Definition of Globalization
Globalization definition – Globalization is the integration of the economy of a country with the world economy. It aims to encourage foreign trade and private and institutional foreign investment. It creates various policies which try to turn the world into one.
Factors that have contributed to Globalization
Two main factors that have contributed to Globalization are
Technology is one of the factors which have led to globalization and have played a major role in the outspread of products and services across countries.
- Technological innovations in telecommunications— mobile, fax, computers and the Internet—have helped people living in different geographical locations to communicate with each other. This has also helped various companies in administration and expansion of their business in many countries located in different time zones.
- Computers have enabled many companies to store infinite data, which has helped in the marketing of various products and services across countries. Through the Internet, one can obtain information on any topic. Instant messages and electronic mail can be sent within seconds. This has completely revolutionised the working of several companies.
- Through technological advancements in transport systems, goods across long distances were delivered at great speed and low cost.
When the government removes various restrictions and barriers such as taxes on imports, it is called liberalization. The process of liberalizing trade and industry from unwanted government controls and restrictions increase the import and export of goods and commodities.
Main objectives of the liberalization policy:
- To increase international competitiveness of industrial production, foreign investment and technology
- To increase the competitive position of Indian goods in international markets
- To improve financial discipline and facilitate modernisation
- To decrease the debt burden of the country
Liberal policies initiated by the various government:
- Some country removed the barriers on foreign trade and investment. It enabled the foreign companies to set up their production units.
- Special economic zones (SEZs) are being set up by the government to provide world-class facilities such as education, electricity, water, transport, storage and recreation. Production units in SEZs are initially exempted from taxes for a period of five years.
- Labour laws are more flexible and rules to protect workers’ rights are ignored. Workers are hired for short periods to overcome the pressure of work.
Effects of Globalization on the Indian Economy