Class Ten NCERT Solutions Chapter 4 Economics

Chapter 4: Globalisation and the Indian Economy


7. How has the liberalisation of trade and investment policies helped the globalisation process?

Ans. Removing barriers or restrictions set by the government is known as the liberalisation. Liberalisation has the following effects:

(i) Goods can be imported and exported easily.

(ii) Companies can set up factories and offices in other countries.

Besides these, activities of MNCs helped in increasing foreign investment and foreign trade. Liberalisation has led to greater integration of production and markets across countries or globe. At the international level, WTO has put pressure on developing countries to liberalise trade and investment.

8. How does foreign trade lead to the integration of markets across countries? Explain with an example other than those given here.

Ans. Foreign trade provides opportunities for both producers and buyers to reach beyond the markets of their own countries. Goods travel from one country to another.

Competition among producers of various countries as well as buyers prevails. Thus, foreign trade leads to the integration of markets across countries. For example, during the Diwali season, buyers in India have the option of choosing between Indian and Chinese decorative lights and bulbs. Foreign trade provides an opportunity to expand the business.

The competition among producers brings them closer to each other. Sometimes, the pro­ducers of other countries set up joint ventures.

Thus, with the opening of trade, goods travel from one market to another. Prices of similar goods in the two markets tend to become equal. Producers to countries now closely compete against each other, resulting in the integration of markets in different countries.

9. Globalisation will continue in the future. Can you imagine what the world would be like twenty years from now? Give reasons for your answer.

Ans. The main objective of globalisation is the integration of production and markets. But, in practice, globalisation has not benefitted all the people. Many rules of WTO are in favour of developed countries. For example, in the USA, the government gives massive money to a farmer for production, whose share in total employment is only 0.5%. The surplus produce is sold at low rates in other countries. This gives an adverse effect on farmers of other countries. This is not a fair trade practice. If such policies continue then the position of developing countries will deteriorate. However, efforts are being made to have fair globalisation to ensure that its benefits are shared by all. Under these circumstances after twenty years, the world would undergo a positive change which will possess the following features—healthy competition, improved production efficiency, increased volume of output, income and employment, better living standards, greater availability of information and modern technology.

Fair globalisation will lead to the following :

(i) Availability of human resources both quantitywise and qualitywise.

(ii) Broad resource and industrial base of major countries.

(iii) Growing entrepreneurship.

(iv) Growing domestic market.