- Meaning and Definition
- Characteristics of Globalization
- Factors Motivating Globalization
- Positive Impacts of Globalization
- Negatives effect of Globalization
- Steps Toward Globalization in India
Today, economic self-reliance is increasing rapidly in the world. Countries, markets, firms, customers, technology, production systems, etc. of the world are coming closer to each other. The economic boundaries and national circles of countries are breaking down. All countries have opened their doors to each other for progress and the whole world has reduced to a “global village”. With the effect of globalization, today the entire human community has become a unified world market. We have become a part of the global village and live in such a ‘global economy’. Where no organization is isolated from foreign markets and competition.
• Meaning :- Globalization means the internationalization of business activities, especially marketing related activities, in which the whole world market is seen as a single area by breaking the trade boundaries of the country by creating mutual interdependence between the markets. .
According to N. Vaghul “the term globalization refers to the rapid expansion of the market sector, which has a worldwide reach. link to the economy.
According to Shrikant Sonam- “Globalization refers to any economy that connects with the world economy”,
According to Stoner and others – “Globalization refers to a new perspective or trend towards relations with individuals in other countries. It reflects the unprecedented scope, nature, number and complexity of business relationships operating across international borders.
According to Thomas Mathew, “Globalization is such a process of change, which occurs due to the growth of cross-border activities and the spread of information technology and which helps in communication at the global level.
According to Prof. Madhu Dandvate “Globalization means the integration of any one economy with the world economy, so that there can be a balanced growth of development and trade and islands of wealth can be eliminated from the middle of the circular sea of wealth.”
Conclusion – Globalization is the process in which the economy of a country is integrated so that the whole world can function as a single economy and a single market and in which individuals, capital, technology, To facilitate mutual exchange of goods, information and knowledge.
- Globalization is the result of the adoption of liberal economic policy or economic reform programs by different countries at the international level.
- The process of globalization is done by multinational companies or corporations. It does production, sales, manufacturing and research work in many countries.
- Globalization has transformed the whole world into one economy, due to which the integration and establishment of the activities of one business is taking place across many international borders. As a result of this “Transnational Management” has developed.
- Globalization is a new and open approach to run the business at the international level. After this the economy of any country cannot remain closed.
- The ideology of shrinking world emerged as a result of globalization. Due to new information technology, electronic communication computers, the proximity of the world has increased.
- Globalization changed the nature of competition which no longer between businesses but between nations (the policy of globalization is undoubtedly an escape from the protectionist point of view of the country)
- Globalization has changed the culture and culture of many countries. It is necessary to study the values there.
- Many developing countries have opened themselves to foreign investors by adopting liberal economic policies.
- New technology has been developed in the field of industry and production. These technologies are being transferred to all countries. The country is taking interest in the policy of globalization as a result of the manufacture and availability of all the goods in all the countries.
- Transport, information dissemination and communication made globalization a fact of life.
- It became necessary to adopt globalization for the activities of production and export etc.
- Globalization is the basis of future economic development. Without this economic development cannot be ensured.
- It is necessary to engage globally to protect ourselves from the changes.
- Links domestic markets to the macro-economy in many respects such as demand, consumption, cost, customer nature, etc. Globalization has its limits. Globalization makes the country one big market and one
- No country can function without a world trade agreement.
- Due to the pressure of world organizations, it has become necessary to adopt globalization.
- Favorable Impacts on Business :-
- i) The size of business enterprises starts getting bigger, because their area expands to many countries.
- ii) The production capacity of the enterprise is determined by the market forces. There are no bureaucratic constraints on his production limit.
- iii) Provides opportunities to each indigenous company and corporations to develop their potential. This leads to the development of indigenous multinational corporations in the country.
- iv) Efforts are also made to improve the quality of indigenous products, so as to meet the challenge of foreign goods.
- v) The latest technical knowledge also spreads rapidly.
- vi) The demand for branded products increases in the economy, which stops the production of counterfeit goods. There is a trend of “Brand Equity” in the country.
- vii) The process of transplanting business from one place to another has also been made possible and easy.
- viii) The company can take advantage of different conditions and economy by setting up its manufacturing plants at many places.
- ix) It is possible to develop the competitive ability of the enterprise.
- x) Free money market will develop in all the countries.
- xi) Globalization will liberate industries from overprotective tendencies.
- xii) Will provide wide capital market, as a result they will get finance at cheaper rate. xiii) Development of new products becomes possible.
- xiv) Market boundaries expand.
- xv) In the era of globalization, multinational firms have more financial resources, they are efficient in using funds, they can easily mobilize financial resources in foreign markets and investors from other countries are also willing to invest in them.
- xvi) Governments also remove control over business and industries.
- xvii) There will be development of the management profession.
- xviii) The mobility of labor will increase. Partnership in labor capital will increase.
- xix) Business combinations will also get a boost in the country. The not-for-profit and sick organizations will get the opportunity of merging or amalgamating with healthy enterprises. This will increase business success and prevent misuse of resources.
Socio Economics Favorable Impacts :–
- 1) Many controls on the economy will be removed, as a result, new industries will be established in the country.
- 2) The development of infrastructure in the country will also happen at a rapid pace.
- 3) Foreign Direct Investment and Portfolio investment in India has grown rapidly in the last 3-4 years.
- 4) Before globalization, India was a closed market in which there was little enthusiasm for capital, management and technology from outside. India is now an open market.
- 5) The export earnings have increased.
- 6) The balance of payments may also remain in favor. Our exports have also increased.
- 7) New industries will open and employment opportunities will increase, both saving and investment will increase in the country, which will accelerate the pace of capital formation in the country.
- 8) Capital investment in social sectors will increase.
- 9) Employment opportunities will also have a favorable effect.
- 10) Due to the economic reforms approaching globalization, there has been an increase in the reserves of foreign exchange in the country.
- 11) The current account deficit has decreased.
- 12) The foreign debt burden has come down.
- 13) The stability of the exchange rate, before globalization, foreign exchange transactions were done through illegal and ‘hawala’ mediums, now it will be through government and legal means
- 14) There is a possibility of cooperation in the social group.
- 15) It has also helped in solving social problems.
- 16) It has become possible to stop brain drain.
- 17) The disputes over the national boundaries of the country will be reduced, regionalism will end and liberal democratic values will develop.
- 18) Centers with monopolistic activities are dying out and commercial activities of centers with efficiency and influence will be attracted.
- 19) It has also become possible to quickly consume new items.
- Adverse Effects on Business :-
- In the fierce competition with foreign goods of indigenous products, many industries are trying to save their existence.
- Due to globalization, all the protection given to the starting industries is removed.
- The fear of destruction of domestic industries has increased, as developed countries are dumping their overproduction in Indian markets.
- Threat to the existence of small and cottage industries has increased because these small scale industries neither have technical superiority nor high production capacity and quality as compared to multinational companies.
- Import liberalization will prove to be very costly if exports do not increase.
- Earlier multinational companies were earning foreign exchange to the country, now they are remitting money to foreign countries.
- Incidence of acquisitions and mergers of companies has started increasing due to tight market competition
- Production of unsuitable goods has increased.
- Multinational corporations also do not carry out research and development activities in less developed countries.
- Multinational companies transfer old technology to less developed countries. Taking advantage of their strong bargaining power, these multinational corporations transfer new technology only on strict terms.
- Adverse Socio-economics Effects :-
- Since employees in multinational companies are recruited from abroad, local employment opportunities are lost.
- Commodities of daily life are expensive, because the flow of goods can be from different countries and their supply is less in our country
- Balanced economic development of the country is also affected.
- Inequalities between countries increase.
- Globalization stimulates hostile forces and can sow the seeds of conflict and tension.
- Globalization is the policy of establishing economic imperialism by developed countries in underdeveloped countries.
- Attack on the interests of small shareholders due to domination of the stock market.
- Rupee devaluation will increase the rupee cost of imports and increase the burden of repayment of foreign debts.
Apart from this, globalization has also given rise to the following problems. Political interference, unbalanced development, no solution to poverty, threat to national sovereignty, etc.
(1) Import liberalization: – In its report (India strategy trade reforms) in 1990, the World Bank suggested India to implement the policy of import liberalization on a large scale.
(2) Opening up to foreign capital: – In order to integrate the Indian economy with the world economy, the Government of India has liberally opened it to foreign investors.
(3) The following changes made in FERA also promote globalization: –
- Freedom for foreign companies to take profits from the country.
- Exemption to buy immovable property in India to the units under FERA,
(4) Exchange rate adjustment and rupee convertibility :- This would have been necessary to link the economy of any country with the world economy. that its currency should be made fully convertible. It is necessary for the convertible to reduce the regulation controls from the orderly condition and eventually be completely abolished.
(5) Foreign Cooperation Agreements: – As a result of the liberal foreign policy announced in July, 1991, there has been a rapid increase in the agreement of foreign cooperation. And the process of globalization got a boost.
(6) The government has from time to time promoted globalization by giving control of capital investment in the country to multinational corporations. (7) Increasing foreign direct investment in the country is also an effective step towards globalization. (8) With a view to strengthen the country’s export competitiveness under the globalization process itself, a revised import export policy was announced by the government on 31 March 1999.
(9) The ‘GATT Agreement’ and the World Trade Organization have played an important role in the formation of the global economic environment and policy. Its purpose was to reduce trade taxes and barriers for mutual benefit. The GATT ceased to exist on 12 December 1995 and was replaced by the World Trade Organization (WTO) established from 1 January 1995. In the WTO, Intellectual Rights (T.R.I.P.S.), Foreign Capital Investment Measures (T.R.I.M.S.), General Agreement on Trade in Services, Textile Industry and Agriculture and Institutional Affairs have been included.
The GATT agreement had the following effects on the Indian economy in terms of foreign sector:-
- (1) India’s exports are expected to increase by 1 to 2 billion dollars per year.
- (2) The government will continue to have the right to allow investment of what kind of capital.