CLASS NOTES

CHAPTER – 4
GLOBALISATION
Q1. Define the following terms:
a) MNC : A Multinational Corporation is a company that owns or controls production in
more than one nation.
b) Investment : Money that is spent to buy assets such as land, building , machines and
other equipments is called investment
c) Foreign Investment : Investment made by MNCs to buy assets like land, building ,
machines and other equipments is called foreign investment.
d) Globalisation : Globalisation is a process of rapid integration or interconnection between
countries.
Q2. Why do MNCs set up their offices and factories in those regions where they get cheap
labour and other resources?
A2. To reduce their cost of production and increase their profits.
Q3. What are the various ways in which countries can be linked?
A3. The ways in which countries can be linked as :
1. Movement of goods between countries
2. Services provided for one country by another such as call centres.
3. Foreign investment done by one country in companies of another country.
4. Immigration of people into one country from another , for work, study etc.
Q4. Mention three ways in which MNCs are spreading their production units across the
globe.
A4. The MNCs are spreading their production across the globe by :
1. Setting up partnerships with local companies.
2. Using the local companies for supplies
3. Closely competing with the local companies or buying them up.
Q5. What factors are kept in mind by the MNCs while setting up their production units?
A5. Generally MNCs set up their production units keeping the following factors in mind:
1. Close proximity to the markets.
2. Availability of skilled and unskilled labour at low cost
3. Availability of other factors of production
Q6. Give the benefits enjoyed by a local company in a joint production with a MNC.
A6. The benefits enjoyed by a local company are:
1. A MNC can provide money for additional investments like buying new machines for
faster production
2. A MNC might bring with them the latest technology for production.
3. The local companies after setting up production jointly with MNCs,have access to
international market.
Q7. What are the various ways in which MNCs set up or control production in other
countries?
A7. MNCs set up production units in the following ways:
1. They operate jointly with some local companies of the existing country.
2. They set up their own production units in a new country.
3. They buy the local companies and expand their production with the help of modern
technology and investment
4. They place orders for production with small producers and sell their products on their
own brand name to the customers worldwide.
Q8. Due to which reasons the latest models of different items are available within our
reach?
A8. Due to Globalisation, the latest variety of different items are available within our reach
Q9. Give one major factor that has stimulated the globalization process.
A9. Rapid improvement in technology has stimulated the gloabalisation process.
Q10. How has globalization benefitted the well-off consumers?
A10. Globalisation has benefited the well-off consumers as there is greater choice before these
consumers who now enjoy improved quality and lower prices for several products.
Q11. How does foreign trade lead to integration of markets across countries? Explain with
an example.
A11.
1. Foreign trade provides opportunities for both producers and buyers to reach beyond the
markets of their own countries.
2. Goods travel from one country to another.
3. Competition among producers of various countries as well as buyers prevails.
4. Thus, foreign trade leads to integration of markets across countries.
5. For Example, During Diwali season,buyers in India have the option of choosing between
Indian and Chinese decorative lights and bulbs. So this provides an opportunity to expand
business.
Q12. Distinguish between foreign trade and foreign investment.
A12.
FOREIGN TRADE FOREIGN INVESTMENT
1. Trade with different countries is called 1. Foreign investment is the inflow of
foreign trade and it includes import and capital from another country to our own
export. country.
2. Foreign trade is about flow of goods.
2. Foreign investment is just limited to the
inward flow of capital.
Q13.What would happen if the government of India puts heavy tax on import of Chinese
toys?Explain any three points.
A13.
 1. If the government of India puts heavy tax on import of Chinese toys , their price will go
up. They will become relatively expensive.
2. As a result, they will lose their market in India i.e. their demand will fall in India.
3. Indian toys will become relatively cheaper. So , their demand will increase . Hence, more
profit will be earned by the Indian toy makers.
Q14.On account of globalization, what are the three ways by which countries can be
connected?
A14. On account of globalization the countries can be connected through:
1. Movement of people between the countries in search of better education, better jobs,
better incomes etc.
2. Movement of goods and services between the countries by way of exports or imports.
3. Movement of investment and technology between the countries.
Q15. Explain the advantages of globalization.
A15.
1. Rapid improvement in technology, especially the development in the field of information
and communication technology is an outcome of globalization.
2. Liberalisation of foreign trade and foreign investment policy by removing barriers to
facilitate easy import and export of goods, has also been due to globalization.
3. It has also created new opportunities for companies producing services particularly those
involving in IT.
4. Besides this, a number of services like data entry and accounting are now being done
cheaply in countries like India and are being exported to developed countries.
5. The well-off consumers have got greater and better choices to make and as a result of
which they enjoy much high standard of living than before.
Q16.Describe the role of MNCs in promoting globalization process.
A16.
1. They serve as agents for the transfer of superior technology
2. They have provided advanced technology, manufacturing process and improved skills to
underdeveloped countries
3. They help in the transfer of capital from countries where it is abundant to where it is
scarce.
4. They help in building up knowledge base and the development of human resources.
5. They help in creating large scale employment opportunities by setting up their branches
and subsidiaries.
6. The operation of MNCs have a favourable effect on the balance of payments account of
the host country.
Q17. What can be done by government so that the workers get a fair share of benefits
brought by globalization?
A17.
1. Government should enforce rules and regulations strictly to safeguard the interest of the
workers.
 2. Employers at the exporting factories should provide good salary, social security and other
facilities to their workers.
3. MNCs should refuse to procure from those who do not provide proper facilities to their
workers.
Q18. How has transportation technology stimulated the globalization process? Explain
with examples.
A18.
1. Faster trains connecting every nook and corner of a country and faster planes that cover
the distance within a few hours have enabled the faster delivery of goods.
2. Improvements done in transportation technology in the past fifty years have also helped
in the quick movement of goods.
3. For example, containers carrying goods have led to huge reduction in port handling costs
etc.
4. Reduced cost of air transport has enabled much greater volumes of goods being
transported by airlines.
Q19. “ Technology has stimulated the globalization process”. Support the statement with
examples.
A19.
1. Transportation technology has made much faster delivery of goods across long distances
2. Also the cost of air transport has fallen which stimulated the globalization process.
3. Telecommunication has shown remarkable development. Computers , internet , email etc
are used widely to contact one another around the world.
4. IT has enabled to access information instantly and communicate even in the remotest
areas.
5. Call centres use this to satisfy their customers abroad or provide outsourcing services
from anywhere.