Globalisation refers to the rapid spread of goods and services, technology and information, ideas and culture, trade and interactions across the world. It is the connection of different parts of the world resulting in the expansion of international cultural, informational, economic and political activities. In the early 1990s, the term globalisation was used to include economic, political, socio-cultural, technological and ideological changes that occurred in the world in the post cold war era. The world has become more interconnected due to advances in technology and communication. Events in one part of the world have an impact on other parts of the world. Changes have taken place economically and culturally.

The economic issues in the context of globalisation are:

1. Free flow of finance and capital – Investments provide finance and help to build industries. Indian companies both private for e.g., Tatas and government e.g., ONGC have invested in many countries in Asia, Africa and Europe. Foreign companies have also invested in India in sectors like power plants, infrastructure projects, consumer food chains, etc. This free flow of capital is both ways i.e., India to foreign countries and vice-versa. Foreign investment especially in the infrastructure sector is essential.

2. Change in the concept of trade.

WTO – It was established in 1995 to replace GATT. The WTO is the only agency that oversees the rules of international trade, settles trade disputes and organises trade negotiations and agreements.

The scope of the term ‘trade’ has widened to include not only traditional commodities like fruits, grains, minerals, oil, etc., but also services like banking, insurance and intellectual property like trademarks.

Use of container cargo ships to carry huge amount of goods all over the world.

3. Rise of Transnational companies for e.g., Nestle, Unilever, etc., operate in India. Even Indian multinational companies like Wipro, Bajaj, etc are doing well. 

This affects the economy as follows:

• Labour market – MNC’s recruit skilled and semi-skilled employees for eg Indian labour is employed in West Asia, Europe, USA, etc in industrial and service sectors.
• Small shops and industries – Those stores which are efficient, continue to thrive while some industries either sell out to MNC’s or shut down.
• Agricultural sector- Many MNC’s have introduced new technology and opened up direct markets for Indian agricultural products for eg India exports spices, fish, etc. to many nations.