.png)
 |
| Classes By Saurabh Globalisation and the Indian Economy PYQs. |
Now Reading: Globalisation and the Indian Economy PYQs.
1 Mark Questions.
Q1. Why is ‘tax’ on imports known as a trade barrier? (2011 OD)
Ans: Tax on imports is known as a trade barrier because it increases the price of imported commodities. It is called a barrier because some restriction has been set up.
Q2. Which organization lays stress on liberalization of foreign trade and foreign investment? (2014 D, 2012 OD)
Q3. Name an important barrier on foreign trade. (2013 D)
Q4. Differentiate between investment and foreign investment.(2016)
Ans: The money that is spent to buy assets such as land, building, machines etc. is called investment whereas investment made by a MNC to buy such assets is called foreign investment.
Q5. Why do MNCs set up their offices and factories in those regions where they get cheap labour and other resources?
Ans: MNCs set up their offices and factories in those regions where they get cheap labour and other resources because they bring down the cost of production and ensure more profits for themselves.
Q6. What do you understand by the term ‘Foreign Direct Investment’? (2014 OD)
Ans: FDI is the investment of foreign capital in the economic and productive activities of a country by foreign companies or MNCs with the aim of expanding capacity and production to earn profits.
Q7. Why had the Indian Government put barriers to foreign trade and foreign investment after independence? State any one reason. (2015 D)
Ans: The Indian government after independence had put barriers to foreign trade and investment.
•This was done to protect the producers within the country from foreign competition.
▪︎To protect the Indian economy from foreign infiltration in industries affecting the economic growth of the country as planned.
Q8. What is meant by trade barrier? (2015 OD)
Ans: Barriers or restrictions that are imposed by the government on free import and export activities are called trade barriers. Tax on imports is an example of a trade barrier because it increases the price of imported • commodities. The government can use a trade barrier like ‘tax’ to increase or decrease (regulate) foreign trade and to decide what kind of goods and how much of what should come into the country.
Q9. What is meant by “fair globalization’? (2013 OD)
Ans: Fair globalization means globalization that would create opportunities for all and ensure that its benefits are shared better.
Q10. Give one characteristic feature of a ‘Special Economic Zone’?
Ans: Special Economic Zones or SEZs are industrial zones set up by the government having word class facilities such as electricity, water, roads, transport, storage, recreational and educational facilities. Companies who set up production units in SEZs are exempted from taxes for an initial period of five years.
Q11. Due to what reason are the latest models of different items available within our reach?
Ans: Globalisation
Q12. How MNCs control production across globe? Mention any one way.
Ans: Large MNCs in developed countries place orders for production with small producers such as garments, footwear etc.
Q13. What is Ford Motors ? When did it come to India and what did it do ?
Ans: Ford Motors, an American company, is one of the world’s largest automobile manufacturers with production spread over 26 countries of the world. Ford Motors came to India in 1995 and spent ?1700 crore to set up a large plant near Chennai. This was done in collaboration with Mahindra and Mahindra.
Q14. Why had the Indian government after independence put barriers to foreign trade and foreign investment ?
Ans: The Indian government put barriers to protect the producers within the country from foreign competition. Industries were just coming up and the competition from imports would not allow the Indian industries to come up.
Q15. How can the globalisation be made more fair ? Write two steps and what will be its effect ?
Ans: (1)The government must protect the interest of all the people in the country.
The government can ensure that labour laws are properly implemented and the workers get their rights.
(2) Fair globalisation would create opportunities for all, and also ensure that the benefits of globalisation are shared better.
3 Marks Questions
Q1. Explain the role of government to make globalization fair. (2011 D)
Ans: The government can play a major role in making fair globalization possible:
Fair globalization would create opportunities for all, and also ensure that the benefits of globalization are shared better. Government policies must protect the interests not only of the rich and the powerful, but also of all the people in the country.
▪️Government should ensure that labour laws are implemented and workers’ rights are protected.
▪️Government should support small producers to improve their performance till the time they become strong enough to compete with foreign competition.
▪️If necessary, government should use trade and investment barriers.
▪️It can negotiate with WTO for fairer rules.
▪️It can also align with other developing countries with similar interests to fight against the domination of developed countries in the WTO.
Q2. Explain any three advantages of globalization. (2011 OD)
Ans: Globalization means integrating the economy of the country with the world economy.
•Under this process, goods and services along with capital, resources and technology can move freely from one nation to another.
•It has increased the movement of people between countries. People usually move from one country to another in search of better income, better jobs or better education. Earlier the movement of people between countries was less due to various restrictions.
•Rapid improvement in technology has been one major factor that has stimulated the globalization process. For instance, advancement in transportation technology has made much faster delivery of goods across long distances possible at lower costs. Container services have led to huge reduction in port handling costs. The cost of air transport has fallen which has enabled much greater volumes of goods being transported by airlines.
•Developments in information and communication technology (IT in short) has brought a revolution in telecommunications. It has made e-banking, e-commerce, e-leaming, e-mail and e-governance a reality.
•Globalization has resulted in greater competition among producers and has been of advantage to consumers, particularly the well-off section. Rich people now enjoy improved quality and lower prices for several products.
Q3. What is a trade barrier? Why did the Indian Government put up trade barriers after Independence? Explain. (2011 OD)
Ans: The restrictions set by the Government to regulate foreign trade are called trade barriers. Tax on imports is an example of a trade barrier.
The Indian Government had put barriers to foreign trade and foreign investment after independence to protect the domestic producers from foreign competition. Imports at that stage would not have allowed local industries to come up. India allowed imports of only essential items such as machinery, fertilizers, petroleum, etc.
Q4. What would happen if Government of India puts heavy tax on import of Chinese toys? Explain any three points. (2012 D)
Ans: If Government of India puts heavy tax on import of Chinese toys.
•The cost of Chinese toys will increase.
•Less Chinese toys would come in the Indian market.
•Indian buyers would have lesser choice in the market and toys will become more expensive.
•For Indian toy makers this would provide an opportunity to expand business as there will be less competition in the market.
Q5. How do Multinational Companies manage to keep the cost of production of their goods low? Explain with examples. (2013 D)
Or
Explain the conditions that determine MNCs setting up production in other countries? (2011 D)
Ans: •MNCs set up offices and factories for production in regions where they can get cheap labour and other resources. Example, Countries like China, Bangladesh and India. They also provide with the advantage of cheap manufacturing locations.
•MNCs also need close-by markets for their manufacturing goods. Mexico and Eastern Europe are useful for their closeness to the markets in the US and Europe.
•Besides these, MNCs also require skilled engineers and IT personnel and a large number of English speaking people who are able to provide customer care services (India possibly tops in this area).
•All these factors help MNCs in saving costs of production by 50-60%.
Q6. How do we participate in the market as producers and consumers? Explain with three examples. (2013 D)
Ans: We participate in the market both as producers and consumers.
•As producers of goods and services we could be working in any of the sectors like agriculture, industry or services.
For example, a farmer who sells wheat to a flour mill. The man at the mill grinds the wheat and sells the flour to a biscuit company. The biscuit company uses flour, sugar and oil to make packets of biscuits. It sells the biscuits in the market to the consumer. Biscuits are the final goods, i.e., the goods that reach the consumer and people as consumers buy.
•We as producers in the market could be made to sell the produce to the moneylender at a low rate in return for a timely loan.
For example, in case of small farmers; the failure of crops often makes loan repayment impossible. They have to sell a part of their land to repay the loans.
•As consumers we participate in the market when we purchase goods and services that we need. As individual consumers we often find ourselves in a weak position. Whenever there is a complaint regarding a good or service that had been bought, the seller tries to shift all the responsibility on to the buyer.
For example, a long battle had to be fought with court cases to make cigarette manufacturing companies accept that their product could cause cancer.
Q7. How are local companies benefitted by collaborating with multinational companies? Explain with examples. (2013 OD)
Ans: When local companies enter into a joint venture with MNCs:
•First, the MNCs provide money for additional investments for faster production.
•Second, MNCs bring with them the latest technology for enhancing and improving the production.
•Some Indian companies have gained from successful collaborations with foreign companies.
Globalization has enabled some companies to emerge as multinationals.
•Parakh Foods was a small company which has been bought over by a large American Company — Cargill Foods. Parakh foods had built a large marketing network in various parts of India as a well- reputed brand. Parakh Foods had four oil refineries whose control has now shifted to Cargill. Cargill is now the largest manufacturer of edible oil in India making five million pouches daily.
Q8. How has foreign trade been integrating markets of different countries in the world? Explain with examples. (2012 OD)
Or
“Foreign trade integrates the markets in different countries.” Support the statement with arguments. (2015 OD)
Ans: (i) Foreign trade creates opportunities for producers to reach beyond domestic markets. Producers can compete in markets located in other countries of the world. Similarly, for the buyers, import of goods from another country leads to expanding choice of goods beyond what is domestically produced. Buyers can thus choose from a wide range of products to suit their individual tastes.
(ii) With the opening of trade, goods travel from one market to another. Choice of goods in the market rises. Prices of similar goods in two markets tend to become equal, and producers in the two countries now closely compete against each other even though they are separated by thousands of miles. Foreign trade, thus, results in connecting the markets or integration of markets in different countries.
For example., There are endless number of footwear brands available in the Indian market. A consumer who is aware of international trends can choose between a local brand like Bata, Lakhani and international brands like Adidas, Nike, Reebok etc.
Q9. How does foreign trade integrates the markets of different countries? Explain with examples.
Ans: Foreign trade integrates the markets of different countries as:
(a) It provides an opportunity for both producers and consumers to reach beyond the markets of their own country.
(b) Producers now compete with markets located in other countries.
(c) There is an expAnswer:ion of choice of goods beyond the domestic market.
(d) For example, during the Diwali season, buyers in India have the option of buying either Indian or Chinese decorative lights and bulbs. The Chinese manufacturers get the opportunity to expand their business.
Q10. “Information and communication technology has played a major role in spreading out production of services across countries”. Justify the statement with examples.
Ans: Information and communication technology has played a major role in spreading out products and services across countries. In recent years, technology in the areas of telecommunication facilities (telegraph, telephone including mobile phone) are used to contact one another around the world.
For example, a news magazine published for London readers is to be designed and printed in India. The text is sent through the internet to Delhi office. Design of the magazine is also sent to Delhi from London office using telecommunication facilities. The design is done on a computer. After printing, the magazines are sent to London by air. The payment for the services from London to Delhi is done instantly through the internet (e-banking).
Q11. How do Multi-National corporations (MNCs) interlink production across countries? Explain with examples. (2017 OD)
Ans: MNCs set up production in various countries based on the following factors:
•MNCs set up offices and factories for production in regions where they can get cheap labour and other resources; eg., in countries like China, Bangladesh and India. These countries also provide with the advantage of cheap manufacturing locations.
•At times, MNCs set up production jointly with some of the local companies of countries around the world. The benefit of such joint production to the local company is two-fold. First, the MNCs can provide money for additional investments for faster production. Secondly, the MNCs bring with them the latest technology for enhancing and improving production.
•Some MNCs are so big that their wealth exceeds the entire budgets of some developing countries. This is the reason why they buy up local companies to expand production.
eg. Cargill Foods, a very large American MNC has bought over smaller Indian companies such as Farakh Foods.
•There is another way in which MNCs control production and that is by placing orders for production with small producers in developing nations; eg., garments, footwear, sports items etc. The products are supplied to these MNCs which then sell these under their own brand name to customers. MNCs also enter into close competition with local companies thereby influencing production in distant locations.
Q12. Examine any three conditions which should be taken care of by multinational companies to set up their production units. (2017 D)
Ans: Conditions:
•MNCs set up offices and factories for production in regions where they can get cheap labour and other resources. Example, Countries like China, Bangladesh and India. They also provide with the advantage of cheap manufacturing locations.
•MNCs also need close-by markets for their manufacturing goods. Mexico and Eastern Europe are useful for their closeness to the markets in the US and Europe.
•Besides these, MNCs also require skilled engineers and IT personnel and a large number of English speaking people who are able to provide customer care services (India possibly tops in this area).
All these factors help MNCs in saving costs of production by 50-60%.
Q13. How have our markets been transformed? Explain with examples.
Ans: The advent of globalisation and the policy of liberalization have opened the market to the world players. It has given rise to wide choice of goods and services to the consumer.
MNCs have played a vital role in the world market. Foreign trade and investment in’the country has increased. It has also resulted in exchange of technology between countries. In recent times, technology in the areas of telecommunications, computers and internet has been changing rapidly.
Globalisation has also created new opportunities for companies providing services, particularly those involving in IT. Better job opportunities for people have given rise to migration.
Globalisation has also enabled some large Indian companies to emerge as multinationals For example, Tata Motors, Infosys, Ranbaxy have expanded their operations around the world.
Q14. Explain by giving examples how Multinational Corporations (MNCs) are spreading their products in different ways.
Ans: Multinational Corporations (MNCs) are spreading their production in different ways. Some of them are:
By buying local companies and, then expanding production. For example, Cargill Foods, a very large American MNC, purchased small Indian company, Parakh foods. Cargill Foods is, now, the largest producer of edible oil in India with a capacity making 5 million pouches daily.
By placing orders for production with small producers. Garments, footwears, sports items are examples where production is carried out by small producers for large MNCs around the world.
By producing jointly with some of the local companies. It benefits the local company in two ways.
•A MNC can provide money for additional investments.
•A MNC can bring latest technology for production.
For example, Ford Motors set up a large plant near Chennai, in collaboration with Mahindra and Mahindra, a major Indian manufacturer of jeeps and trucks.
Q15. In spite of Globalization, creating good quality products and expanding market, how is it affecting the stability in jobs for the workers? (2014 OD)
Ans:
•Employment of ‘flexible workers’.
•Increased competition, objective to lower costs, the axe falls on the ‘labour costs’—temporary jobs given.
•Longer working hours for labour to get suitable salaries.
Q16. “Globalisation and greater competition among producers has been of advantageous
to consumers.” Justify the statement with examples.
Ans: Globalisation and greater competition among producers has been of advantageous to consumers in the following ways:
•Consumers in today’s world have a wide variety of goods and services to choose from. The latest models of digital cameras, mobile phones and televisions made by the leading manufacturers are available to them.
•Consumers now enjoy better and improved quality at lower prices.
•It has resulted in higher standards of living.
•There has been a varying impact on producers and workers.
•Many top Indian companies have been able to establish themselves as multi¬national corporations.
• Latest technology and production methods have raised production standards.
