Top-Rated Free Essay
Preview

Globalization and Indian Economy

Powerful Essays
1714 Words
Grammar
Grammar
Plagiarism
Plagiarism
Writing
Writing
Score
Score
Globalization and Indian Economy
Globalization and Indian Economy - Presentation Transcript 1. 2. Globalization * Globalization has come to be a principal characteristic feature of the new millennium and it has become an inescapable reality in today's society. * No community and society can remain isolated from the forces of globalization 3. What is globalization * Globalization is the increasing integration of economies and societies around the world, transcending the boundaries of the nation state, particularly through international trade and the flow of capital, ideas and people, the transfer of culture and technology, and the development of transnational regulations 4. Contd * Globalization is caused by four fundamental forms of capital movement throughout the global economy. The four important capital flows are:- * Human Capital * Financial Capital * Resource Capital * Power Capital 5. Definition of globalization * Tom G. Palmer of Cato Institute defines "globalization" as "the diminution or elimination of state-enforced restrictions on exchanges across borders and the increasingly integrated and complex global system of production and exchange that has emerged as a result.“ * Noam Chomsky argues that the word globalization is also used, in a doctrinal sense, to describe the neo-liberal form of economic globalization. 6. History * The term "globalization" has been used by economists since the 1980s although it was used in social sciences in the 1960s; however, its concepts did not become popular until the latter half of the 1980s and 1990s * The earliest written theoretical concepts of globalization were penned by an American entrepreneur-turned-minister Charles Taze Russell who coined the term 'corporate giants' in 1897 7. Contd * The 19 th century is sometimes called “The First Era of Globalization”. It was a period characterized by rapid growth in international trade and investment. The “First Era of Globalization” began to break down at the end of the 20 th century with the first World War and later collapsed during the gold standard crisis in the late 1920’s and early 1930’s 8. Modern globalization * It is the actual period in which globalization took another phase, it worked towards promotion of free trade * Globalization has been facilitated by advances in technology which have reduced the costs of trade and trade negotiation rounds, originally under the auspices of the General Agreement on Tariffs and Trade (GATT) * Barriers to international trade have been considerably lowered through international agreements such as GATT 9. Pro-globalization * Supporters of free trade claim that it increases economic prosperity as well as opportunity, especially among developing nations, enhances civil liberties and leads to a more efficient allocation of resources. Economic theories of comparative advantage suggest that free trade leads to a more efficient allocation of resources, with all countries involved in the trade benefiting 10. Contd * Globalization leads to lower prices, more employment, higher output and higher standard of living for those in developing countries * Income equality * Life expectancy * Feminism * Decreased percentage of children in labour force * Increasing use of electric powers, cars, radios and telephones per capita 11. Anti-globalization * Anti-globalization is a term used to describe the political stance of people and groups who oppose the neoliberal version of globalization . * Anti-globalization may occur in order to maintain barriers to the international transfer of people, goods and beliefs, particularly free market deregulation, encouraged by organizations such as the IMF or the WTO 12. Contd * Skeptics believe globalization leads to * Poorer countries * Exploitation * Outsourcing * Weak labour unions 13. Measuring globalization * Globalization has had an impact on different cultures around the world. Economic globalization, demonstrates that it can be measured in different ways. These centers around the four main economic flows that characterize globalization: * The index measures the three main dimensions of globalization: * Economic * Social * Political 14. Contd * There is an overall index of globalization and sub-indices referring to actual economic flows, economic restrictions, data on personal contact, data on information flows, and data on cultural proximity is calculated 15. Effects of globalization * Industrial * Financial * Economic * Political * Informational * Language * Competition * Competition * Cultural * Ecological * Social * Technical * Legal 16. Advantages of globalization * Goods and people are transported with more easiness and speed * The possibility of war between the developed countries decreases * Free trade between countries increases * Global mass media connects all the people in the world * The global village dream becomes more realistic 17. Contd * There is a propagation of democratic ideals * The interdependence of the nation-states increases * As the liquidity of capital increases, developed countries can invest in developing ones * The flexibility of corporations to operate across borders increases * The communication between the individuals and corporations in the world increases 18. Disadvantages of globalization * Increased flow of skilled and non skilled jobs from developed to developing countries * Increased likelihood of economic disruptions in one nation affecting all nations * Corporate influence of nation-states far exceed of civil society organization and average individuals * Threat that control the world media by a handful of corporation that limit cultural expression 19. Contd * Greater chance of reactions for globalization being violent in an attempt to preserve cultural heritage. * Greater risk of diseases being transported unintentionally between nations * Spread of a materialistic lifestyle and attitude that sees consumption as the path to prosperity * International bodies like the World Trade Organization infringe on national and individual sovereignty 20. 21. Indian economy * 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 * Thus, Indian economy had experienced major policy changes in early 1990s. The new economic reform, popularly known as, Liberalization, Privatization and Globalization (LPG model) aimed at making the Indian economy as fastest growing economy and globally competitive. The series of reforms undertaken with respect to industrial sector, trade as well as financial sector aimed at making the economy more efficient. 22. Contd * Indian economy was in deep crisis in July 1991, when foreign currency reserves had plummeted, inflation had roared, fiscal deficit was very high and had become unsustainable; foreign investors and NRIs had lost confidence in Indian economy. So major measures were initiated as a part of the liberalization and globalization strategy in the early nineties included the following:- 23. Contd * Devaluation * Disinvestment * Dismantling of The Industrial Licensing Regime * Allowing Foreign Direct Investment * Non Resident Indian Scheme Throwing Open Industries Reserved For The Public Sector to Private Participation. 24. Contd * Abolition of the (MRTP) Act * The removal of quantitative restrictions on imports * The reduction of the peak customs tariff * Wide-ranging financial sector reforms 25. Contd * The novel Tale of Two Cities of Charles Dickens begins with a piquant description of the contradictions of the times: It was the best of times, it was the worst of times; it was the age of wisdom, it was the age of foolishness; it was the epoch of belief, it was the epoch of incredulity; we had everything before us, we had nothing before us * At the present, we can also say about the tale of two Indias. We have the best of times; we have the worst of times. There is sparkling prosperity, there is stinking poverty. We have dazzling five star hotels side by side with darkened ill-starred hovels. We have everything by globalization, we have nothing by globalization 26. Bright side of globalization * The rate of growth of the Gross Domestic Product of India has been on the increase
Particulars 1980-90 1993-2001 2003-04 2004-05 2005-06 2006-07 Growth rate GDP 5.6% 7% 1.4% AGR (GDP) 7.5% 8.5% 9% 9.2% 1.7% FER 39 bill $ 107 bill $ 145 bill $ 180 bill $ 141 bill $ Cum FDI 1,81,566 crs (43.29 bill $ ) GOM 50 bill $ (covers 45% of the global market) 27. Contd * Foreign Trade (Export- Import) * Export increased by 24 percent in 2004-05 as compared to previous year. It stood at US $ 79 billion in 2004-05 compared with US $ 63 billion in the previous year. 28. Dark side of globalization * On the other side of the medal, there is a long list of the worst of the times * (Demoting) Agriculture * Growth of poverty and unemployment * Degrading society * Growth of slum capitals 29. Contd * GDP Growth Rate * 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 per the Economic Survey in 2000-01. The performance in the first quarter of the financial year is5.8% and second quarter is 6.1%. * India’s imports in 2004-05 stood at US$ 107 billion recording an increase of 35.62 percent compared with US$ 79 billion in the previous fiscal. * Oil imports zoomed by 19 percent with the import bill being US $ 29.08 billion against USD 20.59 billion in the corresponding period. Non-oil imports during 2004-05 are estimated at USD 77.036 billion, which is 33.62 percent higher than previous year's imports of US $ 57.651 billion in 2003-04 30. Where does India stand * Over the past decade FDI flows into India have averaged around 0.5% of GDP against 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 from .05% to .07% over the pat 20 years. Over the same period China's share has tripled 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 its size, proximity to markets and labour cost advantages 31. Future challenges * Sustaining the growth momentum and achieving an annual average growth of 9-10 % * Simplifying procedures and relaxing entry barriers for business * Boosting agricultural growth * Expanding industry * Developing world-class infrastructure 32. Contd * Allowing foreign investment in more areas * Effecting fiscal consolidation and eliminating the revenue deficit * Protecting domestic culture * proper pricing mechanisms and better direction of subsidies * Empowering the population 33. Conclusion * The lesson is that a country must carefully choose a combination of policies that best enables it to take the opportunity while avoiding the pitfalls and utilizing globalization to the fullest extent possible.

You May Also Find These Documents Helpful

  • Good Essays

    Reli 312 Essay Exam

    • 1643 Words
    • 5 Pages

    What is Globalization? In Campbell’s essay Globalization is defined as “a complex web of social processes that intensify and expand worldwide economic, cultural, political, and technological exchanges and connections.” (Campbell, 4) Globalization intensifies global interdependencies and exchanges, increasing global awareness about international issues and constantly creates connections between countries close and distant.…

    • 1643 Words
    • 5 Pages
    Good Essays
  • Good Essays

    Globalization refers to the development of an integrated world economy, exchange of cultural views, thoughts, and products (Wikipedia, 2013). Pologeorgis (2012) states that, essentially globalization began with the exploration and settlement of new lands. Communication and transportation advances have aided in this process.…

    • 805 Words
    • 4 Pages
    Good Essays
  • Powerful Essays

    Merriam-Webster (2013) defines globalization as “the development of an increasingly integrated global economy marked especially by free trade, free flow of capital, and the tapping of cheaper foreign labor markets” (n.p.). Globalization did not start with just the economy. The ideas of globalization can be traced essentially back to the origins of man when they began to move from equatorial Africa. Next were the Europeans trading for silk and spices with the Far East, eventually leading to the discovery of the Americas by Christopher Columbus traveling to the West in an effort to find a shorter route to their foreign trade partners. Modern day globalization began to come about after World War II. This was mainly due to countries such as Sri Lanka, India, and some in South America gaining independence and establishing their own trade relations with the rest of the world as they now had their own economy. With increased global economies, came the United Nations (UN) and the World Trade Organization (WTO) which was established to aid in settling commercial and trade disputes. So while seen as something relatively modern in our age, globalization can be traced to the beginning of time and has continued to evolve over the centuries (Larchi,…

    • 1702 Words
    • 7 Pages
    Powerful Essays
  • Satisfactory Essays

    Globalization is the trend toward local, regional, or national economies becoming connected through communication, business, and trade.…

    • 280 Words
    • 2 Pages
    Satisfactory Essays
  • Good Essays

    “Globalization is the system of interaction among the countries of the world in order to develop the global economy. “Globalization refers to the integration of economics and societies all over the world. Globalization involves technological, economic, political, and cultural exchanges made possible largely by advances in communication, transportation, and infrastructure (Hubpages, 2009).”…

    • 1084 Words
    • 5 Pages
    Good Essays
  • Powerful Essays

    Over the years, vast amount of literature has been written on the subject but even today there exists no clear definition of globalization primarily because it affects such a wide range of activities. Simply put, globalization is defined as “increasing and intensified flows between countries of goods, services, capital, ideas, information and people, which produce national…

    • 2052 Words
    • 9 Pages
    Powerful Essays
  • Good Essays

    Globalization- set of processes that are increasing interactions, deepening relationships, and heightening interdependence without regard to country borders; set of outcomes felt from these global processes…

    • 1726 Words
    • 7 Pages
    Good Essays
  • Powerful Essays

    The World Is Flat

    • 2854 Words
    • 12 Pages

    Globalization is process of integration. It is spread all through several fields, such as politics, culture, economy, technology and the environment. Internationally, these fields are going through a period of conversion and evolution causing this world to turn out to be homogenous and flat. Even nations in the Third World are having the prospects only the developed countries once had to emerge into affluence. In fact, globalization is not new. Numerous events through which this course is evident have been going on for many years. However, between the late 20th century and early 21st century, the process of globalization has intensified. According to Jones (2010), a number of thinkers, including Friedman and Stiglitz, say that economy is the driving force behind globalization.…

    • 2854 Words
    • 12 Pages
    Powerful Essays
  • Powerful Essays

    The definition of the term globalization is somehow vague in comparison to the process. Most people are usually ignorant of its reach and impact yet it touches all aspects of the economy because it involves the processes that incorporate people in the world into one big society. By definition, globalization is the development of integration internationally, arising from the exchange of world views,…

    • 1461 Words
    • 6 Pages
    Powerful Essays
  • Good Essays

    People around the globe are more connected to each other than ever before. Information and money too flow more quickly than ever before. Goods and services produced in one part of the world are increasingly available in all parts of the world. International communication is commonplace. This phenomenon has been titled “globalization.” The era of globalization is fast becoming the preferred term for describing the current times. Because we are thoughtful people concerned about world affairs, our job is to pick up “globalization,” examine it from all sides, dissect it, figure out what makes it tick, and then nurture and promote the good parts and mitigate or slow down the bad parts.…

    • 580 Words
    • 3 Pages
    Good Essays
  • Powerful Essays

    Globalization

    • 1141 Words
    • 5 Pages

    The human society around the world, over a period of time, has established greater contact, but the pace has increased rapidly since the mid 1980’s.The term globalization means international integration. It includes an array of social, political and economic changes. Unimaginable progress in modes of communications, transportation and computer technology have given the process a new lease of life. This paper is an attempt to outline the growth of Indian economy, effects, culture, technology, driving force and transformation that India is going through due to globalization, liberalization and privatization.…

    • 1141 Words
    • 5 Pages
    Powerful Essays
  • Satisfactory Essays

    02 WHAT IS GLOBALIZATION 1

    • 1506 Words
    • 22 Pages

    SCM 460 GLOBAL SUPPLY CHAIN STRATEGY Dr. Alex Rodrigues What is Globalization? Class 02 -Topics Topic 1: Understanding Globalization Topic 2: Challenges of Globalization Topic 3: Emerging Economies and Globalization So what is Globalization? In small groups… Discuss what globalization means.…

    • 1506 Words
    • 22 Pages
    Satisfactory Essays
  • Powerful Essays

    Globalization is a buzz word that refers to the trend for people, firms and governments around the world to become increasingly dependent on and integrated with each other. This can be a source of tremendous opportunity, as new markets, workers, business partners, goods and services and jobs become available, but also of competitive threat, which may undermine economic activities that were viable before globalisation.…

    • 3619 Words
    • 15 Pages
    Powerful Essays
  • Powerful Essays

    Globalization is the increasing interconnection of people and places as a result of advances in transport, communication, and information technologies that causes political, economic, and cultural convergenceThe word "globalization" can be traced back to 1944. The term has been used by economists since 1981; however, its concepts did not permeate popular consciousness until the later half of the 1990s. The earliest concepts and predictions of globalization were penned by an American entrepreneur-turned-minister Charles Taze Russell who first coined the term 'corporate giants' in 1897. Various social scientists have tried to demonstrate continuity between contemporary trends of globalization and earlier periods. The first era of globalization (in the fullest sense) during the 19th century was the rapid growth of international trade between the European imperial powers, the European colonies, and the United States. After World War II, globalization was restarted and was driven by major advances in technology, which led to lower trading costs.Globalization in the era since World War II was first the result of planning by economists, business interests, and politicians who recognized the costs associated with protectionism and declining international economic integration. Their work led to the Bretton Woods conference and the founding of several international institutions intended to oversee the renewed processes of globalization, promoting growth and managing adverse consequences. These were the International Bank for Reconstruction and Development (the World Bank) and the International Monetary Fund. It has been facilitated by advances in technology which have reduced the costs of trade, and trade negotiation rounds, originally under the auspices of GATT, which led to a series of agreements to remove restrictions on…

    • 2849 Words
    • 12 Pages
    Powerful Essays
  • Powerful Essays

    Globlization and Impact

    • 1932 Words
    • 8 Pages

    Globalization (or globalization) describes a process by which regional economies, societies, and cultures have become integrated through a global network of communication, transportation, and trade. The term is sometimes used to refer specifically to economic globalization: the integration of national economies into the international economy through trade, foreign direct investment, capital flows, migration, and the spread of technology.…

    • 1932 Words
    • 8 Pages
    Powerful Essays