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| 1. |
Advantages of globalisation |
| Answer» The following are some of the important advantages of globalisation for a developing country like India:(i) Globalisation helps to boost the long run average growth rate of the economy of the country through:(a) Improvement in the allocative efficiency of resources;(b) Increase in labour productivity; and(c) Reduction in capital-output ratio.(ii)\xa0Globalisation paves the way for removing inefficiency in production system. Prolonged protective scenario in the absence of globalisation makes the production system careless about cost effectiveness which can be attained by following the policy of globalisation.(iii)\xa0Globalisation attracts entry of foreign capital along with foreign updated technology which improves the quality of production.(iv) Globalisation usually restructure production and trade pattern favouring labour-intensive goods and labour-intensive techniques as well as expansion of trade in services.(v)\xa0In a globalized scenario, domestic industries of developing country become conscious about price reduction and quality improvement to their products so as to face foreign competition.(vi)\xa0Globalisation discourages uneconomic import substitution and favour cheaper imports of capital goods which reduces capital-output ratio in manufacturing industries. Cost effectiveness and price reduction of manufactured commodities will improve the terms of trade in favour of agriculture.(vii)\xa0Globalisation facilitates consumer goods industries to expand faster to meet growing demand for these consumer goods which would result faster expansion of employment opportunities over a period of time. This would result trickle down effect to reduce the proportion of population living below the poverty line(viii) Globalisation enhances the efficiency of the banking insurance and financial sectors with the opening up to those areas to foreign capital, foreign banks and insurance companies. | |