It refers to the process of integration of markets and interconnection between countries. The increasing contacts with other nations have made the world a smaller place. This is happening through greater foreign trade and foreign investment. Multi National Corporations (MNCs) are playing a major role in the globalisation process. More and more MNCs looking for locations around the world that are cheap for their production. As a result, production is being organised in complex ways and then they will earn more profit. Technology, particularly IT, has played a big role in organising production across countries. In addition, liberalisation of trade and investment has facilitated globalisation by removing barriers to trade and investment. At the inter-national level, World Trade Organisation (WTO) has put pressure on developing countries to liberalise trade and investment. While globalisation has benefited well-off consumers and also producers with skill, education and wealth, many small producers and workers have suffered as a result of the rising competition. Fair globalisation would create opportunities for all, and also ensure that the benefits of globalisation are shared better.
Reasons for Globalisation
- Improved means of communication technology E.g. Internet, television, telephone, fax etc.
- Increasing trade and commerce among nations.
- Improved means of transportation E.g. Aircraft and ships.
- Greatermovability of people in search of jobs and better education.
A Truly Globalised Economy
A truly global economy implies a boundary less world where there is:
• Free flow of goods and services across nations.
• Free flow of capital across nations.
• Free flow of information and technology.
• Free movement of people across technology.
• A common acceptable mechanism for the settlement of disputes.
• A global governance perspective.
Globalisation in India
Globalisation in Indian context means integration of Indian economy into global economy. Since July 1991,the process of globalisation initiated by implementing economic reforms in the country in a big way.
There are several ways through which globalisation can be achieved such as
• Encouraging inflow of Foreign Direct Investment (FDI) and technology.
• Opening up the system of trade, both in goods and in services.
• Internationalising markets and corporations in general.
With India become founder member of World Trade Organisation ( WTO) in 1995, the scenario of trade and investment, both domestic and international, has considerably changed. Various clauses of WTO agreements are being implemented in phased manner strictly in accordance with the parameters of the agreements. The major response of Indian government to WTO agreements has been to reduce tariffs in a big way. Indian markets have been opened up to global player and consequently many multinational corporations (MNCs) have entered Indian market. Internal subsidies are being reduced in a gradual manner. The procedures are being streamlined and rationalised for smooth two – way glow of goods, services and investment.
These majors adopted for globalisation had a mixed impacts on Indian companies. Those who managed their affairs efficiently not only survived, but become global players. But, on the other, the onslaught of multinational has wiped up many inefficient Indian companies out of the scene. Indian companies are also making strategic moves to enter into joint ventures with MNC’s so as to gain global size and take advantage of situation. Mergers and acquisitions are also taking place in a big way which is shaking out the minor players from the market. The effect of globalisation are still being hotly debated in the country by the people belonging to different school of thoughts who have formed pro and anti globalisation lobbies. The process of globalisation has also resulted in bringing tremendous improvement in the overall infrastructure available in the country.
After Globalisation Physical geographical gap or political boundaries no longer remain barriers for a business enterprise to serve a customer in a distant geographical market. This has been made possible by the rapid advancement in technology and liberal trade policies by Governments. And this will result in development of a nation.