Globalisation is the process of integrating a country's economy with the global economy by
removing restrictions on trade and capital flows. Simply put, globalisation is the process of
interaction and union of individuals, organisations, and governments on a worldwide scale.
It entails the formation of networks and initiatives aimed at breaking down social, economic,
and geographical barriers. Globalisation aims to create interactions between events such
that those happening far away can influence those happening in India. It has a variety of
aspects and is the outcome of the combination of several strategies intended to change the
world to make it more interdependent and integrated. In other words, the primary objective
of globalisation is to eliminate borders.
The integration of a nation's economy with the global economy is commonly defined as
globalisation.
Table of Content
Causes of Globalisation
Advantages of Globalisation
Disadvantages of Globalisation
Types of Globalisation
Changes brought about by the Indian economy's globalisation
1. The New Economic Policy identified a list of high-tech and high-investment priority
industries, which give automatic permission to foreign direct investment up to 51%
of foreign equity.
2. Automatic approval is given for foreign technology agreements in high-priority
industries up to a maximum of ₹1 crore. It is no longer necessary to obtain approval
to hire foreign technicians or test locally developed technology abroad.
3. The rupee was devalued by around 20% in July 1991 to adjust the value of the Indian
currency on a global scale. It increased the inflow of foreign capital, encouraged
exports, and discouraged imports.
4. To further connect the Indian economy with the global economy, the Indian rupee
was declared partially convertible in the Union Budget of 1992–1993 and then fully
convertible in the 1993-1994 budget.
5. The government has launched a new export-import policy that would last for five
years to set up the foundation for India's international commerce to become more
globally oriented. The strategy eliminated all limitations and constraints on
international trade and gave the market more power over exports and imports.
6. The government has significantly changed the customs tariff to push the Indian
economy into the arena of international competition. As a result, the budget for
2007–2008 reduced the peak rate of customs duty from 250 percent to 10 percent.
Causes of Globalisation
The following are the primary causes of globalisation:
1. Facilitating international travel with better transportation.
2. Making communication and information sharing easy through advances in
technology.
3. Reduction of tariff barriers and promoting world trade.
4. Expanding the world's media.
Advantages of Globalisation
1. Employment Growth:
The creation of Special Economic Zones (SEZs) has increased the number of new jobs that
are available. It is highly beneficial to include the export processing zones (EPZs) center in
India in order to employ lakhs of people. India's affordable labour is an additional element.
As a result, large corporations hire workers from other areas, which leads to an increase in
employment.
2. Increase in Compensation:
As a result of globalisation, international corporations now offer more skill and expertise
than domestic companies, which has led to an increase in compensation. This opportunity
also caused changes to the managerial structure.
3. High Level of Living:
With globalisation, both the Indian economy and the average person's standard of living
have improved. This shift is visible in a person's purchasing habits, particularly among those
who work for overseas corporations. Thus, a higher standard of life and business
development is occurring in many places.
4. Encourages Mutual Understanding across Cultures:
It improves accessibility to travel and encountering diverse cultures as a good aspect of
globalisation that can foster cooperation and peace on a global scale.
5. Encourages Economic Growth:
Theoretically, globalisation provides less developed nations with access to capital and
technology from abroad that they would not otherwise have. Foreign investment can raise
the living standards of those countries' populations.
Disadvantages of Globalisation
1. Instability in the Market:
The removal of trade restrictions and increased freedom of movement are cited as reasons
why national policies and regional cultures are being undermined by proponents of
globalisation. Labour markets are impacted when people cross borders in quest of higher-
paying jobs or when businesses outsource work and positions to cheaper labour markets.
What is Outsourcing?
One of the significant effects of globalisation is outsourcing. Outsourcing is the practice of
contracting out third-party activities that were previously handled by the organisation. For
instance, many businesses now contract with other organisations to provide security
services. Due to the development of faster methods of communication, especially the
development of information technology, it has become more intense in recent times. Modern
telecommunication systems allow digitized text, speech, and visual information related to
these services to be transmitted in real-time across continents and national boundaries.
