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Globalization

Introduction The global economy is in the midst of a radical transformation, with far-reaching and fundamental changes in technology, production, and trading patterns. Faster information flows and falling transport costs are breaking down geographical barriers to economic activity. The boundary between what can and cannot be traded is being steadily eroded, and the global market is encompassing ever-greater numbers of goods and services.Treasury: Long-term global economic challenges and opportunities for the UK, December 2004 Definition of Globalization Globalization is the system of interaction among the countries of the world in o rder to develop the global economy. Globalization refers to the integration of e conomics and societies all over the world. Globalization involves technological, economic, political, and cultural exchanges made possible largely by advances i n communication, transportation, and infrastructure.

There are two types of integration Negative and positive. Negative integration is the breaking down of trade barri ers or protective barriers such as tariffs and quotas. In the previous chapter, trade protectionism and its policies were discussed. You must remember that the removal of barriers can be beneficial for a country i f it allows for products that are important or essential to the economy. For exa mple, by eliminating barriers, the costs of imported raw materials will go down and the supply will increase, making it cheaper to produce the final products fo r export (like electronics, car parts, and clothes). Positive integration: on the other hand aims at standardizing international econ omic laws and policies. For example, a country which has its own policies on tax ation trades with a country with its own set of policies on tariffs. Likewise, t hese countries have their own policies on tariffs. With positive integration (an d the continuing growth of the influence of globalization), these countries will work on having similar or identical policies on tariffs.

HISTORY International commodity markets, labour markets, and capital markets make up the economy and define economic globalization. Beginning as early as 4000 BC, peopl e were trading livestock, tools, and other items as a means of money. People res iding in Sumer, an early civilization in Mesopotamia, came up with a token syste m that was seen as one of the first forms of commodity money. Labour markets con sist of workers, employers, wages, income, supply, and demand. Labour markets ha ve been around as long as commodity markets. Labour markets grew out of commodit y markets because labour was needed to grow the crops and tend to the livestock. The growth of commodity and labour markets grew into a capital market where com panies and governments handle longstanding funds. The process of this blending o f markets in the economy took thousands of years to become what it is today. By the early 1911s, it was rare to come across a town that was not influenced by foreign marketswhether it be in labour, prices, or any other policy of business. With advances in ship building technology and the inventions of the railroad an d telephone, communication with other parts of the country and world was readily available. Towns were no longer limited to what they alone could produce and wh at the next two towns over would trade with them. People everywhere had the acce ssibility and resources to obtain goods from the other side of the world. Howeve r, these great advances in economic globalization were disrupted by World War I. Most of the global economic powers constructed protectionist economic policies and introduced trade barriers that slowed economic growth to the eventual point of stagnation which can be seen as a precursor to the Great Depression in the la te 1920s. This caused a slowing of world-wide trade and even led to other countr ies introducing immigration caps. Globalization of the economy didnt fully resume until the 1970s. Today, advances in technology and computer networks, both as a way of sending and receiving information, have led to a worldwide globalization of the economy. There are three suggested factors that accelerated economic globalization, and t hey are advancement of science and technology, market oriented economic reforms and finally contributions by Multinational Corporations. A reduction of transportation and communication costs is what initiated globaliz ation economies around the world, and this was possible mainly due to the advanc ement of science and technology. Ocean shipping costs half, airfreight costs 1/6 th, and telecommunications costs 1% of what it did cost in the 1930s. This impro vement has facilitated and encouraged international trade and investment. Under the GATT and WTO framework, many countries have cut down their tariff and non-ta riff barriers. Along with this external influence, governments within its border s have shifted its economies from central planned economies to market economies. These internal reforms have provided commonalities among different world econom ies and thus helped integrate as a whole. Multinational Corporations that expan d their businesses worldwide organize production and allocate resources all over the world. Not only are Multinational Corporations responsible for internationa l financial transactions, but also for workforce distributions. By setting up br anch offices, factories, and even outsourcing its services, MNCs are contributin g to economic globalization. Irreversibility According to China s prominent economist Gao Shanguan, economic globalization is an irreversible trend due to the fact that the world markets are in great need of science and information technologies. With the growing demands of science and technology, Shanquan states that with world markets take on an "increasing cros s-border division of labour" that works its way down to every facet of globalize d markets from both developed and developing nations. Nevertheless, Princeton University professor Robert Gilpin argues that though ec onomic globalization seems to be irreversible, nations various economic policie s have suppressed the impetus for their own economies to move forward, which he

states has been shown in the past, thus debunking Shanquan s theory of economic globalization as a primarily irreversible phenomena. Further, in his recent book entitled Globalization: Power, Authority, and Legitimacy in Late Modernity, Ant onio L. Rappa agrees with Gilpin s argument of economic globalization as being r eversible and references International Studies professor Peter J. Katzenstein ac cessing that due to the symbiotic nature of globalization and regionalism, so do es the conflict between economic regionalism and multiculturalism.

What is Globalisation? Globalization is an issue that rouses strong emotions among people. The first st ep in understanding the topic is to define what it means. We are hampered by the reality that there is no one single agreed definition indeed the term globalisa tion is used in slightly different ways in different contexts by various writers and commentators. What is common to all usages is an attempt to explain, analys e and evaluate the rapid increase in cross-border (trans-national) business that has take place over the last 10/15 years. Trends in global trade and output % change per annum unless stated 1980-89 1990-99 2000-04 Global GDP growth 3.3 3.2 3.8 World trade growth in goods and services 4.5 6.5 6.2 World trade (% of GDP) 19 21 25 The OECD defines globalization as The geographic dispersion of industrial and service activities, for example resea rch and development, sourcing of inputs, production and distribution, and the cr oss-border networking of companies, for example through joint ventures and the s haring of assets Globalisation is essentially a process of deeper international economic integrat ion that involves: A rapid expansion of international trade in goods and services between countries . A huge increase in the value of transfers of financial capital across national b oundaries including the expansion of foreign direct investment (FDI) by trans-na tional companies. The internationalization of products and services by large firms. Shifts in production and consumption from country to country for example the rap id expansion of out-sourcing of production. All merchandise products Trade Production Average % change per annum 1950-63 7.7 5.2 1963-73 9.0 6.1 1973-90 3.8 2.7 1990-04 5.7 2.5 Manufactured goods Trade Production 1950-63 8.6 6.6 1963-73 11.3 7.4 1973-90 5.5 3.1 1990-04 6.3 2.6 The data table above drawn from statistics published by the World Trade Organiza tion shows how the annual growth in merchandise trade (trade in manufactures, ag ricultural products, fuels and mining products) has consistently out-paced the g rowth of output. This means that trade as a share of output in the global econom y has continued to increase marking an increase in trade integration within the world economic system.

Another way of describing globalisation is to describe it as a process of making the world economy more interdependent. The expansion of trade in goods and serv ices, the huge increase in flows of financial capital across national boundaries and the significant increase in multinational economic activity means that most of the worlds economies are increasingly dependent on each other for their macro economic health. Shares in world exports 1991 2006 Change 1991-2006 Canada 3.4 3.4 -0.1 France 6.2 4.0 -2.1 Germany 10.8 8.6 -2.2 Italy 4.9 3.5 -1.4 Japan 8.0 5.0 -2.9 United Kingdom 5.5 4.4 -1.1 United States 13.7 10.1 -3.6 Non-OECD Asia inc China 11.5 19.3 7.8 Latin America 2.6 3.0 0.4 Source: OECD World Economic Outlook, June 2006 For example, a deflationary monetary or fiscal policy introduced in one country which leads to changes in AD inevitably affects the ability of other countries t o export to that economy. Consider for example a decision by the Federal Reserve Bank in the United States to raise their interest rates in response to the thre at of a rise in inflation. This could conceivably have important feedback effect s throughout the international economy. The rate of growth of the US economy is likely to slow and this will then have an effect on the strength of demand from US consumers for overseas products. Secondly, changes in the structure of company taxation and personal taxation fro m country to country tends to influence flows of investment and have feedback ef fects in the long term on national income, employment and wealth. Trends in global capital flows 1989 1999 2003 Stock of Foreign Direct Investment (% of GDP) Foreign assets (% of GDP) 62.6 139.6 Source: International Monetary Fund

8.0 186.1

16.0

22.1

Is Globalisation Really Necessary? Yes Globalisation is necessary, for an economy to grow. Globalisation refers to the integration of economic, technological, socio-political factors with the wor ld. And with globalisation, with the mutual co-operation and assistance -particu larly with reference to the law of comparative advantage- it is going to be bene ficial. Globalisation also helps reducing the poverty level in the country-there are plenty of evidences and record to support it. Developing countries speciall y require globalization. Because Indians are very rich in resources of skilled m anpower. So Other countries are interested to invest in India.We don t have that much funds/money to make very huge industries or developments. There is no sham e to invite other countries for investing.lot of advantages are there..employmen t, infrastructure development, tourism , foreign exchange and etc..Even America would be nowhere if globalisation was an imaginary concept never put forward. Ha lf the world s countries would be reeling in depression right now if not for glo balisation. For example, petroleum, most countries are on the verge of depleting their entire reserves and some countries don t have it at all. Seeing this if n ot for globalisation the entire world would be left crippled due to the massive energy crisis facing them. while globalisation is necessary it is not sufficient to ensure communities gain from globalisation. To keep and spread the gains,gov ernment must not only reduce barriers to trade and investment, they must also ge t domestic policies right. Many people may think that globalisation is making po or countries poorer. However the evidence is very convincing that developing cou

ntries that globalise grow and reduce poverty level faster than those that do no t. For example, recent study of 72 developing countries shows in the 1990 s glob alisng developing economies real incomes and output grew faster, on average abou t 4 times faster, than inward looking economies output. Effects of Globalization According to economists, there are a lot of global events connected with globali zation and integration. It is easy to identify the changes brought by globalization. Improvement of International Trade. Because of globalization, the number of coun tries where products can be sold or purchased has increased dramatically. Technological Progress. Because of the need to compete and be competitive global ly, governments have upgraded their level of technology. Increasing Influence of Multinational Companies. A company that has subsidiaries in various countries is called a multinational. Often, the head office is found in the country where the company was established. An example is a car company whose head office is based in Japan. This company ha s branches in different countries. While the head office controls the subsidiari es, the subsidiaries decide on production. The subsidiaries are tasked to increa se the production and profits. They are able to do it because they have already penetrated the local markets. The rise of multinational corporations began after World War II. Large companies refer to the countries where their subsidiaries reside as host countries. Globa lization has a lot to do with the rise of multinational corporations. Power of the WTO, IMF, and WB. According to experts, another effect of global ization is the strengthening power and influence of international institutions s uch as the World Trade Organization (WTO), International Monetary Fund (IMF), an d World Bank (WB). Greater Mobility of Human Resources across Countries. Globalization allows cou ntries to source their manpower in countries with cheap labor. For instance, the manpower shortages in Taiwan, South Korea, and Malaysia provide opportunities f or labor exporting countries such as the Philippines to bring their human resour ces to those countries for employment. Greater Outsourcing of Business Processes to Other Countries. China, India, and the Philippines are tremendously benefiting from this trend of global business o utsourcing. Global companies in the US and Europe take advantage of the cheaper labor and highly-skilled workers that countries like India and the Philippines c an offer Civil Society. An important trend in globalization is the increasing influence a nd broadening scope of the global civil society. Civil society often refers to NGOs (nongovernment organizations). There are inst itutions in a country that are established and run by citizens. The family, bein g an institution, is part of the society. In globalization, global civil society refers to organizations that advocate certain issue or cause. There are NGOs that support women s rights and there are those that promote envi ronment preservation. These organizations don t work to counter government polic ies, but rather to establish policies that are beneficial to all. Both the gover nment and NGOs have the same goal of serving the people. The spread of globalization led to greater influence of NGOs especially in areas of great concern like human rights, the environment, children, and workers. Tog ether with the gro growing influence of NGOs is the increasing power of multinat ional corporations. If the trend continues, globalization will pave the way for the realization of the full potential of these two important global actors.

What are the features of globalization? The features of globalization may be discussed as follows: 1. It means free access to the markets in the or fiscal (tariff) or any other governments) rs emerge demanding high quality products and any restrictions like parochial, regional or world without any physical (quota) restriction. Hence, global consume more value for their money without national consideration.

2. Globally standardized products need be marketed ail over the world. There are already many such products having world market. It includes the "lead" products in a region taking care of dominant needs of that region. 3. Globalization requires resources like raw materials, finance and technology. Free access to quality raw materials, latest technology and cheap finance are im portant characteristics of this process at less cost. 4. In globalization. Free mobility of managerial personnel and entrepreneurs res ult into mergers, takeovers and structural regrouping in countries across the gl obe. wing influence of NGOs is the increasing power of multinational corporations. If the trend continues, globalization will pave the way for the realization of the full potential of these two important global actors.

ECONOMIC GLOBALIZATION Economic globalization refers to increasing economic interdependence of and national economies across the world through a rapid increase in cr oss-border movement of goods, service, technology and capital. Whereas globaliza tion is cantered around the rapid development of science and technology, and inc reasing cross-border division of labour, economic globalization is propelled by the rapid growing significance of information in all types of productive activit ies and marketization, and the advance of science and technologies. Depending on the paradigm, economic globalization can be viewed as either a positive or a ne gative phenomenon. Economic globalization comprises the globalization of production, markets, compe tition, technology, and corporations and industries. While economic globalizatio n has been occurring for the last several hundred years (since the emergence of trans-national trade), it has begun to occur at an incre ased rate over the last 2030 years under the framework of General Agreement on Ta riffs and Trade and World Trade Organization which made countries to gradually c ut down trade barriers and open up their current accounts and capital accounts. This recent boom has been largely accounted by developed economies integrating w ith less developed economies, by means of foreign direct investment, the reducti on of trade barriers, and in many cases cross border immigration. It can be argued that economic globalization may or may not be an irreversible t rend. There are several significant effects of economic globalization. There is statistical evidence for positive financial effects as well as proposals that th ere is a power imbalance between developing and developed countries in the globa l economy. Furthermore, economic globalization has an impact on world cultures. EFFECTS Positive effects There are at least three positive financial effects of economic globalization. " Per capita GDP growth in the post-1980 globalizers accelerated from 1.4 percent a year in the 1960s and 2.9 percent a year in the 1970s to 3.5 percent in the 19 80s and 5.0 percent in the 1990s. This acceleration in growth is even more remar kable given that the rich countries saw steady declines in growth from a high of

4.7 percent in the 1960s to 2.2 percent in the 1990s. Also, the non-globalizing developing countries did much worse than the globalizers, with the former s ann ual growth rates falling from highs of 3.3 percent during the 1970s to only 1.4 percent during the 1990s. This rapid growth among the globalizers is not simply due to the strong performances of China and India in the 1980s and 1990s18 out of the 24 globalizers experienced increases in growth, many of them quite substant ial." Growth Rate of Real GDP per capita Despite many analysts concerns about the inequality gap between developed and d eveloping nations, there is no evidence to suggest that inequality increases as international trade increases. Rather, growth benefits of economic globalization are widely shared. While several globalizers have seen an increase in inequalit y, most notably China, this increase in inequality is a result of domestic liber alization, restrictions on internal migration, and agricultural policies, rather than a result of international trade. Economic globalization also has helped to decrease poverty around the world. Pov erty has been reduced as evidenced by a 5.4 percent annual growth in income for the poorest fifth of the population of Malaysia. Even in China, where inequality continues to be a problem, the poorest fifth of the population saw a 3.8 percen t annual growth in income. In several countries, those living below the dollar-p er-day poverty threshold declined. In China, the rate declined from 20 to 15 per cent and in Bangladesh the rate dropped from 43 to 36 percent. The final positive effect to be mentioneding is the narrowing gap between the ri ch and the poor. Evidence suggests that the growth of globalizers, in relation t o rich countries, suggests that globalises are narrowing the per capita income g ap between the rich and the globalizing nations. China, India, and Bangladesh, w ho were among the poorest countries in the world twenty years ago, have greatly influenced the narrowing of worldwide inequality due to their economic expansion . Negative effects and solutions The Economic Commission for Latin America and the Caribbean (ECLAC) has proposed an agenda to support conditions for developing countries to improve their stand ing in the global economy. Economists have theories on how to combat the disadva ntages faced by developing countries. However, the advantaged countries continue to control the economic agenda. In order to rectify the social injustice dilemm a, international economic institutions (such as the World Bank and the Internati onal Monetary Fund) must give voice to developing countries. A solution is to is sue global rules that protect developing countries. It is still difficult for le aders of developing nations to influence these global rules. In his article, Gao Shangquan elaborates this point saying that economic globali zation has in fact expanded rather than reduced the gap between the North and So uth. He is referring to some UN report in 1999, in order to show that the number of developing countries that have benefited from economic globalization is smal ler than 20, that the average trade deficit of developing countries in 1990s incr eased by 3% as compared with that in 1970s, and that over 80% of the capital is flowing among US, Western European and East Asian countries. The influx of international corporations not only brings positive advantages reg arding global financial transactions. Some may emphasize that the multinational corporations may raise education levels as well as the financial health in devel oping countries, but that only applies to the long term effects of economic glob alization. In the short term, poor countries will become poorer and unemployment rates may soar. Automation in the manufacturing and agricultural sectors always follows the appearance of multinational corporations. This lessens the need for unskilled and uneducated workers thus raising unemployment levels. Also, in the developing countries where this phenomenon occurs, infrastructure to re educate these unskilled workers are not properly established which means a redirection of the governments focus from social services to education.

In order to create better economic relations globally, international lending age ncies must work with developing countries to change how and where credit is conc entrated as well as work towards accelerating financial development in developin g countries. There is a need for social respect for all persons worldwide. The E conomic Commission of Latin America and the Caribbean suggests that in order to ensure such social respect, the United Nations should expand its agenda to work more rigorously with international lending agencies. Despite their title, intern ational lending agencies tend to be nation-based. The ECLAC suggests that intern ational lending agencies should expand to be more inclusive of all nations and t hey propose that there is a need for universal competitiveness. Key factors in a chieving universal competition is the spread of knowledge at the State level thr ough education, training and technological advancements. Economist,Jagdish Bhagw ati, also suggests that programs to help developing countries adjust to the glob al economy would be beneficial for international economic relations. Several movements, such as the Fair Trade movement and the Anti-sweatshop moveme nt, have worked towards promoting a more socially just global economy. The Fair Trade movement has played a significant role in alleviating exploitation due to economic globalization. For example, Fair Trade sales account for 1.6 billion US dollars each year. The Fair Trade movement works towards improving trade, devel opment and production for disadvantages producers. Furthermore, the movement wor ks to raise consumer awareness of exploitation of developing countries. Fair Tra de works under the motto of trade, not aid, to improve the quality of life for far mers and merchants by participating in direct sales, providing better prices and supporting the community.

THE BRIGHT SIDE OF GLOBALIZATION The rate of growth of the Gross Domestic Product of India has been on the increa se from 5.6 per cent during 1980-90 to 7% in the 1993-2001 period. The foreign exchange reserves (as at the end of the financial year) were $ 39 bi llion (2000-01), $ 107 billion (2003-04), $ 145 billion (2005-06) and $ 180 bill ion (in February 2007). In respect of market capitalization India is in the fourth position with $ 894 b illion As per the Forbes list for 2007, the number of billionaires of India has risen t o 40 (from 36 last year) more than those of Japan (24), China (17), France (14) and Italy (14) this year. THE DARK SIDE OF GLOBALIZATION On the other side of the medal, there is a long list of the worst of the times, the foremost casualty being the agriculture sector. Globalisation has lowered the per capita income of the farmers and increased the rural indebtedness. The agricultural growth of 3.2 per cent observed from 1980 to 1997 decelerated t o two per cent subsequently. With more than half the population directly depending on this sector, low agricu ltural growth has serious implications for the inclusiveness of growth.

Effects on world cultures Economic globalization may have various strong impacts on different world cultur es. Populations may mimic the international flow of capital and labor markets in the form of immigration and the merger of cultures. Foreign resources and econo mic measures may impact different native cultures and may cause assimilation of

a native people. Researchers are now studying the effects of economic globalizat ion on the youth in various world populations such as Arab, South American, Sout h East-Asian, Caribbean, and African populations. As these populations are expos ed to the English language, Computers, western music, and North American culture , changes are being noted in shrinking family size, immigration to larger cities , more casual dating practices, and gender roles are transformed. Yu Xintian wrote in a cultural impact study that there were two contrary trends in culture due to economic globalization. Xintian argues that culture and indust ry not only flows from the west while affecting people, but he says there is als o a cultural nationalization or an effect of localization that wishes to promote and protect individual cultures. He also points out that economic globalization began after WWII, whereas internationalization began over a century ago and is something completely different. George Ritzer wrote about the McDonaldization of society and how fast food busin esses spread throughout the United States and the rest of the world, forcing wor ld populations to adopt fast food culture. In this book, Ritzier also writes abo ut how other businesses have copied the McDonalds Corporation s business model f or expansion and influence. In 2006, 233 of 280 or over 80% of the new McDonalds opened were overseas. In 2007, Japan had 2,828 McDonalds locations and serves a s just one example of the globalized effect of international corporations. The B ody Shop, a British ecologically conscious cosmetic company, represents the proc ess of McDonaldization working in all directions.Various countries export their own versions of McDonaldization but have the same influences in standardizing wo rld culture. Global media news companies export information through news, radio, and internet . This creates a mostly one-way flow of information, and exposure of mostly west ern products and values. Companies like CNN, Reuters, and the BBC dominate the g lobal airwaves while having a particular western point of view. Other media news companies such as Al Jazeera may offer a different point of view, but have a fa r smaller audience and thus effect fewer people in influence. Different Waves of Globalisation Globalisation is not new! Indeed there have seen several previous waves of globa lisation. Nick Stern, Chief Economist of the World Bank has identified three maj or stages of globalization: Wave One: Began around 1870 and ended with the descent into global protectionism during the interwar period of the 1920s and 1930s. This period involved rapid g rowth in international trade driven by economic policies that sought to liberali ze flows of goods and people, and by emerging technology, which reduced transpor t costs. This first wave started the pattern which persisted for over a century of developing countries specializing in primary commodities which they export to the developed countries in return for manufactures. During this wave of globali sation, the level of world trade (defined by the ratio of world exports to GDP) increased from 2 per cent of GDP in 1800 to 10 per cent in 1870, 17 per cent in 1900 and 21 per cent in 1913. Wave Two: After 1945, there was a second wave of globalization built on a surge in world trade and reconstruction of the world economy. The rapid expansion of t rade was supported by the establishment of new international economic institutio ns. The International Monetary Fund (IMF) was created in 1944 to promote a stabl e monetary system and so provide a sound basis for multilateral trade, and the W orld Bank (founded as the International Bank for Reconstruction and Development) to help restore economic activity in the devastated countries of Europe and Asi a. Their aim was to promote lasting multilateral economic co-operation between n ations. The General Agreement on Tariffs and Trade (GATT) signed in 1947 provide d a framework for progressive mutual reduction in import tariffs. Wave Three: The current wave of globalisation which is demonstrated for example by a sharp rise in the ratio of trade to GDP for many countries and secondly, a sustained increase in capital flows between counties and trade in goods and serv ices

Main Motivations and Drivers for Globalisation As the well respected commentator Hamish McRae has argued, Business is the main d river of globalization! The process of globalisation is motivated largely by the desire of multinational corporations to increase profits and also by the motivat ion of individual national governments to tap into the wider macroeconomic and s ocial benefits that come from greater trade in goods, services and the free flow of financial capital. Among the main drivers of globalisation are the following: Improvements in transportation including containerisation the reduced cost of sh ipping different goods and services around the global economy helps to bring pri ces in the country of manufacture closer to prices in the export market, and add s to the process where markets are increasingly similar and genuinely contestabl e in an international sense. Technological change reducing massively the cost of transmitting and communicati ng information - sometimes known as the death of distance this is an enormous fact or behind the growth of trade in knowledge products using internet technology. A dvances in transport technology have lowered the costs, increased the speed and reliability of transporting goods and people extending the geographical reach of firms by making new and growing markets accessible on a cost-effective basis. De-regulation of global financial markets: The process of deregulation has inclu ded the abolition of capital controls in many countries. The opening up of capit al markets in developed and developing countries facilitates foreign direct inve stment and encourages the freer flow of money across national boundaries Differences in tax systems: The desire of multi-national corporations to benefit from lower labour costs and other favourable factor endowments abroad and there fore develop and exploit fresh comparative advantages in production Avoidance of import protection: Many businesses are influenced by a desire to ci rcumvent tariff and non-tariff barriers erected by regional trading blocs to giv e themselves more competitive access to fast-growing economies such as those in the emerging markets and in eastern Europe Economies of scale: Many economists believe that there has been an increase in t he estimated minimum efficient scale associated with particular industries. This is linked to technological changes, innovation and invention in many different markets. If the MES is rising this means that the domestic market may be regarde d as too small to satisfy the selling needs of these industries. Overseas sales become essential. Division of labour on a global scale: The ease with which goods, capital and technical knowledge can be moved around t he world has increasingly enabled the division of labour on a global scale, as f irms allocate their operations in line with countries comparative advantage. As a result, there has been a significant increase in the number of firms that locat e, source and sell internationally, reflecting the new opportunities presented b y the ICT revolution, alongside falling transport costs and easing trade and cap ital restrictions. Globalization no longer necessarily requires a business to own a physical presen ce in terms of either owning production plants or land in other countries, or ev en exports and imports. For instance, economic activity can be shifted abroad by the processes of licensing and franchising which only needs information and fin ance to cross borders. And increasingly we are seeing many examples of joint-ven tures between businesses in different countries e.g. businesses working together in research and development projects. Impact of Globalisation on Developing Countries and India Chandrasekaran Balakrishnan for The 2004 Moffatt Prize in Economics Introduction: Globalisation is the new buzzword that has come to dominate the world since the nineties of the last century with the end of the cold war and the break-up of th

e former Soviet Union and the global trend towards the rolling ball. The frontie rs of the state with increased reliance on the market economy and renewed faith in the private capital and resources, a process of structural adjustment spurred by the studies and influences of the World Bank and other International organis ations have started in many of the developing countries. Also Globalisation has brought in new opportunities to developing countries. Greater access to develope d country markets and technology transfer hold out promise improved productivity and higher living standard. But globalisation has also thrown up new challenges like growing inequality across and within nations, volatility in financial mark et and environmental deteriorations. Another negative aspect of globalisation is that a great majority of developing countries remain removed from the process. Till the nineties the process of globalisation of the Indian economy was constra ined by the barriers to trade and investment liberalisation of trade, investment and financial flows initiated in the nineties has progressively lowered the bar riers to competition and hastened the pace of globalisation Globalised World - What does it mean? Does it mean the fast movement of people which results in greater interaction? Does it mean that because of IT revolution people can be in touch with each othe r in any part of the world? Does it mean trade and economy of each country is open in Non-Intrusive way so t hat all varieties are available to consumer of his choice? Does it mean that mankind has achieved emancipation to a level of where we can s ay it means a social, economic and political globalisation? Though the precise definition of globalisation is still unavailable a few defini tions worth viewing, Stephen Gill: defines globalisation as the reduction of tra nsaction cost of transporter movements of capital and goods thus of factors of p roduction and goods. Guy Brainbent: says that the process of globalisation not o nly includes opening up of world trade, development of advanced means of communi cation, internationalisation of financial markets, growing importance of MNC s, population migrations and more generally increased mobility of persons, goods, c apital, data and ideas but also infections, diseases and pollution Impact on India: India opened up the economy in the early nineties following a major crisis that led by a foreign exchange crunch that dragged the economy close to defaulting on loans. The response was a slew of Domestic and external sector policy measures partly prompted by the immediate needs and partly by the demand of the multilate ral organisations. The new policy regime radically pushed forward in favour of a more open and market oriented economy. Major measures initiated as a part of the liberalisation and globalisation strat egy in the early nineties included scrapping of the industrial licensing regime, reduction in the number of areas reserved for the public sector, amendment of t he monopolies and the restrictive trade practices act, start of the privatisatio n programme, reduction in tariff rates and change over to market determined exch ange rates. Over the years there has been a steady liberalisation of the current account tra nsactions, more and more sectors opened up for foreign direct investments and po rtfolio investments facilitating entry of foreign investors in telecom, roads, p orts, airports, insurance and other major sectors. The Indian tariff rates reduced sharply over the decade from a weighted average of 72.5% in 1991-92 to 24.6 in 1996-97.Though tariff rates went up slowly in the late nineties it touched 35.1% in 2001-02. India is committed to reduced tariff rates. Peak tariff rates are to be reduced to be reduced to the minimum with a peak rate of 20%, in another 2 years most non-tariff barriers have been dismantl ed by march 2002, including almost all quantitative restrictions. India is Global: The liberalisation of the domestic economy and the increasing integration of Ind ia with the global economy have helped step up GDP growth rates, which picked up from 5.6% in 1990-91 to a peak level of 77.8% in 1996-97. Growth rates have slo wed down since the country has still bee able to achieve 5-6% growth rate in thr ee of the last six years. Though growth rates has slumped to the lowest level 4.

3% in 2002-03 mainly because of the worst droughts in two decades the growth rat es are expected to go up close to 70% in 2003-04. A Global comparison shows that India is now the fastest growing just after China. This is major improvement given that India is growth rate in the 1970 s was very low at 3% and GDP growth in countries like Brazil, Indonesia, Korea, and Mexico was more than twice that of India. Though India s average annual growth rate al most doubled in the eighties to 5.9% it was still lower than the growth rate in China, Korea and Indonesia. The pick up in GDP growth has helped improve India s global position. Consequently India s position in the global economy has improv ed from the 8th position in 1991 to 4th place in 2001. When GDP is calculated on a purchasing power parity basis. Globalisation and Poverty: Globalisation in the form of increased integration though trade and investment i s an important reason why much progress has been made in reducing poverty and gl obal inequality over recent decades. But it is not the only reason for this ofte n unrecognised progress, good national polices , sound institutions and domestic political stability also matter. Despite this progress, poverty remains one of the most serious international cha llenges we face up to 1.2 billion of the developing world 4.8 billion people sti ll live in extreme poverty. But the proportion of the world population living in poverty has been steadily d eclining and since 1980 the absolute number of poor people has stopped rising an d appears to have fallen in recent years despite strong population growth in poo r countries. If the proportion living in poverty had not fallen since 1987 alone a further 215million people would be living in extreme poverty today. India has to concentrate on five important areas or things to follow to achieve this goal. The areas like technological entrepreneurship, new business openings for small and medium enterprises, importance of quality management, new prospect s in rural areas and privatisation of financial institutions. The manufacturing of technology and management of technology are two different significant areas i n the country. There will be new prospects in rural India. The growth of Indian economy very mu ch depends upon rural participation in the global race. After implementing the n ew economic policy the role of villages got its own significance because of its unique outlook and branding methods. For example food processing and packaging a re the one of the area where new entrepreneurs can enter into a big way. It may be organised in a collective way with the help of co-operatives to meet the glob al demand. Understanding the current status of globalisation is necessary for setting cours e for future. For all nations to reap the full benefits of globalisation it is e ssential to create a level playing field. President Bush s recent proposal to el iminate all tariffs on all manufactured goods by 2015 will do it. In fact it may exacerbate the prevalent inequalities. According to this proposal, tariffs of 5 % or less on all manufactured goods will be eliminated by 2005 and higher than 5 % will be lowered to 8%. Starting 2010 the 8% tariffs will be lowered each year until they are eliminated by 2015. GDP Growth rate: The Indian economy is passing through a difficult phase caused by several unfavo urable domestic and external developments; Domestic output and Demand conditions were adversely affected by poor performance in agriculture in the past two year s. The global economy experienced an overall deceleration and recorded an output growth of 2.4% during the past year growth in real GDP in 2001-02 was 5.4% as p er the Economic Survey in 2000-01. The performance in the first quarter of the f inancial year is5.8% and second quarter is 6.1%. Export and Import: India s Export and Import in the year 2001-02 was to the extent of 32,572 and 38 ,362 million respectively. Many Indian companies have started becoming respectab le players in the International scene. Agriculture exports account for about 13 to 18% of total annual of annual export of the country. In 2000-01 Agricultural

products valued at more than US $ 6million were exported from the country 23% of which was contributed by the marine products alone. Marine products in recent y ears have emerged as the single largest contributor to the total agricultural ex port from the country accounting for over one fifth of the total agricultural ex ports. Cereals (mostly basmati rice and non-basmati rice), oil seeds, tea and co ffee are the other prominent products each of which accounts fro nearly 5 to 10% of the countries total agricultural exports. Where does Indian stand in terms of Global Integration? India clearly lags in globalisation. Number of countries have a clear lead among them China, large part of east and far east Asia and eastern Europe. Lets look at a few indicators how much we lag. Over the past decade FDI flows into India have averaged around 0.5% of GDP again st 5% for China 5.5% for Brazil. Whereas FDI inflows into China now exceeds US $ 50 billion annually. It is only US $ 4billion in the case of India Consider global trade - India s share of world merchandise exports increased fro m .05% to .07% over the pat 20 years. Over the same period China s share has tri pled to almost 4%. India s share of global trade is similar to that of the Philippines an economy 6 times smaller according to IMF estimates. India under trades by 70-80% given it s size, proximity to markets and labour cost advantages. It is interesting to note the remark made last year by Mr. Bimal Jalan, Governor of RBI. Despite all the talk, we are now where ever close being globalised in t erms of any commonly used indicator of globalisation. In fact we are one of the least globalised among the major countries - however we look at it. As Amartya Sen and many other have pointed out that India, as a geographical, po litico-cultural entity has been interacting with the outside world throughout hi story and still continues to do so. It has to adapt, assimilate and contribute. This goes without saying even as we move into what is called a globalised world which is distinguished from previous eras from by faster travel and communicatio n, greater trade linkages, denting of political and economic sovereignty and gre ater acceptance of democracy as a way of life. Consequences: The implications of globalisation for a national economy are many. Globalisation has intensified interdependence and competition between economies in the world market. This is reflected in Interdependence in regard to trading in goods and s ervices and in movement of capital. As a result domestic economic developments a re not determined entirely by domestic policies and market conditions. Rather, t hey are influenced by both domestic and international policies and economic cond itions. It is thus clear that a globalising economy, while formulating and evalu ating its domestic policy cannot afford to ignore the possible actions and react ions of policies and developments in the rest of the world. This constrained the policy option available to the government which implies loss of policy autonomy to some extent, in decision-making at the national level.

IMPACT OF GLOBALIZATION ON INDIAN ECONOMY The impact of globalisation has been highly positive in almost all spheres of ec onomic and social life and virtually no negative effect. India s economic growth has been high, exports have boomed, incidence of poverty has been reduced, employment has surged, begging by India for economic aid has stopped, long-term inflation rate has gone down, scarcity of goods have disappea

red, the quality of products available have improved substantially and overall I ndia has become progressively vibrant and internationally competititive. Service sector is the lifeline for the social economic growth of a country. The real reason for the growth of the service sector is due to the increase in u rbanization, privatization and more demand for intermediate and final consumer s ervices. In advanced economies the growth in the primary and secondary sectors are direct ly dependent on the growth of services like banking, insurance, trade, commerce, entertainment, etc.

IMPACT ON INDIA: India opened up the economy in the early nineties following a major crisis that led by a foreign exchange crunch that dragged the economy close to defaulting on loans. The response was a slew of Domestic and external sector policy measures partly prompted by the immediate needs and partly by the demand of the multilate ral organisations. The new policy regime radically pushed forward in favour of a more open and market oriented economy. Major measures initiated as a part of the liberalisation and globalisation strat egy in the early nineties included scrapping of the industrial licensing regime, reduction in the number of areas reserved for the public sector, amendment of t he monopolies and the restrictive trade practices act, start of the privatisatio n programme, reduction in tariff rates and change over to market determined exch ange rates. Over the years there has been a steady liberalisation of the current account tra nsactions, more and more sectors opened up for foreign direct investments and po rtfolio investments facilitating entry of foreign investors in telecom, roads, ports, airports, insurance and other maj or sectors. The Indian tariff rates reduced sharply over the decade from a weighted average of 72.5% in 1991-92 to 24.6 in 1996-97.Though tariff rates went up slowly in the late nineties it touched 35.1% in 2001-02. India is committed to reduced tariff rates. Peak tariff rates are to be reduced to be reduced to the minimum with a peak rate of 20%, in another 2 years most non-tariff barriers have been dismantl ed by march 2002, including almost all quantitative restrictions.

Impact Of Globalization On International Trade International trade is an activity performed by a resident of a country with a population of other countries on the basis of mutual agreement. The occupation is bound to be inter-individual (person to person)between individuals and the government of a country or a national government with other governments.

According to Amir, an observer economic MS on the implementation of internationa l trade is very complicated and complex. The complexity is partly due to politic al and state boundaries that can hamper international trade, for example, cultur al differences, language, currency, estimates and ranges, and commercial law. International trade policies These actions include: 1. Rate Prices are similar taxes imposed on imported goods. Specific tariffs (specific t ariffs) established that the fixed charges on goods imported units. For example, $ 6 per barrel of oil). Tarifold valorem (ad valorem tariffs or d) is a tax und er a certain percentage of the value of imported goods (for example, 25 percent of tariffs on imported cars.) In both cases, the impact of tariff increase freig ht cost in a country. 2. Export Subsidies export subsidy is a payment from a number of other companies or individuals that sell products abroad, such as tariffs, export subsidies, specifically (a specif ic value per unit property) or the value Od (percentage of predicted of which is exported). If the government provides export subsidies, export to the consignor , the consignor of export goods to the extent that the difference in price of do mestic and foreign prices equal to the value of subsidies. The impact of export subsidies is to increase the price of the exporting country in the importing cou ntry, while the price decreases. 3. Import restrictions import restrictions (import quotas) is a direct restriction on the amount of goo ds can be imported. These restrictions are usually applied by giving licenses to several groups of individuals or companies. For example, the United States to l imit imports of cheese. Only some companies can be imported cheese, each with a quota to import a certain amount each year should not exceed a maximum amount. T he amount of the shares of each company based on the amount of cheese imported d uring the previous year. 4. Voluntary export restraints Another form of import restrictions are voluntary restraint (Voluntary Export Re straints), which is also known to control voluntary agreements (voluntary restra int agreement = ISS). SEE is a limitation (Kuota0 on trade imposed by the exporting country rather tha n import. The most famous example is the limitation of car exports to the United States conducted by Japan since 1981. SEE is usually done at the request of the importing country and approved by the exporting country to avoid new trade restrictions. SEE has political advantages and legal framework that makes it a preferred trade policy in recent years. Howe ver, an economic perspective, voluntary export controls exactly the same as the import quotas that the licenses granted to foreign governments and therefore ver y expensive for the importing country. VER is always more expensive for the importing country with respect to a rate li miting imports for the same amount. The difference is that government tariff rev enues (rental) earned by foreigners in the version, and the result see, obviousl y, in defeat. 5. local content requirements. Local content requirements (local content requirement) is a regulation that requ ires that certain parts of the physical drives, as the 1960 U.S. oil imports dit ahun fee. In other cases, the requirements specified in the value, which require s a minimum price of the merchandise comes from nilali national aggregate. conte nt provisions have been widely used by developing countries that divert base ber iktiar manufakturanya general treatment of the materials (intermediate goods). B ills in the United States the draft local content of vehicles offered in 1982, b ut so far applied berlum.

6. Export Subsidies credit. granting export credit is a type of export subsidies is just the form of subsidi zed loans for buyers. United States and most states, a government agency, the Ex port-Import Bank (Ex-Im Bank), which addresses at least offer subsidized loans t o support exports. 7. Government control (domestic supply) Purchases made by governments or heavily regulated companies can be directed to products manufactured in the country, even if the products are more expensive th an imports. The classic example is the telecommunications industry in Europe. De mands that European countries are essentially free to trade with each other. But the main purchasers of equipment are telekonumikasi phone companies in Europe a nd these companies until now in the hands of government, domestic suppliers, whi le suppliers charge a higher price than other suppliers. The result is a little communication equipment in European trade. 8. Bureaucratic barriers, dams (bureaucracy) Sometimes the government wants to restrict imports without doing so formally. Fo rtunately or unfortunately, so easy to adjust the level of health, security and customs procedures to ensure that it is a barrier to trade. The classic example is the French government decree of 1982 that requires all video recorder with a small department of customs in Poltier that effectively limit the amount of achi evement in the relatively very low. Economic globalization is the life of a world economy that is open and does not recognize territorial boundaries, or land between yanglain regions with each reg ion. Here the world is considered as a whole in which all regions can quickly an d easily affordable. Side of trade movements and inventory towards liberalizatio n of capital so that all people are free to try any time and place in this world . Economic globalization is a process of economic activity and trade, where countr ies in the world of market forces increasingly integrated within the territorial limits without hindrance. The globalization of the economy requires the removal of all restrictions and barriers to capital flows of goods and services. IMPACT OF GLOBALIZATION ON INTERNATIONAL TRADE Positive impact: 1. World production could be improved 2. Prosperity in a country of the Community. 3. The development of the domestic market. 4. Can obtain more capital and better technology. 5. Provide additional funding for economic development. Negative impact: 1. Because the development of the foreign trade becomes more free, which can inh ibit the growth of the industry. 2. Can worsen the balance of payments. 3. The financial sector is increasingly unstable. 4. Exacerbate the process of long-term economic growth.

Impact of Globalisation on Banking Sector in India. There are three distinct spells of development of Banking industry in post indep endent India, the pre-nationalisation era from 1947 to 1969, the post-nationalis ation cum preliberalisation era from 1969 to 1991 and the neo-liberalisation era from 1991 onwards. The first phase was mostly city-centric private Banking mark

ed by frequent failures and liquidation of Banks and consequent pauperisation of numerous poor and middle class depositors and loss of jobs for the employees. The post-nationalisation era saw a seachange in the Banking scenario : financia l stability of Public Sector Banks (PSBs) controlling more than 84% of Banking b usiness of the country, PSBs commanding trust and confidence of the Banking-publ ic, expansion of Branch net-work of Banks particularly in hitherto unbanked rur al and semi-urban centres, opening up the banking services accessible to the rur al poor, expansion of credit to agriculture, small scale industries and small en trepreneurs, artisans even to the marginal farmers, small shop owners, vegetabl e vendors etc. Such expansion of Branch network, coupled with such mass-banking , created considerable job opportunities on the one hand, and, on the other, it helped a green revolution on the agricultural sector, obviating dependence of im port of food grains, as also a spurt in the development of Small and Medium Scal e Industries. It also rescued a vast section of the rural poor from the exploita tion by village-money-lenders. By tapping the hitherto untapped huge rural savings, the PSBs could help the gro wth of large-scale and capital intensive industries too. Even the most ardent cr itics of Public Sector too have had to recognise and appreciate the laudable rol e of PSBs towards development of economic self reliance. During this post nation alization era, Regional Rural Banks (RRBs) were established in 1975 onwards unde r the auspices of PSBs to cater to the credit needs of rural-India. Till 1990, priority sector lending constituted over 70% of the advance portfolio of RRBs gi ving further fillip to the rural economy. During the last four decades of their productive existence, the PSBs have taken up the services of employees and the l iability of depositors of a number of Private Banks going on liquidation due to mismanagement by and the greed of their private owners. With the onset of World Bank-IMF dictated reforms, euphemistically called liber alisation, successive Governments at the centre have consistently been trying to undo all the good work of the PSBs as also to dismantle and privatise the PSBs altogether. On 14thAugust 1991, the Government of India (GOI) appointed a Commit tee headed by Mr. M. Narashimham (called Narashimham Committee I) to suggest the modus operandi for reforms of the Banking Sector. On 16th November 1991, the sai d Committee submitted its Repost suggesting downsizing of PSBs through closure o f Branches, merger of PSBs, reduction of priority sector lending from the then p revailing 40% to 10% of total advance portfolio, abolition of Banking Service Re cruitment Board, granting of more autonomy to PSBs in respect of both financial and administrative matters, to reduce the supervisory and regulatory control of Reserve Bank of India (RBI), the Central Bank of the country, and, to top it all , dilution of Government Holding in PSBs through suitable amendment of relevant legislations. Thereafter, a number of committees, such as Narashimham Committee II, Khan Committee, Verma Committee, S.C.Gupta Committee, Raghuram Rajan Commit tee, Anwarul Hoda Committee, to name a few, have been appointed to assess the p rogress in implementation of the Recommendations of the Narashimham Committee I a s also to suggest measures for carrying forward the reforms of the Banking Secto r further as per dictates of the World Bank-IMF. Following the Recommendations of these Committees, successive Governments have persistently been trying to c arry forward the reforms dictated by World Bank-IMF. In the process, law has bee n amended to pave the way for reduction of Govt. holding of shares in PSBs from 100% to 51% and, in pursuance of such amendment, most of the PSBs (except two ma jor PSBs and two subsidiaries of State Bank of India) have made public issue of 2shares, thus, reducing Government holding. Instead of filling up more than o ne-hundredthousand vacant posts through employment, the PSBs have reduced its w orkforce through Voluntary Retirement Scheme on the one hand, and, on the other outsourcing even the regular and core banking jobs to outside agencies. The rol e of RBI, as the regulatory and supervisory authority over the Banks, have been redefined and undermined considerably. RRBs have been directed to give more emp hasis on conventional Banking and, consequently, its priority lending stands red uced to around 40% (from 70%) of total advances today. Still, all is not yet lost altogether, as least, so far our country, India, is c

oncerned. Bank employees in India have been fighting relentlessly against the m achinations of the successive Governments to the reform the Banking Sector at th e dictates of the World Bank-IMF combine. It is most encouraging that all the ni ne unions having all-India presence in the Banking Industry five Workmens Unions and four Officers Unions representing almost 100% of the workforce in the Industr y have joined hands to form a United Forum of Bank Unions (UFBU). All the Unions are, in the main, united in principle, against the reforms. Since the onset of the reforms regime in 1991, the Bank employees have undertaken, apart from othe r forms of struggle-programmes, not less than 19 one-day strike and 3 two-day st rike programmes (total 25 days of strike); these strikes are apart from the stri kes undertaken jointly with other sections of Trade Union movement on popular de mands. I am very happy to report before this august house, that the left politi cal parties in our country have always extended their unequivocal support to all our struggles/strikes against the World Bank-IMF dictated reforms of the financ ial sector; the left-parties have also voiced their strongest opposition to such reforms both inside and out of legislative bodies. Because of all these strike/ struggle of Bank Employees and the role played by the left parties, the successi ve Governments have not been able to push through their much cherished reforms-p rogramme to the fullest extent they wished they could have done, to dismantle th e PSBs that they would have liked. The PSBs still retain their Nationalised cha racter, save and except State Bank of Sourastra ( a subsidiary of State Bank of India) which has been merged with State Bank of India, no other PSB has so far b een merged with any other by way of reform (merger of New Bank of India with Pun jab National Bank was actuated by commercial considerations and not by way of re forms; hence no TU opposed the said merger). The top echelons of PSBs, on their part, has not yet been able to introduce outsourcing to the extent they would ha ve liked. Notwithstanding all their intentions, GOI has not yet been able to pri vatize the Pension Fund. The result is there for all of us to see. Because of th e presence of a strong and dominant Public Sector, the financial sector in our c ountry, though affected, has not crushed down with the melt down of the financia l sector in the United States and other major economies of the capitalist world; not a single copper of public money has to be spent to dole out/save any PSB, n one of the depositors in any Bank has lost a single farthing of his/her deposit; when the financial giants all over the world have been happily off-loading thei r employees in thousands to tide over the crisis, not a single Bank-employee in India has lost his job just to accommodate the financial health of his/her emplo yer. Pension, the only postsuperannuation succor of employees, still remain ass ured. There is, however, no room to be complacent. The present dispensation at the centre of our country has not learnt any lesson from the prevailing convulsi on in the world economy and is still hell bent on going full steam with its refo rms agenda. The recent cabinet decision to increase the cap on FDI in insurance sector from 26% to 49%, as also to amend the law to allow proportionate voting r ights to the shareholders in Private Banks are indications of the road-map draw n for the desired reforms. There is the added danger of their intentions to allo w proportionate voting rights to the private shareholders of PSBs by amending th e relevant law. The working class, employees in financial sector in particular, have, therefore, to carry on the struggle unabated. The left parties of our coun try have always remained with us in these struggles and they will continue to do so in future, we are confident.

Effects of Globalization on Indian Industry Effects of Globalization on Indian Industry started when the government opened t he country s markets to foreign investments in the early 1990s. Globalization of the Indian Industry took place in its various sectors such as steel, pharmaceut ical, petroleum, chemical, textile, cement, retail, and BPO. Globalization means the dismantling of trade barriers between nations and the in tegration of the nations economies through financial flow, trade in goods and se rvices, and corporate investments between nations. Globalization has increased a cross the world in recent years due to the fast progress that has been made in t he field of technology especially in communications and transport. The governmen t of India made changes in its economic policy in 1991 by which it allowed direc t foreign investments in the country. As a result of this, globalization of the Indian Industry took place on a major scale. The various beneficial effects of globalization in Indian Industry are that it b rought in huge amounts of foreign investments into the industry especially in th e BPO, pharmaceutical, petroleum, and manufacturing industries. As huge amounts of foreign direct investments were coming to the Indian Industry, they boosted t he Indian economy quite significantly. The benefits of the effects of globalizat ion in the Indian Industry are that many foreign companies set up industries in India, especially in the pharmaceutical, BPO, petroleum, manufacturing, and chem ical sectors and this helped to provide employment to many people in the country . This helped reduce the level of unemployment and poverty in the country. Also the benefit of the Effects of Globalization on Indian Industry are that the fore ign companies brought in highly advanced technology with them and this helped to make the Indian Industry more technologically advanced.

The various negative Effects of Globalization on Indian Industry are that it inc reased competition in the Indian market between the foreign companies and domest ic companies. With the foreign goods being better than the Indian goods, the con sumer preferred to buy the foreign goods. This reduced the amount of profit of t he Indian Industry companies. This happened mainly in the pharmaceutical, manufa cturing, chemical, and steel industries. The negative Effects of Globalization o n Indian Industry are that with the coming of technology the number of labor req uired decreased and this resulted in many people being removed from their jobs. This happened mainly in the pharmaceutical, chemical, manufacturing, and cement industries. The effects of globalization on Indian Industry have proved to be positive as we ll as negative. The government of India must try to make such economic policies with regard to Indian Industry s Globalization that are beneficial and not harmful.

What is the function of globalization? and what is the problem of globalization? In a word ,C O N T R O L ! You will hear all kinds of good things that can come of "Globalization", but deep down, control of commerce and our very individual l ives are at the center of the issue. I caught a blurb on Y!A here about a propos al from France s Sarkozy about us getting in line with the rest of the European Union s currency , that we should follow suit. At this point , we have our own c urrency, and we are not yet quite in the cluches of U.N. /Euro control, but we a re standing on a slippery slope , and I fear for our nation. The benefit to othe r nations of globalization is that their standard of living gets lifted. Guess w hat happens to ours? It falls, that s not a guess, that s a fact! Cases in point , look at the auto industry, they sent so much of the work overseas that paid we ll here in the U.S. ,the American real content is very low in so called "America n Made" cars. Look at toy manufacturers, I THINK it was Mattel, ( correct me if I ve got the wrong one) that has a setup in China making toys for export back he re in the U.S. that were painted with lead paint. We got them here and had them tested for toxins, found lead paint, the manufacturer apologizes to , of all peo ple , the CHINESE!!! WE get the back of their hand!! Let s go from there to the infant formula that sicken and killed children that was made in CHINA. They DO N OT operate under the same parameters as U.S. manufacturers do, and don t let any one tell you they do! These people that set up shop overseas are dubiously calle d "American Businesses" selling out our very nation.

Indian economy has made rapid strides in the process of globalisation. Globalisation is increasing the integration of national markets and the interdep endence of countries world wide for a wide range of goods, services, and commodi ties. The most important lesson that we must learn from the crisis is that we must be self-reliant. Indias trade reform programme resulted in strong economic growth in the globaliza tion age. In particular, difficult decisions are to redress the fiscal imbalance, by reduc ing subsidies, completing the process of tariff and tax reform, and stepping-up privatization of state-owned enterprises. The efforts are needed to balance the trade and consider expansion of trade in o ther countries of the world.

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