Globalization An Opportunity or a Threat?
National economic development is powered by competition and competition is powered by Globalization. Globalization, in its broader terms, is a combination of integrity in technological, socio-cultural, political and economical components. It brings together the entire world on the same platform. Globalization has enabled a pathway through which communication has been possible globally. Globalization plays an important role in overall development of the economy as it promotes competitiveness. This will eventually aid employment generation and increase the pace of development of countries. It will create both entrepreneurial and employment opportunities for the people in different countries.
Globalization An Opportunity or a Threat?
Is Globalization really necessary in India ?
In this globalized world, government, public sector and private sector all have to work as partners to make the country economically competitive. Effects of globalization changed the every aspect of life through its advanced communicating technology. The increase in growth of many third world nations was due to availing the global opportunities rose from globalization. Job market was created many opportunities and financial markets seen foreign currency flowing into the country as foreign investments.
On the other hand, Globalization poses threat to domestic growth of the Small Scale Industries by counteracting on the production which strives a lot to combat with the high quality products that are globally manufactured. Domestic industries suffer a lot along with the people who directly and indirectly depends on it for employment and growth opportunity often distressing them.
Advantages of Globalization :
- It will increase the trading between different nations free of cost.
- Advancement of new technologies
- Global Expansion in the business operations.
- Reduction of Cultural Barriers, Increases the global village effect.
Disadvantages of Globalization :
- Government Laws and Control
- Greater chance of reactions for globalization being violent in an attempt to preserve cultural heritage
- Increases the chances of Civil War
- Globalisation aims at making the Indian economy as fastest growing economy and globally competitive. The series of reforms undertaken with respect to industrial sector, trade as well as financial sector aimed at making the economy more efficient.
- The process of globalization not only includes opening up of world trade, development of advanced means of communication, internationalization of financial markets, growing importance of MNCs, but the term globalization refers to the integration of economies of the world through uninhibited trade and financial flows, as also through mutual exchange of technology and knowledge.Globalisation also marks the advent of the real integration of the Indian economy into the global economy.
- The rate of growth of the Gross Domestic Product of India has been on the increase from 5.6 per cent during 1980-90 to 7.1% in the year 2016. This has been possible only due to advent of globalisation.
- Foreign Direct Investment in India increased by 2043 USD Million in November of 2016. Foreign Direct Investment in India averaged 1211.71 USD Million from 1995 until 2016, reaching an all time high of 5670 USD Million in February of 2008 and a record low of -60 USD Million in February of 2014. The sectors attracting highest FDI inflows are electrical equipments including computer software and electronics, service sector, telecommunications, transportation industry, etc. So, increase in FDI can be attributed to globalisation.
- Having witnessed the positive role that Foreign Direct Investment (FDI) has played in the rapid economic growth of most of the Southeast Asian countries and most notably China, India has embarked on an ambitious plan to emulate the successes of her neighbors to the east and is trying to sell herself as a safe and profitable destination for FDI.
- Globalisation also contains free inter-country movement of labor. In context to India, this implies opening up the economy to foreign direct investment by providing facilities to foreign companies to invest in different fields of economic activity in India, removing constraints and obstacles to the entry of MNCs in India. This means increased employment opportunities and higher standard of living than was possible earlier.
- Entry of MNCs means allowing Indian companies to enter into foreign collaborations and also encouraging them to set up joint ventures abroad; carrying out massive import liberalization programs by switching over from quantitative restrictions to tariffs and import duties. The removal of quantitative restrictions on imports and the reduction of the peak customs tariff from over 300 per cent prior to the 30 per cent is a result of globalisation.
- The first step towards globalization was taken with the announcement of the devaluation of Indian currency by 18-19 percent against major currencies in the international foreign exchange market. In fact, this measure was taken in order to resolve the BOP crisis.
- Wide-ranging financial sector reforms in the banking, capital markets, and insurance sectors, including the deregulation of interest rates, strong regulation and supervisory systems, and the introduction of foreign/private sector competition.
- Globalisation offers an increased advantage to consumers as there is a greater choice in front of them. Consumers can enjoy improved quality and lower prices for several products.
- Local and small companies that were supplying raw materials to large companies will be prospered with the advent of globalisation. Large Indian companies like Tata motors have emerged as multinationals.
- Use of newer technology and globalisation has also created new opportunities for Indian companies providing services like IT sector. Services such as data entry, accounting and administrative tasks, are now being done cheaply in India and exported to the developing countries. This has generated thousands of jobs.
- Liberalisation of foreign trade policies allowed the import of electronic goods at a very cheap price. Local producers of electronic goods were not able to meet this challenge.
- MNCs flooded the market with quality products at a cheap price. Local producers are not able to compete with large MNCS and are put to hardships.
- Agriculture has been and still remains the backbone of the Indian economy. In 1951, agriculture provided employment to 72 per cent of the population and contributed 59 per cent of the gross domestic product. However, by 2001 the population depending upon agriculture came to 58 per cent whereas the share of agriculture in the GDP went down drastically to 24 per cent and further to 22 per cent in 2006-07. This has resulted in a lowering the per capita income of the farmers and increasing the rural indebtedness. Thus, globalisation has done more harm than benefit to poor farmers.
- The reasons for the deceleration of the growth of agriculture are given in the Economic Survey 2006-07: Low investment, imbalance in fertilizer use, low seeds replacement rate, a distorted incentive system and low post-harvest value addition continued to be a drag on the sectors performance. With more than half the population directly depending on this sector, low agricultural growth has serious implications for the inclusiveness of growth.
- The proportion of people depending in India on agriculture is about 60 % whereas the same for the UK is 2 %, USA 2 %and Japan 3 %. The developed countries, having a low proportion of population in agriculture, have readily adopted globalization which favors more the growth of the manufacturing and service sectors.
- Exporters try and cut labour costs in order to compete in the world market. This has resulted in less wages for the workers and they are denied their fair share of benefits as manufacturers are always in search of cheaper labour. This has resulted in uncertain employment for workers rather than increased job opportunities.
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