Class 10 Economics Chapter 4 Globalization and The Indian Economy
| 1. Exercise Questions |
| 2. Intext Questions |
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NCERT Solutions for Class 10 Economics Chapter 4 Globalization and The Indian Economy
Class 10 Economics Chapter 4 Globalization and The Indian Economy
Exercise Questions
Q. 1 . What do you understand by globalization ? Explain in your own words .
Ans . Globalization is the process by which the economic activities of different countries are so integrated that the whole world becomes a single market . It may be defined as the rapid integration between countries through foreign trade and foreign investments by MNCs . In the process of globalization we become economically interdependent at international level .
Q. 2. What was the reasons for putting barriers to foreign trade and foreign investment by the Indian government ? Why did it wish to remove these barriers ?
Ans . To protect the Indian companies in the early stages of development from the foreign competition , Indian government put the barrier on foreign trade and foreign investment . Indian government allowed imports of only essential goods such as machinery , petroleum , fertilizer etc.
It wished to remove these barriers because now the Indian producers became able to compete with the producers at global level . It was felt that competition would improve the performance of Indian companies and it will help in the technological advancement .
Q. 3. How would flexibility in labour laws help companies ?
Ans . Flexibility in labour laws helps companies in the following ways :
( i ) Companies could employ workers on a temporary basis so that they do not have to pay them for the whole year .
( ii ) They could keep workers in very long working hours and workers also work in night shift during peak season . Thus employers are able to meet production demand on time .
( iii ) They could pay low wages to the workers and no other benefits like provident fund , health insurance , paid holiday etc. are given to them .
In these ways , companies can cut labour cost and earn more profits .
Q. 4. What are the various ways in which MNCs set up or control production in other countries ?
Ans . The various ways in which MNCs set up or control , production in other countries are :
( i ) MNCs set – up production jointly i.e. partnership with some of the local companies .
( ii ) They buy local companies and then expand production .
( iii ) They use the local companies for supplies and then sell these items under their own brand names to the customers .
Q. 5. Why do developed countries want developing countries to liberalize their trade and investment ? What do you think should the developing countries demand in return ?
Ans . Developed countries want developing countries to liberalize their trade and investment so that they easily enter in the market of developing countries to expand their business activities and utilise their extra production capacity there .
The developing countries should demand for removing unfairly retained trade barriers by developed countries and for more economic aid developed countries should remove agriculture and other subsidies .
Q. 6 . ‘ The impact of globalization has not been uniform ‘ . Explain this statement .
Ans . The impact of globalization has not been uniform among producers and workers .
( i ) Consumers have wider choice who now enjoy improved quality and lower prices . They enjoy higher standard of living .
( ii ) A large number of jobs have been created for the educated and skilled workers in the field of electronics , automobiles , banking and service sector .
( iii ) Local companies supplying raw material etc. to MNCs have been prospered .
( iv ) Some big Indian companies have been able to benefit from the increased competition by adopting advance technology .
( v ) It has also created new opportunities for companies providing services such as information technology , data entry , engineering etc.
But , globalization not only positively affects any country , it has some negative impact also on the al economy . Sometimes the development for one may be destructive for the other .
Negative Impact :
( i ) MNCs produce or supply only those commodities which are demanded by only a small section . They ignore the interest of a large community .
( ii ) Thousands of uneducated and unskilled labourers have become jobless due to closure of various units .
( iii ) Globalization has negative impact on most of the small industries which employ the largest number of workers after agriculture .
Q. 7. How has liberalization of trade and investment policies helped the globalization process ?
Ans . Liberalization means removing barriers . restrictions set by the government . Barriers on foreign trade and foreign investment were removed to a large extent . This meant that goods could be imported and exported easily and also foreign companies could set up factories and offices here . This has further led to greater integration of production and market across countries . Now more and more goods and services , investment and technology are moving between countries . This is followed by movement of people between countries in search of better income , better jobs , or better education .
Thus liberalization helped the globalization process .
Q. 8. How does foreign trade lead to integration of markets across countries ? Explain with an example other than those given here .
Ans . Foreign trade creates an opportunity to both the seller and buyer to sell or buy the commodities beyond the markets for their own country . With this , the seller sells his commodities outside his country and thus market for his product expands . In the same way buyers have wider choice . They choose from the various varieties available within and from outside the countries .
Thus a consumer gets an improved quality at least prices . Thus , producers in the two countries closely compete against each other .
Thus , foreign trade leads to integration of market across countries . This can be explained by the following example as a result of opening of trade , foreign car makers came into the Indian markets . In the competition between Indian and foreign cars , foreign cars prove better . So , Indian buyers have a greater choice of cars at lower prices . Foreign car makers are able to expand business . In contrast Indian car makers face losses because their cars are selling much less .
Q . 9. Globalization will continue in the future . Can you imagine what the world would be like twenty years from now ? Give reasons for your answers .
Ans . The whole world would become a single market twenty years from now .
The reasons behind this are :
( i ) MNCs would produce goods and services in those locations around the world which would be cheap for their production .
( ii ) MNCs explore new areas to expand their activities and thus development takes place .
( iii ) Foreign investment by MNCs would increase much more which encourages technological advancement . It helps in the emergence of new MNCs .
( iv ) There would be greater movement of people between countries .
Q. 10. Suppose you find two people arguing ; One is saying globalization has hurt our country’s development . The other is telling , globalization is helping India – develop . How would you respond to these arguments ?
Ans . It is true that globalization is fruitful for well off customers and the skilled and educated workers and for the producers who improve their performance by adopting new technology . It creates new markets and new opportunities and thus creates new jobs . Thus , it helps in the economic upliftment of the country . On the other hand , many small producers and workers have suffered much as a result of rising competition .
It is required that government should try to make globalization fairer . Fair globalization would create opportunities for all and ensures that the benefits of globalization are shared better in a fair way .
Q. 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 ______ . Markets in India are selling goods produced in many other countries . This means there is increasing _________ 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 because ________ . While consumers have more choice in the market , the effect of rising ______ and _________ has meant greater _______ among the producers .
Ans . Globalization ; foreign trade ; they find India as a vast market and availability of factor of production at low costs ; foreign trade and foreign investment ; competition .
Q. 12. Match the following :
Ans . ( 1 ) – ( b ) , ( 2 ) – ( e ) , ( 3 ) – ( d ) , ( 4 ) – ( c ) , ( 5 ) – ( a ) .
Q. 13. Choose the most appropriate option :
( i ) The past two decades of globalization have seen rapid movements in :
( a ) goods , services and people between countries .
( b ) goods , services and investment between countries .
( c ) goods , investment and people between countries .
Ans . ( c ) goods , investment and people between countries .
( ii ) The most common route for investment by MNCs in countries around the world is to :
( a ) set up new factories .
( b ) buy existing local companies .
( c ) form partnership with local companies .
Ans . ( b ) buy existing local companies .
( iii ) Globalization has led to improvement in living conditions :
( a ) of all the people .
( b ) of people in the developed countries .
( c ) of workers in the developing countries .
( d ) none of the above .
Ans . ( d ) none of the above .
Intext Questions
Q.1 . Complete the following statement to show how the production process in the garment industry is spread across countries .
The brand tag says ‘ Made in Thailand ‘ but they are not Thai products . We dissect the manufacturing process and look for the best solution at each step . We are doing it globally , in making garments , the company may , for example , get cotton fibre from Korea , _______ ( Let’s work these out , Page no . 57 )
Ans . Manufacture cloth in India , stitch garment in Thailand and sell all over the world .
Read the passage given below and answer the questions :
Ford Motor , an American Company is one of the world’s largest automobile manufacturer with production spread out 26 countries of the world .
Ford Motor 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 , a major Indian manufacturer of jeeps and trucks . By the year 2017 , Ford Motors , was selling 88,000 cars in the Indian markets , while 1,81,000 other cars were exported from India to South Africa , Mexico , Brazil and United States of America . The company wants to develop Ford India as a component supplying base for its other plants across the globe . ( Let’s work these out , Page no . 59 )
Q. 2. Would you say Ford Motors is a MNC ? Why ?
Ans . Yes , Ford Motors is a MNC . It is an American company who owns or controls production in more than one country i.e. in 26 countries of the world .
Q. 3 . What is foreign investment ? How much did Ford Motors invest in India ?
Ans . The investment made by the MNCs is called foreign investment . Ford Motors invested 1700 crore in India in 1995 .
Q.4 . By setting up their production plants in India , MNCs such as Ford Motors tap the advantage not only of the large markets that countries such as India provide but also the lower cost of production . Explain this statement .
Ans . Generally MNCs set up production where it is close to the market , skilled and unskilled labours are available at low cost and availability of other factors of production and favourable government policies are also there .
The statement states that MNCs are interested in setting up their plants in India due to the cheap factor of production and large growing market . In the same way Ford Motors taps the advantage of the large market of India and also enjoys the benefit of cheap labour and production cost .
Q. 5. Why do you think the company wants to develop India as a base for manufacturing car components for its global operation ? Discuss the following factors :
( i ) Cost of labour and other resources in India .
( ii ) The presence of several local manufacturers who supply auto parts to Ford Motors .
( iii ) Closeness to a large number of buyers in India and China .
Ans . ( i ) Cost of labour and other resources in India is cheap . Both skilled and unskilled labourers are available in India at low wages .
( ii ) A number of local manufacturers supply auto parts to Ford Motor which has tremendous power to determine price , quality delivery and labour conditions .
( iii ) India and China have large number of prospective buyers who have great purchasing power .
Q. 6 . In what ways will the production of cars by Ford Motors in India lead to interlinking of production ?
Ans . The production of cars by Ford Motors in India leads to interlinking of production in the following ways :
( i ) Ford Motors set up production jointly with the Mahindra and Mahindra a major Indian manufacturer of jeeps and trucks .
( ii ) The company places orders for production with small producers in the country .
Q. 7 . In what ways is MNC different from other companies ?
Ans . MNC is different from other companies in the following ways :
( i ) MNC owns or controls production in more than
( ii ) MNC sets up its offices and factories in the country in which it gets cheap labour and another factor of production but there is no such choice available to other companies .
( iii ) MNC enjoys the benefit of low cost of production and , able to earn large profit is there whereas no such scope of earning greater profit for the other companies .
Q. 8. Nearly all major multinationals are American , Japanese or European such as Nike , Coca – Cola , Pepsi , Honda , Nokia . Can you guess why ?
Ans . Nearly all major multinationals are American , Japanese or European because it needs a huge sum of money to expand their production and market in more than one country . Poor or undeveloped countries have shortage of money so they are not able to expand their production and market activities .
Q. 9. What was the main channel connecting countries in the rest ? How is it different now ? ( Let’s work these out , Page no . 61 )
Ans . The main channel connecting countries in the past was foreign trade . In the past , foreign trade was done only through sea routes but now it is done through sea routes , air routes , roads and telecommunication .
Q. 10. Distinguish between Foreign Trade and Foreign Investment .
Ans . Foreign trade means buying and selling goods from outside the domestic territory of the country i . e . from other countries . Whereas foreign investment means to invest money in other countries to set up production and market activities there by the MNCs .
Q. 11. In recent years China has been importing steel from India . Explain how the import of steel by China will affect :
( i ) Steel Companies in China
( ii ) Steel Companies in India
( iii ) Industries buying steel for production of other industrial goods in China .
Ans . ( i ) The demand of steel from steel companies in China decreases and they may face losses .
( ii ) The steel companies in India will expand their production capacity as the demand for their product increases .
( iii ) Industries buying steel for production of other industrial goods in China will be benefited as they will have a choice to buy steel at lower cost .
Q. 12. How will the import of steel from India into the Chinese markets leads to integration of markets for steel in the two countries ?
Ans . The import of steel from India into the Chinese markets leads to integration of market for steel in the two countries as the producers in the two countries now closely associate with each other and the price of similar quality of steel tend to become equal in the two markets .
Q. 13 . What is the role of MNCs in the globalization process ? ( Let’s work these out , Page no . 62 )
Ans . MNCs play a major role in the globalization process . MNCs carry out their production activities in other countries for which they invest their money in that country in the form of foreign up investment . MNCs also control a substantial trade in goods and services and they bring with themselves the latest technology . This results in the greater integration of production and market across the countries .
Q. 14 . What are the various ways in which countries can be linked ?
Ans . Movement of goods and services , investment , latest technology and people between countries are the different ways in which countries can be linked .
Q. 15. Choose the correct option :
Globalization by connecting countries shall result in :
( i ) lesser competition among producers
( ii ) greater competition among producers
( iii ) no change in competition among producers
Ans . ( ii ) greater competition among producers .
Q. 16. In the above example , underline the words . describing the use of technology in production . ( Refer to Example on , Page no . 63 )
Ans . The underlined words are :
Internet , telecommunication , computer , printing , by air , internet ( e – banking ) .
Q. 17. How is information technology connected with globalization ? Would globalization be possible without expansion of IT ?
Ans . The development in the information and communication technology has facilitated to contact one another around the world , to access information instantly and to communicate from remote areas in much lesser time than before and at very low cost . Internet facility allows us to send instant electronic mail ( e – mail ) and talk ( voice mail ) across the world at negligible cost . In this way information technology is connected with globalization .
No , Globalization would not have been possible without expansion of IT
Q. 18 . What do you understand by liberalization of foreign trade ?
Ans . Liberalization of foreign trade means removing barriers or restrictions set by the government i.e. businessmen are allowed to make decisions freely about what they wish to import or export . ( Let’s work these out , Page no . 64 )
Q. 19.Tax on imports is one type of trade barrier . The government could also place a limit on the number of goods that can be imported . This is known as quotas . Can you explain using the example of Chinese toys , how quotas can be used as trade barriers ? Do you think this should be used ? Discuss .
Ans . If the Indian Government imposes quotas on Chinese toys then the supply of these toys in the Indian market would be limited up to the quota . Thus , Indian producers will face less competition because there is a little option for the Indian buyers to purchase Chinese – toys at cheaper prices and the demand for the Indian toys will increase . In this way , quota can be used as trade barrier .
No , this should not be used now . Competition helps in improving the quality of the products at the same price and in diversifying their activities . So , Indian producers should compete with producers globally .
Q. 20 Fill in the blanks :
WTO was started at the initiative of _________ countries . The aim of WTO is to ______ WTO establishes rules regarding _____ for all countries , and sees that ______ practice , trade between countries is not ______ . Developing countries like India have ________ whereas developed countries , in many cases , In i have continued to provide protection to their pon producers . ( Let’s work these out , Page no . 66 )
Ans . Developed countries ; liberalize international trade ; international trade ; these rules are obeyed ; fair ; removed trade barriers .
Q. 21 . What do you think can be done so that trade between countries is fairer ?
Ans . The following steps are to be taken to make the trade between countries fairer :
( i ) More power is to be given to the international organisations like WTO , IMF etc. They should play a key role in this direction .
( ii ) Influence of the developed countries on these organisation should be lessened .
( iii ) Developing countries should unitedly and forcefully present their views before these organisations .
Q. 22. In the above example , we saw that the US government give massive sums of money to farmers for production . At times , governments also give support to promote production of certain type of goods , such as those which are environmentally friendly . Discuss whether these are fair or not . ( Refer to Example , Page no . 65 )
Ans . The activities of the government are not unfair in the above example . Environmental problem is a global problem and the laws should be equal for all the countries of the world . It is the duty of every government to promote environment friendly production .
Q. 23 . How has competition benefited people in India ? ( Let’s work these out , Page no . 67 )
Ans . Globalization and competition benefited people in India in the following ways :
( i ) Now , consumers especially well – off section enjoy improved quality at lower prices for several products which increases their standard of living .
( ii ) Foreign investment creates new jobs especially in industries such as cell phones , automobiles , fast food services , banking etc.
( iii ) Local companies supplying raw materials etc. to these industries have prospered .
( iv ) Big companies invested in newer technology and production method and raised their production standards .
( v ) New opportunities are created for companies providing services , particularly those involving IT .
Q. 24 . Should more Indian companies emerge as MNCs ? How would it benefit the people in the country ?
Ans . Yes , more Indian companies should emerge as MNCs . It would benefit the people in the country in the following ways :
( i ) Indian people will have greater job opportunities .
( ii ) Technological advancement will take place in the country .
( iii ) They will bring scarce foreign exchange for the country .
( iv ) Quality of the product will improve and goods will be cheaper than before .
Q. 25 . Why does government try to attract more foreign investment ?
Ans . The government tries to attract more foreign investment due to the following reasons :
( i ) Foreign investment creates new job opportunities in the country .
( ii ) It brings not only the finance but also the latest technology and managerial personnel .
( iii ) A part of profit from such investment is invested in the expansion and modernisation of the related industries .
( iv ) Government gets revenues in the form of taxes which are levied on profit of foreign firm or gets royalties form concession agreement .
Q. 26. In chapter 1 , we saw that development for one may be destructive for others . The setting of SEZs has been opposed by some people in India . Find out who are these people and why are they opposing it .
Ans . They are the people who are displaced . They opposed the setting up of SEZs because they fear that SEZs may submerge the land and disrupt their lives .
Q. 27. What are the ways in which Ravi’s small production unit was affected by rising competition ? ( Let’s work these out , Page no . 68 )
Ans . Ravi’s small production unit was affected by rising competition in the following ways :
( i ) With the removal of government restrictions on the import of capacitors , the demand for his product decreased as imported item is cheaper than his product .
( ii ) Competition from the MNC brand forced the Indian television companies to move into assembling activities for MNCs .
Q. 28. Should producers such as Ravi stop production because their cost of production is higher compared to producers in other countries ? What do you think ? ( Refer Paragraph on Page no . 68 )
Ans . No , they should not stop their production . They should adopt new technology and production method to improve their product quality and also reduce its cost .
Q. 29. Recent studies point out that small producers in India need three things to compete better in the market ( a ) better roads , power , water , raw materials , marketing and information network ( b ) improvements and modernisation of technology ( c ) timely availability of credit at reasonable interest rates .
( i ) Can you explain how these three things would help Indian producers ?
( ii ) Do you think MNCs will be interested in investing in these ? Why ?
( iii ) Do you think the government has a role in making these facilities available ? Why ?
( iv ) Can you think of any other step that the government could take ? Discuss .
Ans . ( i ) They would help Indian producers in the following ways :
Better roads : for transportation of raw material and finished goods .
Power : for operating machines .
Water : for production process and other uses .
Raw material : for producing goods .
Marketing and Information Network : Good marketing and information network help in selling goods .
( ii ) Improvement and modernisation of technology : Increase in the quality of the goods and reduce their cost .
( iii ) Timely availability of credit at reasonable rate :
( a ) Encourages entrepreneurs to expand their activities and to invest in technology . advancement which helps in reducing the cost .
( b ) No , MNCs will not be interested in it because these things have long gestation period and low earning .
( c ) Yes , the government has an important role in making these facilities available as social welfare . It is one of the objectives of the government and private sector is not interested in investing in these things due to long gestation period .
( d ) Yes , the government should remove corruption and red tapism and provide better facilities than before .
Q. 30. In what ways has competition affected workers , Indian exporters and foreign MNCs in the garment industry ?
Ans . Competition has affected workers , Indian exporters and foreign MNCs in the following ways :
( i ) Workers :
( a ) Workers – jobs are no longer secure .
( b ) Worker’s work is on a temporary basis .
( c ) They have long working hours and during peak season they work in night shifts .
( d ) Wages are low .
( ii ) Indian Exporters :
( a ) MNCs look for the cheapest goods , so the exporters try hard to reduce their own cost .
( b ) To reduce labour cost they employ workers only on temporary basis .
( iii ) Foreign MNCs :
( a ) They are able to find the cheapest goods in order to maximise their profit .
( b ) Competition among the garment exporters allows MNCs to make larger profit .
Q. 31. What can be done by each of the following so that the workers can get a fair share of benefits will brought by globalization ?
( i ) Government
( ii ) Employers at the exporting factories
( iii ) MNCs
( iv ) Workers .
Ans . ( i ) Government : It should protect the working by making and implementing the labour laws .
( ii ) Employers at the exporting factories : They should give fair wages and job security to the workers .
( iii ) MNCs : They should give orders only to those exporters who follow the labour laws properly .
( iv ) Workers : They should organise themselves in trade unions and pressurise the exporters to get their fair share through these trade unions .
Q. 32. One of the present debates in India is whether companies should have flexible policies for employment . Based on what you have read in the chapter , summarise the point of view of the employers and workers .
Ans . View of the Employers : They prefer flexible policy for employment . Due to the pressure of competition , employers try hard to cut their own cost . For this , they prefer to employ workers on temporary basis so that they do not have to pay workers for the whole year .
View of the Workers : Workers are not in favour of the flexible policy , because they have no security in this policy and on they get work on temporary basis at low wages . They get no other benefit except wages .
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