Class 10 Economics Ch 4 – Globalisation

NCERT CLASS 10 ECONOMICS • DETAILED SOLUTIONS • CHAPTER 4 • GLOBALISATION AND THE INDIAN ECONOMY

Globalisation & Indian Economy

Detailed Solutions from Textbook

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💡 Key Terms

Globalisation: Integration between countries through foreign trade and foreign investment.
Liberalisation: Removing barriers or restrictions set by the government on trade.
MNC: A Multinational Corporation owns or controls production in more than one nation.

Descriptive Questions

Question 1

What do you understand by globalisation? Explain in your own words.

Globalisation is defined as the integration between countries through foreign trade and foreign investments by multinational corporations (MNCs).

It involves:

Increase in foreign trade.
Migration of people from one country to another.
Flow of capital finance and technology.
Private and public investments from foreign countries.

Question 2

What were the reasons for putting barriers to foreign trade and foreign investment by the Indian government? Why did it wish to remove these barriers?

Reasons for Barriers (Early years):
The main reason was to protect the interest earned by producers and small industrialists of our country from foreign competition.

Reasons for Removal (1991):
The government accepted that foreign competition would encourage Indian industrialists to improve the quality of their products. Removing these barriers would increase trade and quality of products produced in the country.

Question 3

How would flexibility in labour laws help companies?

Flexibility in labour laws helps companies to attract foreign investments.

Instead of hiring workers on a regular basis, companies hire workers flexibly for short periods when there is intense pressure of work.
This is done to reduce the cost of labour for the company.
However, still not satisfied, foreign companies are demanding more flexibility. The competition in the market is increasing each day and if the Government does not allow flexibility, they will not be able to reach their desired profit levels.

Question 4

What are the various ways in which MNCs set up, or control, production in other countries?

MNCs control production in other countries by:

Direct Investment: Investing a huge amount of money in a country’s economy to set up production units close to markets to get cheaper labour.
Collaboration: Collaborating with local companies to produce goods.
Acquisition: Buying local companies and expanding their production (Most common route).
Orders to Small Producers: Placing orders for production with small producers (e.g., garments, footwear) and selling them under their brand name.

Question 5

Why do developed countries want developing countries to liberalise their trade and investment? What do you think should the developing countries demand in return?

Why Developed Countries want it:
Developed countries want developing countries to liberalise because MNCs can set up industries in small and developing nations (where labour is cheaper). This decreases manufacturing cost and increases profit.

What Developing Countries should demand:
They should ask for a fair removal of trade barriers in order to protect their own domestic industries from unfair competition.

Question 6

“The impact of globalisation has not been uniform.” Explain this statement.

The impact has not been uniform because:

Developed Countries Benefit: Only the developed countries have gained profits due to globalisation. They are a source of setting industries and getting cheaper labour.
Developing Countries Struggle: Small industries and companies in developing countries have been constantly facing challenges in terms of earning profits and bringing goods in the market.

Question 7

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

Liberalisation helped by removing trade barriers:

It made foreign trade and investment easier.
Choices of buyers expanded as they get to choose products manufactured by foreign companies too.
Competition among traders resulted in cheaper prices.
Liberalisation spread globalisation as decision making power of export and import now lies with the businessmen themselves.

Question 8

How does foreign trade lead to integration of markets across countries? Explain with an example.

Foreign trade leads to integration because:

Producers can compete and export goods to markets of other countries.
Buyers get goods from outside their own country, expanding choice.
Prices of goods tend to equalize across markets.

Example: In India, the market is not just flooded with Indian goods but also foreign goods. This leads to competition and price reduction (e.g., Chinese toys in India).

Question 9

Globalisation will continue in the future. Can you imagine what the world would be like twenty years from now?

Twenty years from now:

Production of goods will be more efficient.
Competition in the market will increase.
Advancement in every field will be evident.
Quality and quantity of goods produced will increase.
Small industries and entrepreneurs will increase as more opportunities will be provided to them.

Objective Questions

Question 11

Fill in the blanks:

Indian buyers have a greater choice of goods than they did two decades back. This is closely associated with the process of globalisation. Markets in India are selling goods produced in many other countries. This means there is increasing trade with other countries. Moreover, the rising number of brands that we see in the markets might be produced by MNCs in India. MNCs are investing in India because of the cheaper production costs. While consumers have more choices in the market, the effect of rising demand and purchasing power has meant greater competition among the producers.

Question 12

Match the following:

Statement	Match
(i) MNCs buy at cheap rates from small producers	(b) Garments, footwear, sports items
(ii) Quotas and taxes on imports are used to regulate trade	(e) Trade barriers
(iii) Indian companies who have invested abroad	(d) Tata Motors, Infosys, Ranbaxy
(iv) IT has helped in spreading of production of services	(c) Call centres
(v) Several MNCs have invested in setting up factories in India for production	(a) Automobiles producers

Question 13

Choose the most appropriate option.

(i) The past two decades of globalisation has seen rapid movements in:
Answer: (b) goods, services and investments between countries.

(ii) The most common route for investments by MNCs in countries around the world is to:
Answer: (b) buy existing local companies.

(iii) Globalisation has led to improvement in living conditions:
Answer: (d) none of the above (as it benefits mostly developed countries/rich).