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Option : (c) Multinational Company

(c) USA – Capitalist Market Economy OR India – Economic Liberalism (Mixed economy)

Multi National Companies.

World Trade Organization (WTO)

This statement is False. 

(i) Good governance and the participatory State focus on the role of the civil society which includes non-state actors such as NGO’s.

(ii) International relations today, are not only between States but also include non-state actors. These sometimes also pose a challenge to the position of the State. Globalisation has made non-state actors relevant. This includes organisations which are beneficial e.g., NGO’s working for humanitarian issues as well as threatening organisations e.g., terrorist outfits.

In 1991, the Indian government decided that the time has come for Indian producers to compete with producers around the world. It felt that foreign competition would improve the quality of goods produced by Indian producers within the country. Thus, barriers on foreign trade and foreign investment were removed to a large extent. It meant goods could be imported or exported easily and foreign companies could set up factories and offices in India.

The harmful impacts of MNCs to a host country are: 

• They can hamper the growth of local industries by giving them tough competition.
• They generally use capital intensive techniques which may not be suitable for a developing country like India, where unemployment is a big problem. 
• They may misuse the environment of the host country by over exploiting its natural resources.

C) Pharmaceutical MNC

B) Multi National Companies

C) Distribution of MNCs’profit to public

Cooperative Movement in India can be traced to the Cooperative Credit Societies Act (1904). India’s first Prime Minister, Jawaharlal Nehru had strong faith in the cooperative movement. Hence, cooperatives became an integral part of Five Year Plans in India. In 1958, National Development council recommended setting up of Cooperative Marketing Societies. The major sectors where cooperatives dominate are in dairy, agriculture, banking and rural credit, etc. Article 43, Part IV (DPSP) of the constitution, mentions about promotion of cooperatives mainly in rural areas.

The importance of the cooperative sector.

• it provides agricultural credits where the State and private sectors have not been able to do so. 
• it helps to overcome the constraints of agricultural development. 
• it provides empowerment to the members. 
• it can be an answer to the domination by the MNC’s which work solely on the profit motive. If the problems of cooperatives are overcome, they can strengthen the financial sector and lessen our reliance on MNC’s. 

This statement is False. 

1. Today, in a globalised world, there appears to be only one dominant ideological and economic , system i.e. ‘Market Economy.’ However, the nature of the market economy is determined by the ideology of that country.

2. The USA has a ‘capitalist market’ economy which combines capitalist system with market economics. In most West European nations, the political system is a ‘welfare State’, so they adhere to welfare market economies. China has a socialist market economy and Indian system is described as economic liberalism.

Transnational Corporations are a type of Multi National Companies e.g., General Electric, Walmart, Nike etc. It is a borderless entity as it does not consider any particular country as it’s home base. Globalisation has led to many private sector companies expanding their area of operations in foreign lands. Due to globalisation traditional companies can now spread out their operations in many countries to sustain high levels of responsiveness to the local markets. Transnational Corporations (TNCs) try to make decisions from a global perspective rather than from one centralised base. Actions taken by TNC’s can help in better relationships between nations as well as in the spread of resources.

The New economic policy was adopted in India in 1991

Answer is Indonesia

Resistance against globalization is seen on many parts of India. Entry of the MNCs, foreign TV channels, Night Clubs, Valentines’Day, Western dresses (especially among the girls in schools and colleges) etc. are part of globalization. The Left parties object globalization. The Indian Social Forum is also against it. Trade Union workers oppose MNCs. The acquisition of the patent for trees like ‘neem’ by the Americans and Europeans brought a lot of vehement protests

D) All of these

1. Cartoon comments on the changing scenario due to globalization. 

2. It refers to earlier conditions of developing countries who were starving due to less growth in their economy. 

3. Globalisation opened doors for new entrants from developing nations and resulted into brain drain.

Globalisation is the interconnection between counties through the expansion of foreign trade and foreign investment. It is the process of integrating the home country with foreign countries through the movement of goods, services, investment, technology and people. Flexibility in labour laws is an important impact of globalisation. 

Government is providing many incentives for the MNCs to attract foreign companies. In the organised sector, the rights of the workers are protected. But MNCs are allowed to overlook many of these rules. One such incentive provided to the MNCs is flexibility in labour laws. 

According to this, the companies are allowed to hire workers for short periods of time when the pressure of work is more, rather than hiring them on a regular basis. This is a way to reduce the cost of production for the companies. With the increasing competition in the market, MNCs placing orders for their products in the domestic countries are forcing the domestic producers to employ workers on a temporary basis to reduce their cost of production. Thus, they need not pay them for the whole year and can employ additional workers only during the peak seasons of demand. Also, workers are made to work overtime, but they are paid less. This results in uncertainty in jobs. 

This uncertainty in jobs can have serious implication in the living standards of the people. Thus the companies should not adopt flexibility employment policies.

Globalisation is the interconnection between counties through the expansion of foreign trade and foreign investment. It is the process of integrating the home country with foreign countries through the movement of goods, services, investment, technology and people. Due to globalisation, competition and uncertain employment prevail. 

Globalisation is a major challenge to the small traders. Because of the growing competition from the MNCs, small companies who are unable to withstand the increased competition are shutting down their companies. The unchecked imports of the goods without any restrictions and the aggressive advertising strategies taken by the MNCs has resulted in the closure of many small, domestic industries leading to large unemployment. 

Uncertain jobs have increased after globalisation. Globalisation has resulted in jobless growth. The government has allowed the flexibility of labour to attract foreign investment. With the increasing competition in the market, MNCs placing orders for their products in the domestic countries are forcing the domestic producers to employ workers for a temporary basis to reduce their cost of production. Thus, they need not pay them for the whole year and can employ additional workers only during the peak seasons of demand. This results in uncertainty in jobs.

Globalisation is the interconnection between counties through the expansion of foreign trade and foreign investment. It is the process of integrating the home country with foreign countries through the movement of goods, services, investment, technology and people. 

Globalisation act as means of social change in society. New ideas, technologies, attitudes and planning spread from different countries because of this. It results in the mingling of people from varied cultures and beliefs. It results in the development of combined culture. It enables the people to break their constricted stereotypes and attitudes and widen their mental, emotional and psychological attitudes. 

Globalisation also results in the inflow of additional investment to the home country. Huge firms with many resources may bring in their additional share of investment. This is particularly beneficial to the developing countries that have scarcity in resources. 

New and advanced technology is also an advantage of globalisation. MNCs, bring in with them the latest technology as an investment to the home country. MNCs always have new and advanced technology for operations which can be used by the home countries to increase their production. 

Globalisation will result in increased employment opportunities. MNCs always bring in with them the bulk of employment opportunities. They will require qualified and professional employees for the management of their regional offices in the home country. It will also increase employment in allied sectors like transportation, IT and other industries. They will also generate a lot of other jobs in sectors like footwear and garments when they place orders for the products with the local industries. This increases employment opportunities in the home country. 

Thus globalisation is fun if its positive aspects are considered. But it has also widened the gap in income distribution, jobless growth, insecure jobs and the shutting down of many domestic industries. In short, globalisation has resulted in the domination of the large MNCs in the world economy.

Globalisation has resulted in the trade of foreign commodities in domestic countries. Globalisation is the interconnection between counties through the expansion of foreign trade and foreign investment. It is the process of integrating the home country with foreign countries through the movement of goods, services, investment, technology and people. 

With the growing globalisation, Chinese manufacturers are exporting Chinese toys to the Indian economy. In India, toys are sold at a high price. Because of this high price for toys, the Chinese manufacturers have started to export plastic toys to India. It will give a lot of opportunities and openings for domestic consumers to reach out beyond the domestic market. The consumers can choose between Indian and Chinese toys. Chinese toys have become more popular in the Indian markets due to its low price and attractive designs. Thus a large proportion of Indian toys have been substituted with much cheaper Chinese toys. This has also reduced the price of toys in the Indian market. 

But the producers are at a loss because of the import of Chinese toys. Producers in India has to compete with the Chinese producers. Even though this greater competition has resulted in the improved standards of the products produced at a lower price, Indian producers are having a tough time competing in the market. The Chinese toys are far better in terms of cost of production and designs. 

Thus the excessive import of toys has enabled the Indian buyers to have a wider choice at lower prices. The Chinese toy makers also acquire an opportunity to expand their production and profits. But the Indian producers face losses and many are shutting down their production.

Multi-National Corporations are large companies established in a particular country and has offices, markets and produces and sells its products in many countries. They try to integrate and control the production across countries where close markets, low labour and high profits are earned. Nearly all major multinational are American, Japanese or European. The main reason for the dominance of developed countries as MNCs are: 

• Large size: MNCs are huge organisations that own and control huge resources in terms of capital, technology, people and information. They have large physical and financial assets and bulk sales. They are very mammoth organisations whose monthly budget may even surpass the annual budget of countries. Such a massive quantity of resources can be amassed by developed countries. 
• Multi-country operations: MNCs operate in many different countries. They have a very vast marketing network. Their assets may be diversified in many countries. Thus they carry out their production, marketing and sales in many countries, even in all the continents. Only developed countries like America, Japan or Europe has the potential in terms of resources and management to ensure these large scale operations. 
• Sophisticated technology and professional management: MNCs will always have highly sophisticated and advanced techniques and technology for production. The will always develop newer cost-reducing methods of production through consistent spending in research and development. Also, they employ the most efficient and professional staffs to handle the organisation. This helps them to reap huge profits. Only developed countries like America, Japan or Europe has the potential in terms of resources and management to ensure rapid technological developments.
• Mighty organisations: Mostly MNCs are very powerful organisations who try to retain their economic and political powers through consistent mergers and acquisitions. They may have some degree of monopoly due to economic and technical advantage. Only the developed countries have an influence because of their political and economic power to influence the decision of other economies.

a – d  ; b – c  ; c – a  ; d – b

Vajpai is associated with this slogan

Foreign Investment: The money that MNCs spent to buy assets such as land, building, machines, and other equipment

Technology: (The study, and knowledge of) the practical, especially industrial, use of scientific discoveries

Nation-State: An independent country, especilly when thought of as consisting of a single large group of people all sharing the same language, traditions, and history.

Globalization: The process of rapid integration or Interconnection between countries

B) Privatisation

1. The central and state governments are trying to attract more foreign investment. 

2. Because this investment boosts the infrastructural facilities in our country.

3. MNCs share with our companies the latest technology. 

4. So governments are providing world-class facilities, tax exemptions, flexibility in labour laws etc. to attract more foreign investment.

1. Previously important decisions regarding the value of currency were taken by sovereign governments are today made by market players and forces. 

2. In fact many of the MNCs have wealth exceeding the entire budgets of the developing country governments. 

3. With such enormous wealth, imagine the power and the influence of these MNCs. 

4. This is how the decision making powers of sovereign governments are at a risk.

1. Multi-National Companies (MNCs) are looking for cheap locations for their production. 

2. Foreign investment in developing countries has been raising. 

3. A large part of the foreign trade is controlled by MNCs. 

4. More and more goods and services, investments and technology are moving between countries. 

5. MNCs, bring not only their products to a country but also the new business policies and cultures.

6. Most regions of the world are in closer contact with each other than a few decades back by MNCs. Thus, MNCs are playing major role in the globalisation process. 

7. MNCs are helping in increasing competitiveness among native companies. 

8. Latest models of vehicles in different countries are introduced by the MNCs in the globalisation process.

1. Rapid improvement in technology has been one major factor that has stimulated the globalisation process. 

2. The developments in information technology are even more remarkable. 

3. To contact one another around the world and to access information instantly telegraph, telephone including mobile phones, fax, etc. are used. 

4. Computers have now entered almost every field of activity.

5. To share information and to know almost anything you want, Internet is useful. 

6. So, globalisation would not have been possible without the expansion of Information Technology.

 Foreign trade integrates the markets of different countries as: 

(a) It provides an opportunity for both producers and consumers to reach beyond the markets of their own country. 

(b) Producers now compete with markets located in other countries. 

(c) There is an expansion of choice of goods beyond the domestic market. 

(d) For example, during the Diwali season, buyers in India have the option of buying either Indian or Chinese decorative lights and bulbs. The Chinese manufacturers get the opportunity to expand their business.

1. The full form of SEZ is Special Economic Zone. 

2. They are meant for free establishment of industries.

WTO – World Trade Organisation

NGO – Non-Governmental Organisation

GATT – General Agreement on Tariffs and Trade

TRIPs – Trade Related Aspects of Intellectual Property Rights

D) Movement for nationalisation.

International Bank for Reconstruction and Development. 

(OR) 

World Bank.

A tariff is a tax imposed on goods when they are moved across a political boundary. Mostly, they are imposed on imported commodities. Tariffs are imposed on goods 

(i) To protect infant industries of the home country. 

(ii) To prevent the dumping of foreign countries. 

(iii) A source of revenue.

C) Expansion of nationalist feelings

C) Multi National Companies

Flexibility in labour laws has badly affected the workers. MNCs employ them on a temporary basis in order to cut costs. They do not pay throughout the year. During peak seasons, workers are made to work for long hours and in night shifts. They are also not given fair wages. This forces them to lead a very hard and highly insecured life.

D) Information Technology

C) Arab Spring

C) It was opposed by powerful international organisation

D) Removal of Trade barriers – Globalisation

1. Flexibility in labour laws can help the companies to decrease their production cost by employing labourers only for a short period of time when there is need instead of employing them for long period of time or yearly basis. 

2. By easing upon labour laws, company heads can negotiate wages and terminate employment, depending on market conditions.