Why are MNCs spreading across the borders give two reasons

• Globalisation and the Indian Economy

MNC's setup their units in different countries according to the availability of raw material,to decrease cost of production,according to availabitlity of Educated employees

• Globalisation and the Indian Economy

MNC are companies which do trade among different countries.they are spread along border becoz it is easy for them in transportation and trading between differenet countries.MNc setup their industries in different countrie where they see cheap raw material , easy excess to market ,excess to skilled and unskilled labour wher government take care of them .For ex. infosys , Cargo Food , ranbaxy ,ford etc

Mind Maps

Class X - Social: GlobalisationOne Word Answer Questions: Q) Expand WTO?

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  Multinational corporation  

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Short Answer Questions:

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  The main functions of the WTO are: 1.Administering WTO trade agreements. 2.Providing forum for trade negotiations. 3.Handling trade disputes. 4.Monitoring Members' trade policies. 5.Providing technical assistance and training to developing and least developed economies. 6.Cooperating with other international organizations.

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  The Globalisation has impacted Indian economy in the following ways: (i) Increase in foreign investment, Over the past twenty years, the foreign investment has increased. (ii) Emergence of Indian companies as multinational Several of the top Indian companies like Tata Motors, Infosys, Ranbaxy have been able to get benefit from the increased competition created as a result of Globalisation.

(iii) Creation of new opportunities Globalisation has created new opportunities for Indian companies, particularly providing services like IT.  

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  The globlisation is a process of going to more interconnected world or it is a process of developing international influence between nations,companies or people through out the world which leads to a cohesive and integrated global economy.Some shortcomings of this globalisation are: 1.Small manufactures were hit hard.

2.Worker's job is no longer secure because companies are trying to cut costs of products leading to cut in labour costs.  

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  Some of the ways in which countries can be linked are (i) Movement of goods between countries. (ii) Services being provided for one country from another country (e.g. call centres). (iii) Foreign investments being done by one country with companies in another country.

(iv)Immigration of people into one country from another for working there or for study.  

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  These are the the ways in which MNCs set up or control production in other countries: 1) By buying local companies of an area. 2) By making partnership with the owner of local companies.

3) By investing in local companies to encourage the production of foreign product in any country.  

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  Rapid improvement in technology has been playing a key role in encouraging the globalization process. Improvements in transportation technology, e.g. container manufacturing has made faster delivery of goods across long distances at lower costs. There have been rapid developments in information and communication technology, e.g. computer, internet, etc. They have made easy access to any person or place around the world. Thus, it can be said that technology has stimulated the globalisation process.  

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  ->so many small manuacturers have been hit by others due to competition during globalisation. ->Batteries, capacitors, plastics, toys, tyres, dairy products, and vegetable oil are some examples of industries where the small manufacturers have been hit hard due to competition. Several of the units have shut down rendering many workers jobless  

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  1)Generally it refers Globalization. 2)And sometimes foreign trade creates an opportunity for the producers to reach beyond the domestic markets. 3)By using this new jobs are created in industries.

4)It refers to the various restrictions which are used by the government of a country to increase or creates an opportunity for the producers to reach beyond domestic markets.  

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Long Answer Questions:

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Globalisation

There are three types of movement within international economic exchanges.

• The first is the flow of trade in goods as well as services.

• The second is the flow of labour is the migration of people in search of employment.

The third is the movement of capital for short-term or long-term investments over long distances.

• Globalisation is not merely about the market, infact, ideas are also being shared and expanded.

• The early phase of globalisation involved export of raw materials from colonial countries such as India and import of finished products from industrially developed European countries and the USA.
• But from the middle of the 20th century, things began to change. Some companies became Multinational Corporations (MNCs) as they spread their economic activities to various parts of the world.

• An MNC is a company that owns or controls production in more than one country.
• MNCs set-up offices and factories for production in regions where they can get cheap labour and other resources, to minimise cost and maximise profit.
• They sell their finished products globally and also produce the goods and services globally.
• The production process was divided into small parts and spread out across the globe.

• The nature of working of a large MNC is a complex process.
• Given below will describe the working of MNC. Suppose a large MNC produces industrial equipment, designs its products in research centres in the United States and manufactures its components in China. These are then shipped to Mexico and Eastern Europe where the products are assembled and the finished products are sold all over the world. At the same time, the company's , customer care is carried out through call centres located in India. This is how an MNC works.In this example, the MNC is not only selling its finished products globally, but more important, the goods and services are produced globally. As a result, production is organised in increasingly complex ways. The production process is divided into small parts and spread out across the globe.
Advantage of Spreading Out MNC in Different Countries
• In the above example, China provides the advantage of being a cheap manufacturing location. Mexico and Eastern Europe are useful for their closeness to the markets in the US and Europe. India has highly skilled engineers who can understand the technical aspects of production. It also has educated English speaking youth who can provide customer care services.And all this causes about 50-60% cost-savings for the MNC. Thus, it can be said that the advantage of spreading out production across the borders to the multinationals can be truly immense.

Merits
• There is an international market for companies and for consumers there is a wider range of products to choose from.
• Increase in flow of investments from developed countries to developing countries, which can be used for economic reconstruction.
• Greater and faster flow of information between countries and greater cultural interaction has helped to overcome cultural barriers.
• Technological development has resulted in reverse brain drain in developing countries.
Interlinking Production Across Countries
• MNC's look into four major criteria before they set up production in any place.
1. The factory or company should be close to the markets.
2. Skilled and unskilled labour should be available at low costs.
3. Availability of other factors of production should be assured. (eg. Infrastructure")

Local Government policies should be in their interests.

When the above conditions are to their satisfaction MNCs set up factories and offices for production in different countries. As these MNCs are setting up factories in a foreign country, the investment they make in terms of acquiring land, constructing buildings and buying machinery is called foreign investment.

• At times, MNCs set up production jointly with some of the local companies of these countries. The benefit to the local company of such joint production is two-fold.
• First, MNCs can provide money for additional investments, like buying new machines for faster production.
• Second, MNCs might bring with them the latest technology for production.

• The money that is spent to buy assets such as land, building, machines and other equipment is called Investment.
• Investment made by MNCs is called Foreign investment.
• By setting up partnerships with local companies, by using the local companies for supplies, by closely competing with the local companies or buying them up, MNCs are exerting a strong influence on production at these distant locations.
• As a result, production in these widely dispersed locations is getting interlinked.

Foreign Trade And Integration Of Markets
Foreign Trade

• Foreign trade in India includes all imports and exports to and from India.
• At the level of Central Government it is administered by the Ministry of Commerce and Industry.
• Foreign trade creates an opportunity for the producers to reach beyond the domestic markets, i.e., markets of their own countries.
• Producers can sell their produce not only in markets located within the country but can also compete in markets located in other countries of the world.
• With the opening of trade, goods travel from one market to another. Choice of goods in the markets rises.
• Foreign trade this results in connecting the markets or integration of markets in different countries.

Foreign trade is nothing but trade between the different countries of the world. It is also called as International trade, External trade or Inter-Regional trade.

It consists of imports, exports and entrepot.

Foreign Trade can be divided into following three groups :-

Import Trade :

Foreign trade basically takes place for mutual satisfaction of wants and utilities of resources.

• Market integration occurs when prices among different locations or related goods follow similar patterns over a long period of time.
• Groups of prices often move proportionally to each other and when this relation is very clear among different markets it is said that the markets are integrated.
• Thus market integration is an indicator that explains how much different markets are related to each other.

• Globalisation is this process of rapid integration or interconnection between countries.
• MNCs are playing a major role in the globalisation process. More and more goods and services, investments and technology are moving between countries.
• Tourism is one of the most important areas that Globalisation affect. Even Could be said that the tourism is established with globalisation.
• Besides it provide to meet different cultures. Also important changes and fast development can be observed in countries which aim to support the tourist demands and needs.

1. Technology:
• Rapid improvement in technology has been one major factor that has stimulated the globalisation process.
• In recent times, technology in the areas of telecommunications, computers, Internet has been changing rapidly.
• The developments in information and communication technology have been even more remarkable and rapid.
Telecommunication facilities (telegraph, telephone including mobile phones, fax) are used to contact one another around the world, to access information instantly and to communicate from remote areas.
• This has been facilitated by satellite communication devices. Computers have now entered almost every field of activity.
• You might have also ventured into the amazing world of internet, where you can obtain and share information on almost anything you want to know.
• Internet also allows us to send instant electronic mail (e-mail) and talk (voice-mail) across the world at negligible costs.
2. Liberalisation of foreign trade and foreign investment policy:
• Governments can use trade barriers to increase or decrease(regulate) foreign trade and to decide what kinds of goods and how much of each, should come into the country.
• Removing barriers or restrictions set by the government is what is known as liberalisation.
• With liberalisation of trade, businesses are allowed to make decisions freely about what they wish to import or export.
• The government imposes much less restrictions than before and is therefore said to be more liberal.

A good example is the issue of climate change. Initially, the issue of reducing carbon emissions were left to individual countries. However, it was soon found that if one country were to attempt to reduce carbon emissions, industry could just shift to another location where there are lower regulations. Consequently, the issue of carbon emissions and climate change has to be tackled by countries together

World Trade Organisation

• World Trade Organisation(WTO) is one such organisation whose aim is to liberalise international trade.
• WTO rules have forced the developing countries to remove trade barriers.
• The World Trade Organization (WTO) is the only global international organization dealing with the rules of trade between nations. At its heart are the WTO agreements, negotiated and signed by the bulk of the world's trading nations and ratified in their parliaments.
• The goal is to help producers of goods and services, exporters, and importers conduct their business.

• Started at the initiative of the developed countries, WTO establishes rules regarding international trade, and sees that these rules are obeyed. Nearly 150 countries of the world are currently members of the WTO.
• WTO establishes rules regarding international trade, and sees that these rules are obeyed.

• Globalisation and greater competition among producers-both local and foreign producers-has been of advantage to consumers, particularly the well-off sections in the urban areas.
• There is greater choice before these consumers who now enjoy improved quality and lower prices for several products.
• MNCs have increased their investments in India over the past 20 years, which means investing in India has been beneficial for them.
• Also, local companies supplying raw materials, etc. to these industries have prospered.
• Several of the top Indian companies have been able to benefit from the increased competition.

• Globalisation has also created new opportunities for companies providing services, particularly those involving IT.

• Globalisation and the pressure of competition have substantially changed the lives of workers.
• Faced with growing competition, most employers these days prefer to employ workers 'flexibly'. This means that workers' jobs are no longer secure.

What has been the effect of globalisation on the lives of people?

• Globalisation has been of advantage to consumers, particularly the well-off sections in the urban areas.
• There is greater choice before these consumers who now enjoy improved quality and lower price products. As a result, these people today enjoy much higher standards of living than was possible earlier.
• Among producers and workers, the impact of globalisation has not been uniform buyers. In these industries and services, new jobs have been created.
• Local companies supplying raw materials etc. to these industries have also prospered.
• Secondly, several of the top Indian companies have been able to benefit from the increased competition.
• They have invested in newer technology and production methods and raised their production standards. Some have gained from successful collaborations with foreign companies.
• Moreover, globalisation has enabled some large Indian companies to emerge as multinationals themselves! Tata Motors (automobiles), Infosys (IT), Ranbaxy (medicines), Asian Paints (paints), Sundaram Fasteners (nuts and bolts) are some Indian companies which are spreading their operations worldwide
• Globalisation has also created new opportunities for companies providing services, particularly those involving IT.
• The Indian company producing a magazine for the London based company and call centres are some examples. Besides, a host of services such as data entry, accounting, administrative tasks, engineering are now being done at cheaper costs in countries such as India and are exported to the developed countries.

• Fair globalisation would create opportunities for all, and also ensure that the benefits of globalisation are shared better.
• The government can play a major role in making this possible. The government can ensure that labour laws are properly implemented and the workers get their rights.
• It can support small producers to improve their performance till the time they become strong enough to compete.

• The above evidence indicates that not everyone has benefited from globalisation.
• People with education, skill and wealth have made the best use of the new opportunities. On the other hand, there are many people who have not shared the benefits.
• Since globalisation is now a reality, the question is how to make globalisation more 'fair'? Fair globalisation would create opportunities for all, and ensure that the benefits of globalisation are shared better.
• The government can play a major role in making this possible. Its policies must protect the interests not only of the rich and the powerful, but also the interests of all the people in the country.
• You have read about some of the possible steps that the government can take to ensure this. For instance, the government can ensure that labour laws are properly implemented and the workers get their rights.
• It can support small producers to improve their performance till the time they become strong enough to compete. If necessary, the government can use trade and investment barriers.
• It can negotiate at the WTO for 'fairer rules'. It can also align with other developing countries with similar interests to fight against the domination of developed countries in the WTO.
• In the past few years, massive campaigns and representations by people's organisations have influenced important decisions relating to trade and investments at the WTO.
• This has demonstrated that people also can play an important role in the struggle for fair globalisation

An important question that has often been debated is whether globalisation has seen the demise of nation state or not. For most part of the time, the nation state with people organised on territorial grounds was the main form of political organisation when it came to demarcating countries. This territorial division created divisions of us and them, of outside and inside and laid the psychological foundations for creating a feeling for one's own country, the feeling of nationalism. The single most important impact of globalisation is the gradual dilution of this feeling.Another issue that received attention is about

Globalisation is the process of rapid integration of countries. It is a major change that occurred across the globe in the late 20th century. This has economic, political as well as cultural dimensions. Integration of markets and production through trade and investments controlled by the multinational corporations with huge wealth and power is one hallmark of the present phase of globalisation. Liberalisation, by removing barriers to trade and investment, has opened the economies to the forces of globalisation. The benefits of globalisation have been unevenly distributed. It has benefited well-off consumers and as well as producers with skill, education and huge amount of wealth. Certain services that are enabled with technology have expanded. On the other hand, thousands of small producers and workers have seen their employment and worker's rights erode. It is important to understand the two-sided nature of globalisation.