PRODUCTION ACROSS COUNTRIES
Multinational corporations (MNCs):-
- MNC is a company that owns or controls production in more than one nation.
- MNCs set up offices and factories for production in regions where they can get cheap labour and other resources.
- This is done so that the cost of production is low and the MNCs can earn greater profits.
MNCs set up production where it is close to the markets; where there is skilled and unskilled labour available at low costs; and where the availability of other factors of production is assured. In addition, MNCs might look for government policies that look after their interests.
INTERLINKING PRODUCTION ACROSS COUNTRIES
- The money that is spent to buy assets such as land, building, machines and other equipment is called investment.
- Investment made by MNCs is called foreign investment. Any investment is made with the hope that these assets will earn profits.
Variety of ways in which the MNCs are spreading their production and interacting with local producers in various countries across the globe.
- By setting up partnerships with local companies, by using the local companies for supplies, by closely competing with the local companies or buying them up, MNCs are exerting a strong influence on production at these distant locations.
- As a result, production in these widely dispersed locations is getting interlinked.
FOREIGN TRADE AND INTEGRATION OF MARKETS
- Foreign trade creates an opportunity for the producers to reach beyond the domestic markets, i.e., markets of their own countries.
- Producers can sell their produce not only in markets located within the country but can also compete in markets located in other countries of the world.
- Similarly, for the buyers, import of goods produced in another country is one way of expanding the choice of goods beyond what is domestically produced.
- Foreign trade thus results in connecting the markets or integration of markets in different countries.
WHAT IS GLOBALISATION?
- Globalisation is this process of rapid integration or interconnection between countries.
- MNCs are playing a major role in the globalisation process. More and more goods and services, investments and technology are moving between countries.
- Besides the movements of goods, services, investments and technology, there is one more way in which the countries can be connected. This is through the movement of people between countries.
FACTORS THAT HAVE ENABLED GLOBALISATION
- Rapid improvement in technology has been one major factor that has stimulated the globalisation process.
- For instance, the past fifty years have seen several improvements in transportation technology. This has made much faster delivery of goods across long distances possible at lower costs.
2. Liberalisation of foreign trade and foreign investment policy
- Tax on imports is an example of trade barrier. It is called a barrier because some restriction has been set up. Governments can use trade barriers to increase or decrease (regulate) foreign trade and to decide what kinds of goods and how much of each, should come into the country.
- Removing barriers or restrictions set by the government is what is known as liberalisation.
WORLD TRADE ORGANISATION
- World Trade Organisation (WTO) is organisation whose aim is to liberalise international trade.
- Started at the initiative of the developed countries, WTO establishes rules regarding international trade, and sees that these rules are obeyed.
- As on July 2016, nearly 165 Countries of the world are currently members of the WTO.
IMPACT OF GLOBALISATION IN INDIA
Among producers and workers, the impact of globalisation has not been uniform.
Firstly, MNCs have increased their investments in India over the past 20 years, which means investing in India has been beneficial for them.
- MNCs have been interested in industries such as cell phones, automobiles, electronics, soft drinks, fast food or services such as banking in urban areas.
- These products have a large number of well-off buyers. In these industries and services, new jobs have been created. Also, local companies supplying raw materials, etc. to these industries have prospered.
Secondly, several of the top Indian companieshave been able to benefit from the increased competition.
- They have invested in newer technology and production methods and raised their production standards.
- Some have gained from successful collaborations with foreign companies.
Moreover, globalisation has enabled some large Indian companies to emerge as multinationals themselves! Tata Motors (auto-mobiles), Infosys (IT), Ranbaxy (medicines), Asian Paints (paints), Sundaram Fasteners (nuts and bolts) are some Indian companies which
are spreading their operations worldwide
THE STRUGGLE FOR A FAIR GLOBALISATION
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.