Euro Crisis (2009–2012): The Euro Crisis happened when some European countries, like Greece,

Portugal, and Spain, couldn’t manage their debts after the 2008 financial crisis. These countries had
borrowed too much and couldn’t pay it back. Greece, especially, needed help from the European Union
(EU) and International Monetary Fund (IMF) to avoid bankruptcy. Countries like Germany pushed for
strict spending cuts, which caused protests and slowed economic recovery. The crisis revealed problems
with how the Eurozone worked, as member countries shared a currency but had different economic
policies. It also highlighted the need for better coordination in managing Europe’s economy.

Lehman Brothers Crisis (2008): The Lehman Brothers crisis marked a turning point in the 2008 global
financial meltdown. Lehman Brothers, a major U.S. bank, had invested heavily in risky home loans,
known as subprime mortgages. When housing prices fell, these investments lost value, and the bank
couldn’t recover. In September 2008, Lehman filed for bankruptcy, the largest in U.S. history. Its collapse
caused panic in financial markets, freezing loans and damaging businesses worldwide. Governments had
to step in, bailing out other big banks to prevent the entire system from collapsing. This crisis showed
how interconnected and fragile global finance had become.

Great Depression (1929–1939): The Great Depression began after the U.S. stock market crash in 1929,
wiping out savings and investments. Banks failed because people couldn’t repay loans, and businesses
shut down, leading to massive unemployment. Farmers suffered as crop prices dropped, and trade
between countries slowed due to high tariffs like the U.S. Smoot-Hawley Act. Many people lost homes
and jobs, facing severe poverty. Recovery was slow, but programs like the New Deal in the U.S. created
jobs and rebuilt confidence. World War II eventually boosted economies through increased production.
The Depression taught the world the importance of stable financial policies.

Underdeveloped Countries: Underdeveloped countries are nations with very low income levels, poor
infrastructure, and limited access to basic needs like clean water, healthcare, and education. Their
economies often rely heavily on agriculture or natural resources, but they lack industries and modern
technology. High poverty, unemployment, and low literacy rates are common. Political instability,
corruption, and weak governance further hinder progress. These countries struggle to attract investment
and face challenges like food insecurity and poor living conditions. Examples include some nations in
Sub-Saharan Africa and South Asia. International aid and development programs are often necessary to
help them grow.

Developing Countries: Developing countries are those that are improving their economies but still face
challenges like poverty, inequality, and limited access to advanced technology. They have growing
industries and better infrastructure than underdeveloped nations, but many people still lack basic services
like quality healthcare and education. These countries often experience rapid urbanization and population
growth, which can strain resources. Examples include India, Brazil, and Indonesia. They aim to attract
foreign investment, improve exports, and raise living standards. Progress is uneven, with a mix of
wealthier cities and poorer rural areas. Education and innovation are key to their future development.

Developed Countries: Developed countries are wealthy nations with advanced economies, strong
industries, and high standards of living. They have modern infrastructure, excellent healthcare, and
widespread access to quality education. People in these countries enjoy longer lifespans, higher incomes,
and better working conditions. These nations invest heavily in technology and innovation, and their
economies are diverse, including sectors like manufacturing, finance, and services. Examples include the
United States, Germany, and Japan. Developed countries also play a major role in global trade and
politics. However, they face challenges like aging populations, climate change, and maintaining economic
growth.
Protectionist Approach: A protectionist approach is when a country tries to protect its domestic
industries from foreign competition by limiting imports through tariffs (taxes on imported goods), quotas
(limits on the number of imports), or other barriers. The goal is to encourage local businesses to grow by
reducing competition from abroad. For example, India adopted protectionism after independence by
imposing strict import regulations and tariffs to promote its own industries. While protectionism can help
develop local industries, it can also lead to inefficiency, higher prices for consumers, and retaliation from
other countries, which may harm global trade.

Devaluation: Devaluation refers to a decrease in the value of a country's currency relative to other
currencies. This can make a country’s exports cheaper and more competitive internationally, while
imports become more expensive. It is often used to boost exports and reduce trade deficits. For example,
in 1991, India devalued its rupee to tackle economic problems like high inflation and a large trade deficit.
While devaluation can help increase export demand, it also raises the cost of imported goods, which can
lead to inflation and affect the standard of living.

Non-Alignment Movement:The Non-Alignment Movement (NAM) was a group of countries that did
not formally align with either the U.S.-led Western bloc or the Soviet-led Eastern bloc during the Cold
War. The movement, founded by leaders like Jawaharlal Nehru (India), Gamal Abdel Nasser (Egypt), and
Sukarno (Indonesia), aimed to promote peace, sovereignty, and economic development without taking
sides in global power struggles. For example, India played a major role in NAM, trying to maintain
independence in its foreign policy and avoid military alliances. The movement promoted the interests of
developing countries and sought a more equitable world order.

Characteristics of Indian economy

1. Low Per Capita Income: India's per capita income is low, with a large portion of the population
living below the poverty line. Despite being one of the largest economies, wealth is unevenly
distributed, and many people work in low-paying sectors like agriculture or informal labor.
2. Occupational Pattern Based on the Primary Sector: A large part of India’s workforce is
employed in agriculture, which contributes significantly to employment but less to GDP. The
primary sector offers low wages and limits growth, as workers lack access to modern technology
or better-paying opportunities in industry or services.
3. Heavy Population Pressure: India faces the challenge of a rapidly growing population, which
puts a strain on resources like water, food, healthcare, and education. Overcrowding in cities and
inadequate infrastructure lead to poor living conditions and limited opportunities for growth.
4. Chronic Unemployment and Underdevelopment: Many young people, even with higher
education, struggle to find good jobs. The economy is not growing fast enough to provide
employment for everyone, leading to widespread underemployment and poverty, particularly in
rural areas.
5. Maladministration of Wealth and Assets: Corruption and poor governance contribute to the
mismanagement of resources. Despite having vast natural wealth, India’s potential remains
untapped due to inefficiency and unequal distribution, where funds often do not reach the
intended beneficiaries.
6. Prevalence of Low Technology: Technological advancement is limited, especially in rural areas.
The agricultural sector relies on outdated tools and methods, reducing productivity. A lack of
modern technology in industries also keeps India from competing globally in high-tech markets.
7. Poor Quality of Human Capital: Education and healthcare systems need improvement.
Inadequate access to quality education and healthcare in many parts of India results in a
workforce that is not fully skilled, limiting productivity and economic growth.
 8. Low Standard of Living: Despite economic growth, many Indians still face poor living
conditions. A significant portion of the population lacks access to basic amenities like sanitation,
clean water, and electricity. This inequality leads to a low quality of life for many.
9. Demographic Challenges: India's large, young population can be a benefit but also presents
challenges. Providing education, jobs, and healthcare for such a large and growing population is
difficult, particularly with regional disparities in development.
10. Socio-Economic Indicators: Indicators like poverty rates, literacy, and life expectancy show that
India still faces substantial socio-economic challenges. Income inequality is growing, and while
some regions are improving, others are lagging behind, hindering overall national progress.

Foreign Direct Investment (FDI) refers to investments made by foreign companies or individuals in a
country’s businesses, industries, or assets. This investment can be in the form of establishing a new
business, acquiring a company, or expanding an existing one. FDI is important because it brings capital,
technology, and expertise to a country, helping boost economic growth, create jobs, and improve
infrastructure. For example, many global companies, like Toyota or Samsung, have invested in India,
helping modernize industries and create employment. FDI also enhances trade and international
relationships, contributing to overall national development and competitiveness in the global market.

Liberalization: Liberalization is the process of reducing government controls and restrictions on the
economy to promote free-market practices. In India, the 1991 reforms marked the beginning of
liberalization, which aimed to make the economy more competitive and efficient. It involved measures
like reducing import tariffs, relaxing licensing requirements for businesses, and deregulating various
industries. This allowed companies to operate with greater freedom and increased foreign competition.
The result was faster economic growth, as businesses were able to expand, innovate, and improve their
efficiency, leading to better products and services for consumers.

Privatization: Privatization refers to the transfer of ownership of state-owned enterprises to private

hands. In India, this began after the 1991 reforms as the government realized that many public sector
companies were inefficient and burdened with losses. Privatization aimed to bring in private investment
and management expertise to improve these enterprises' performance. For example, companies like Indian
Airlines and Bharat Aluminium Company (BALCO) were privatized. This shift also encouraged
competition and innovation, as private companies often work more efficiently to maximize profits.
Privatization led to increased productivity and the creation of better services and jobs in several sectors.

Globalization: Globalization is the process of integrating a country's economy with the world economy
through trade, investment, and the flow of goods, services, and information. In India, globalization began
with the 1991 LPG reforms, opening the door to international markets. It led to increased foreign
investment, the entry of global companies, and the expansion of India’s exports. For example,
multinational companies like McDonald's and Coca-Cola entered India, bringing new products and
technologies. Globalization helped India’s industries become more competitive on the world stage and
provided consumers with a wider variety of goods and services. It also boosted economic growth and job
creation.