility in labour law helps companies because it helps to attract foreign investments. Instead of
hiring workers on a regular basis, companies hire workers flexibly for short periods when there is intense
pressure of work. This is done to reduce the cost of labour for the company. However, still not satisfied, foreign
companies are demanding more flexibility in labour laws. The competition in the market is increasing each
day, and if the Government does not allow flexibility with these laws, the foreign companies will not be able to
reach their desired profit levels.
4. What are the various ways in which MNCs set up, or control, production in other countries?
Answer: MNCs set up and control production by investing a huge amount of money in a country’s economy. It
sets up production units close to the market so that they get cheaper labour. To increase production, MNCs
collaborate with some local companies as the production rate would rapidly increase. In most of the cases, the
MNCs buy local companies and expand their production. The other way in which they control production is by
placing the orders for production with small and local producers. They help production using technology and
heavy machinery, which makes the work more efficient and productive.
5. Why do developed countries want developing countries to liberalise their trade and investment?
What do you think should the developing countries demand in return?

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Answer: Developed countries want developing countries to liberalise their trade and investment because
MNCs can set up industries in small and developing nations, which are less expensive and can earn them more
profit. The labour cost decreases the manufacturing cost, and these decreases in cost results in an increase in
profit. Also setting up factories and industries in developed countries increases competition. The developing
countries should, in turn, ask for a fair removal of trade barriers in order to protect their own industries.
6. “The impact of globalisation has not been uniform.” Explain this statement.
Answer: The impact of globalisation has not been uniform because only the developed countries have gained
profits due to globalisation. The developing countries are only a source of setting industries and getting
cheaper labour, and the entire profits are earned by the developed countries. The small industries and
companies in developing countries have constantly been facing challenges in terms of earning profits and
brings their goods in the market.
7. How has liberalisation of trade and investment policies helped the globalisation process?
Answer: The liberalisation of trade and investment policies helped the globalisation process because it has
helped in the removal of trade barriers. It has made foreign trade and investment easier. The choices of the
buyers have also expanded, as now they get to choose products manufactured by not only domestic companies
but also by the foreign companies. Competition among traders has resulted in the cheaper price of products.
Liberalisation has spread globalisation as the decision making power of export and import now lies with the
businessmen themselves.
8. How does foreign trade lead to integration of markets across countries? Explain with an example
other than those given here.
Answer: Foreign trade has led to the integration of markets across the countries. Because of foreign trade, the
producers are now able to compete and export their goods to the markets of other countries. Opportunities
are provided not just for the seller but also for the buyer to get goods outside their own country. Their choices
have expanded as now they get to choose products manufactured by not only domestic companies but also by
the foreign companies.
The price of these goods has decreased because of the competition in the market. Producers from different
countries are now able to compete not just with the competitors in their own country, but with across the
world. The Indian market today is not flooded with goods made in India but goods from all across the world at
an affordable price.
9. Fill in the blanks.
Indian buyers have a greater choice of goods than they did two decades back. This is closely associated
with the process of ______________. Markets in India are selling goods produced in many other countries.
This means there is increasing ______________ with other countries. Moreover, the rising number of brands
that we see in the markets might be produced by MNCs in India. MNCs are investing in India because
_____________ ___________________________________________ . While consumers have more choices in the market, the
effect of rising _______________ and ______________has meant greater _________________among the producers.
Answer:
Indian buyers have a greater choice of goods than they did two decades back. This is closely associated with
the process of globalisation. Markets in India are selling goods produced in many other countries. This means
there is increasing trade with other countries. Moreover, the rising number of brands that we see in the
markets might be produced by MNCs in India. MNCs are investing in India Because of the cheaper production
costs. While consumers have more choices in the market, the effect of rising demand and purchasing
power has meant greater competition among the producers.

10. Match the following.

(i) MNCs buy at cheap rates from small (a) Automobiles producers

(ii) Quotas and taxes on imports are used to regulate trade items (b) Garments, footwear,
sports

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 (iii) Indian companies who have invested abroad (c) Call centres

(iv) IT has helped in spreading of production of services (d) Tata Motors, Infosys,
Ranbaxy

(v) Several MNCs have invested in setting up factories in India for (e) Trade barriers
production
Answer:

(i) MNCs buy at cheap rates from small producers (b) Garments, footwear, sports
items

(ii) Quotas and taxes on imports are used to regulate trade (e) Trade barriers

(iii) Indian companies who have invested abroad (d) Tata Motors, Infosys, Ranbaxy

(iv) IT has helped in spreading of production of services (c) Call centres

(v) Several MNCs have invested in setting up factories in India for (a) Automobiles producers
production
13. Choose the most appropriate option.
1. The past two decades of globalisation has seen rapid movements in

a. goods, services and people between countries.

b. goods, services and investments between countries.
c. goods, investments and people between countries.

Answer: c. goods, services and investments between countries

2. The most common route for investments by MNCs in countries around the world is to

a. set up new factories.

b. buy existing local companies.
c. form partnerships with local companies.

Answer: c. buy existing local companies

3. Globalisation has led to improvement in living conditions

a. of all the people

b. of people in the developed countries
c. of workers in the developing countries
d. none of the above

Answer: d. none of the above

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